Global stock markets presented a mixed picture on Thursday, May 1, 2025, influenced by a surprise contraction in the U.S. economy and ongoing concerns about trade tariffs. While some markets showed resilience, uncertainty loomed due to the potential impacts of U.S. trade policies.
US Economic Data and Market Reaction
Wall Street experienced initial declines following the release of data indicating a 0.3% contraction in the U.S. economy during the first quarter of 2025. However, markets partially recovered as personal spending in March exceeded expectations. The U.S. Bureau of Economic Analysis attributed the GDP decrease primarily to increased imports and decreased government spending.
European Markets and Auto Industry Challenges
European stocks saw gains, buoyed by a better-than-expected 0.4% GDP growth in the Eurozone for Q1 2025. However, major German automakers like Volkswagen and Mercedes-Benz reported profit declines. Mercedes-Benz and Stellantis have suspended their financial guidance for 2025, citing uncertainties related to evolving tariff policies.
Impact of US-China Tariffs
Reports indicate that Chinese manufacturing activity contracted at its fastest pace since July 2023, reflecting the impact of tariffs imposed by the U.S. This has led to warnings of potential product shortages and disruptions in global trade flows, as U.S. retailers brace for inventory challenges.