The US economy fell 0.3% on an annualised basis during the first quarter of the year, as companies responded to the sweeping tariffs imposed by President Trump. This is the first fall in GDP for the world’s largest economy since 2022, and far below the 2.4% rise in the previous quarter. However, analysts say that the reason for this unexpected contraction is due to the surge of imports before the tariffs kick in, not underlying trends. However, Trump insisted the figures were “NOTHING TO DO WITH TARIFFS” in a post on Truth Social, insisting these figures were down to his predecessor. The data did not shift interest rate expectations, with traders still pricing in four cuts this year.
This is the first fall in GDP for the world’s largest economy since 2022, and far below the 2.4% rise in the previous quarter.
Microsoft and Amazon both released results this week, reporting on the first full quarter under Trump 2.0. Microsoft reported robust sales growth for cloud computing as demand for artificial intelligence-based services remains strong. Microsoft shares gained over 9% in morning trading on Thursday, having lost 6% year to date off the back of uncertainty surrounding the Trump tariffs. However, Amazon posted weaker guidance as it weighs up the impact of the steep tariffs on the goods it imports from China. Goldman Sach’s analysts said that tariffs could knock between 6% and 12% off Amazon’s operating profits. Amazon shares ended the day up 3.1% but had eased back in after-hours trading.
Our specialist's final thought
"UK house prices fell 0.6% month on month in April as the discount on stamp duty came to an end. Data suggested there was a significant jump in property transactions in March as buyers scrambled to complete before the end of the month. However, with stamp duty back to pre-September 2022 levels, demand has now been dampened. However, figures from Nationwide revealed that house prices are still 3.4% higher than in April last year."
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