The last few trading days were characterized in particular by hopes of a possible agreement in the trade dispute between the US and China. Meanwhile, the highly anticipated Fed meeting turned out to be less spectacular than expected. The ongoing reporting season in Germany is also likely to have kept investors on their toes.
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Possible breakthrough in the trade dispute between the USA and China gives investors hope
The prospect of a possible agreement in the trade dispute between the world's two largest economies has given investors on both sides of the Atlantic renewed confidence.
Next Saturday, US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer want to meet with China's Vice Premier He Lifeng in Geneva. It remains to be seen whether an actual deal will be reached. In this context, the potential for disappointment could be significant.
On Thursday, Trump also announced a trade deal with the UK, which sent out a general signal of relaxation.
ISM index for service sector better than expected - US Federal Reserve meeting without any major surprises - Fed wants to "wait and see"
At 51.6 points, the ISM index for the service sector at the start of the week was significantly better than previously expected (50.6 points), following 50.8 points in the previous month.
Wednesday, however, was dominated by the US Federal Reserve meeting. As expected, the Federal Reserve (Fed) did not turn the interest rate screws and left the interest rate band at a range of 4.25 to 4.50 percent.
On April 2, Trump announced tariffs of ten percent on imports into the USA from most countries. Many trading partners are subject to even higher tariffs.
Powell also said that the White House had no influence on the work of the central bank. "We are in a good position to wait and see and are in no hurry." In this context, the Fed wants to wait to gain more clarity on the actual impact of the trade dispute on the economy. So far, no major economic effects have been seen in the data, Powell said.
At the beginning of the year, the US economy declined slightly after having flourished for a long time. Uncertainty about future economic development has increased, the report continued.
German industry at its highest level for three and a half years
New figures on the development of German industry caused a stir on Thursday. The strongest growth in production for three and a half years was recorded. In March, industry, construction and energy suppliers produced 3.0% more than in February, according to the Federal Statistical Office in Wiesbaden. Numerous companies had brought forward their orders in order to avoid customs duties, it said.
In the night from Thursday to Friday, important data from China could provide important guidance for Friday trading. Chinese exports grew four times as much as expected following the trade war initiated by Donald Trump. Exports rose by 8.1% in April compared to the same month last year. Trump had imposed a punitive tariff of 145 percent on Chinese imports in April. Beijing, in turn, countered with a 125 percent tariff on US goods.
The background to this growth is demand from countries such as Vietnam and Thailand, which have ramped up their production.
BMW maintains forecast
Despite the tariffs in the United States, BMW is sticking to its forecast and expects profits to remain at the previous year's level. The car manufacturer anticipates that the tariff increases are only temporary and that the tariffs will be reduced from July 2025. In addition, demand for cars would increase in numerous markets. The background to this is support for prices as well as moderate interest rate cuts. However, there would be a risk if the tariffs were to extend well into the second half of the year.
In the first quarter of the year, turnover fell by 7.8% to 33.8 billion euros. The Chinese market was particularly hard hit. Profit before tax amounted to 3.1 billion euros.
Bavarian engine plant (BMW)
Source: TradingView
Dow Jones Industrial Average Index
Source: TradingView
