US stocks advanced at open on Thursday following strong earnings from major technology firms, which helped ease concerns that economic headwinds could derail momentum.

The S&P 500 rose nearly 1%, the Nasdaq Composite added almost 2%, and the Dow Jones Industrial Average gained 233 points, or 0.6%.

Investor sentiment improved after Meta Platforms reported better-than-expected revenue for the first quarter.

Meta posted first-quarter revenue of $42.31 billion, topping the average analyst estimate of $41.40 billion, according to LSEG data.

Earnings came in at $6.43 per share, ahead of expectations for $5.28 per share.

On its earnings call, CEO Mark Zuckerberg said the company is “performing very well” and is “well-positioned to navigate the macroeconomic uncertainty.”

Microsoft also delivered strong results, with both revenue and profit exceeding expectations in its fiscal third quarter.

Microsoft reported revenue of $70.07 billion and earnings of $3.46 per share for the quarter, surpassing analyst expectations.

Forecasts had called for revenue of $68.42 billion and earnings of $3.22 per share.

Its Azure cloud business posted solid growth, and the company issued optimistic guidance.

Microsoft shares rose around 10%, while Meta climbed around 6%. Nvidia and other AI-related stocks also moved higher, with Nvidia gaining more than 4%.

US jobless claims came spike

Initial jobless claims rose more than expected last week, signaling potential strain in the US labor market as broader economic indicators weaken.

The Labor Department reported Thursday that seasonally adjusted initial claims totaled 241,000 for the week ended April 26, an increase of 18,000 from the prior week and above the 225,000 estimate from economists surveyed by Dow Jones.

This marked the highest reading since February 22.

Continuing claims, which are reported with a one-week lag and offer a broader view of unemployment trends, climbed to 1.92 million, up 83,000 from the previous week and the highest level since November 13, 2021.

A significant portion of the increase came from New York, where unadjusted claims more than doubled to 30,043. The report did not provide a specific explanation for the surge.

The District of Columbia, which had experienced a notable rise in claims earlier this year amid efforts by President Donald Trump to reduce the federal workforce, recorded a modest uptick last week.

The data follows Wednesday’s GDP report showing a 0.3% annualized contraction in the first quarter, the first decline in three years.

That drop was driven largely by a spike in imports ahead of new tariffs, alongside softer consumer spending and reduced government expenditures.

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US construction spending unexpectedly declined in March, and the country’s manufacturing sector continued its downward slide in April, as rising tariffs and high borrowing costs put pressure on builders and factory output.

The data points to growing concerns about the strength of the US economy amid persistent inflationary pressures and trade tensions.

According to the US Commerce Department’s Census Bureau, construction spending fell by 0.5% in March, reversing the 0.6% gain recorded in February (revised from an earlier estimate of 0.7%).

Economists had expected a modest 0.2% rise, making the drop a surprise for markets.

On an annual basis, construction spending was still up 2.8% compared to March 2023.

Private construction, which accounts for the majority of overall spending, saw a 0.6% decline.

Within the sector, residential construction dipped by 0.4%, although spending on new single-family homes rose slightly by 0.1%.

Investment in multi-family housing projects remained unchanged during the month.

High mortgage rates and increased material costs, driven in part by tariffs, continue to weigh heavily on the housing market.

The National Association of Homebuilders recently estimated that new tariffs—including a 145% duty on Chinese goods and a 25% levy on foreign steel and aluminum—have pushed construction costs up by approximately $10,900 per home.

Private non-residential construction, which includes commercial projects like offices and factories, fell by 0.8%, suggesting broader caution among developers and businesses.

Public construction projects also recorded a modest decline, with overall spending easing 0.2%.

State and local government outlays dropped 0.2%, while federal construction spending was down 0.4%, signaling a slight pullback in government-funded infrastructure activity.

US manufacturing struggles in April

The Institute for Supply Management (ISM) reported that its manufacturing Purchasing Managers’ Index (PMI) fell to 48.7 from 49.0 in March, the lowest level in five months.

A reading below 50 indicates contraction. The manufacturing sector makes up about 10.2% of the U.S. economy.

The downturn followed former President Donald Trump’s “Liberation Day” announcement, which imposed sweeping tariffs on imports, particularly Chinese goods, further straining already fragile supply chains.

Manufacturers, heavily reliant on imported raw materials, are now facing higher input costs and longer delivery times.

The ISM’s forward-looking new orders sub-index slightly improved to 47.2 from 45.2, offering a glimmer of hope.

However, production levels remained subdued, and the supplier deliveries index jumped to 55.2 from 53.5, signaling slower delivery times.

Prices paid by manufacturers rose to 69.8—the highest since June 2022—suggesting renewed pressure on goods inflation.

Factory employment remained weak, with the ISM employment index rising slightly to 46.5 from 44.7, still firmly in contraction territory. Imports into the manufacturing sector also declined for the first time since December, reflecting reduced demand and trade disruptions.

Together, the weak construction and manufacturing data point to cooling economic momentum as higher tariffs, rising material costs, and tight monetary policy continue to impact investment and production.

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China said on Friday that it is assessing recent overtures from the United States to initiate trade negotiations, raising hopes of a potential thaw in the ongoing trade war between the world’s two largest economies.

However, Beijing warned that any dialogue would hinge on the removal of all unilateral tariffs imposed by Washington.

