Stay up to date with the latest market trends, economic shifts and key financial developments across the UK, US and Asia.
Key market events
📉 Chinese manufacturing slows
- The National Bureau of Statistics (NBS) manufacturing Purchasing Managers Index (PMI) fell into contraction territory following a steep decline in activity in April, as uncertainty around tariffs continued.
🏃♂️➡️ Euro Area picks up pace
- The Eurozone economy grew by 1.2% year-on-year in Q1 2025, with Spain leading the way. This growth came even as Germany remained in recession.
🏦 Japan holds rates steady
- The BoJ (Bank of Japan) kept its short-term interest rate steady at 0.5%, among concerns around global growth prospects. Meanwhile consumer confidence in Japan fell for the fifth month in a row.
⚡ US inflation holds flat
- Core PCE (Personal Consumption Expenditures) - excluding food and energy - was unchanged in March, despite expectations of an increase in spending ahead of tariff implementation. At the same time, annual inflation slowed to 2.3%.
🏠 UK house prices dip
- House prices unexpectedly fell 0.6% in April, compared to a month earlier – according to Nationwide. While a slowdown in growth had been expected following stamp-duty rises, an absolute decline came as a surprise to many.
What this means for financial advisers and clients
Tariff uncertainty continues to dominate economic news this week, with China now saying they’re open to trade negotiations. In China, stimulus measures are failing to make up for falling foreign demand across manufacturing and services. And despite US inflation remaining flat, pre-tariff activity was also key to US GDP contracting in Q1 - its first contraction since early 2022 - as businesses rushed to stockpile goods ahead of April.
While we continue to closely monitor the unfolding situation, it’s worthwhile remembering that we’re long-term investors and reacting to short term market movements rarely adds value.
Chart of the week - European smaller companies look cheap
Source: Jefferies, April 2025
The chart above shows the price-to-earnings (PE) ratio of the MSCI All Country (AC) Europe small-cap index compared to its larger-cap parent index. PE is a measure of company value - and right now, small-cap stocks are trading at one of the steepest discounts we’ve seen in years, sitting more than two standard deviations below their long-term average.
Why this matters
In recent years, larger companies have generally outperformed smaller ones. This is because the latter struggles in more challenging macro conditions and a higher interest rate environment. This has led to larger-cap companies revaluing higher and higher compared to their smaller peers - making small-cap stocks appear increasingly cheap in comparison.
As the economic environment evolves across Europe - with falling inflation and cuts to interest rates - conditions may start to turn back in favour of smaller companies, which offer greater potential for growth. Smaller companies, with mainly domestic customers and supply chains, could also end up being more insulated from the US’s global tariffs, while benefiting from larger companies attempts to diversify their own supply chains.
Our portfolios contain a dedicated allocation to smaller companies and it remains an area of the market we feel has the potential to deliver attractive returns over the longer term.
Market recap
US markets edge up
- After a difficult month, US markets edged up on robust tech earnings and optimism around a de-escalation of the trade war as China said it was open to negotiations.
UK climbs
- UK markets were also buoyed by trade optimism with sectors such as energy, banking, and defence outperforming while healthcare lagged.
Modest growth in Asia
- Japan’s Nikkei 225 saw a small gain, thanks to strong corporate earnings and outperformance from the tech and financials sectors. The Hang Seng also managed to remain positive on reduced trade tensions and improvements in China tech.
Commodity losses
- Oil fell as easing trade tensions couldn’t compete against an anticipated rise in supply from the Organization of the Petroleum Exporting Countries (OPEC+) cartel. Easing trade tensions were also key to a drop the gold price amid optimism on improving economic conditions.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | 1.00% | 5.46% |
| FTSE 250 | 2.78% | -1.13% |
| S&P 500 | 1.53% | -9.99% |
| NASDAQ | 3.08% | -12.80% |
| MSCI Europe ex UK | 0.63% | 8.47% |
| Hang Seng | 0.50% | 3.65% |
| Nikkei 225 | 1.20% | -7.03% |
| Brent Crude | -3.67% | -16.12% |
| Gold Spot | -1.93% | 23.76% |
| UK 10yr Gilt yield | -3bps | -9bps |
| US 10yr Treasury yield | -9bps | -34bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 1st May 2025.
Stay tuned for next week’s market insights
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This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