Beijing’s latest remarks come amid a series of conflicting statements from both the Trump administration and Chinese leadership about the status of trade talks, as each side seeks to avoid appearing to make the first concession.

A spokesperson for China’s Ministry of Commerce confirmed that senior US officials had recently reached out “through relevant parties multiple times” in an attempt to begin talks aimed at easing trade tensions that have disrupted financial markets and weighed on global economic sentiment.

“If the US wants to talk, it should show its sincerity and be prepared to correct its wrong practices and cancel the unilateral tariffs,” according to the statement.

Failure to do so, it added, would indicate “an outright lack of sincerity” and could further damage mutual trust.

The United States has imposed tariffs of 145% on a broad range of Chinese goods this year, prompting China to retaliate with levies of up to 125%.

Both sides have since issued limited exemptions on critical products to blunt the impact on their domestic industries.

Markets respond cautiously to potential thaw

Following the Chinese commerce ministry’s statement, the offshore yuan edged up 0.14% to 7.2665 per US dollar.

With mainland Chinese markets closed for a holiday, investors reacted through the Hong Kong exchange, where the Hang Seng Index rose 1.6%.

Despite the market response, there remains widespread skepticism over the likelihood of a breakthrough.

The Trump administration and Chinese leadership have issued a series of conflicting signals in recent weeks, each seeking to avoid the appearance of conceding first.

In a separate interview with Fox News, US Secretary of State Marco Rubio said the Chinese side was willing to talk, suggesting that some form of dialogue could resume soon.

Analysts expect a slow and complex process

Analysts were quick to caution that any progress toward a comprehensive agreement would likely be protracted and fraught with uncertainty.

Dan Wang, China director at Eurasia Group, pointed to the unpredictability of President Donald Trump as a key obstacle.

“The negotiation is difficult to start because Trump is chaotic. China will not risk losing control of the situation just for the negotiation’s sake,” Wang said in a CNBC report.

She anticipates that both sides will only arrange open negotiation after all details are agreed privately.

“A more likely scenario is just a long-lasting painful truce with both sides doing their own type of rolling back in practice without backing down politically in public. It can easily last the entire Trump term,” Wang said.

Alfredo Montufar-Helu, senior advisor to the China Center at The Conference Board, said both sides are expected to hold firm on issues central to their national interests.

“The process is likely to be delicate, as both sides will be reluctant to make concessions on issues they deem vital to their national economic security,” he noted.

“One of the major asks of China will be for tariffs to go back to pre-‘liberation day’ levels, at least during the negotiation period,” he said.

He added that such a move could offer significant relief to businesses in both countries, but it is uncertain whether the Trump administration would agree.

US officials float possibility of phased de-escalation

Some members of the Trump administration have hinted at a willingness to ease tensions.

Treasury Secretary Scott Bessent told Fox Business that current tariff levels are “not sustainable on the Chinese side,” and suggested a “big deal” could be on the horizon.

“Everything is on the table for the economic relationship,” Bessent said.

“First, we need to de-escalate, and then over time, we will start focusing on a larger trade deal.”

White House economic adviser Kevin Hassett echoed that view in a CNBC interview, noting that China’s recent tariff cuts on certain US products may indicate readiness for deeper engagement.

Tariff relief underway, but no formal compromise yet

President Trump this week signed an executive order exempting imported cars and parts from additional tariffs, following earlier relief granted to electronics.

China, for its part, issued waivers on tariffs for a range of American imports, including pharmaceuticals, aerospace components, and semiconductors.

Still, Chinese officials have not softened their stance on the broader political message.

“Although in practice, the effective tariffs on both sides have gone down, the political stance [from Beijing] has not changed,” said Eurasia Group’s Wang.

“China is actively managing this decoupling, not taking the bait from the US,” she added.

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The Trump administration on Friday formally closed a trade loophole that had allowed a flood of inexpensive goods from China to enter the United States without tariffs, a move that is likely to benefit domestic manufacturers but hit consumers with higher prices and upend business models of both Chinese exporters and US small firms.

The policy shift, ending the so-called de minimis exemption, caps a years-long controversy over whether China’s low-cost retail platforms—particularly fast-fashion giants like Shein and Temu—were exploiting a regulatory grey area to gain unfair access to American markets.

The rule had permitted shipments under $800 in value to bypass most customs duties and inspections, provided they were sent directly to consumers or small businesses.

Now, those same packages must clear the same tariff barriers and regulatory scrutiny as bulk commercial imports.

What was the ‘De minimis’ rule and why it mattered?

The de minimis exception, introduced in the 1930s, aimed to reduce the burden on customs officials by waiving duties on shipments where collection costs outweighed the revenue.

Congress later raised the threshold to $5 in 1978, $200 in 1993, and $800 in 2016.

For years, the de minimis threshold became a tool of choice for a wide range of exporters and logistics firms.

It enabled sellers in China and elsewhere to send small parcels directly to US consumers without paying duties or providing full documentation.

That created a boom in low-cost cross-border e-commerce, with platforms like Shein and Temu sending tens of millions of parcels annually into American households.

In 2023 alone, US Customs and Border Protection processed over one billion such packages, with the average value of just $54.

But the loophole soon drew bipartisan scrutiny.

Critics, including US manufacturers and labour groups, said the rule gave Chinese sellers an unfair edge and contributed to job losses in warehousing, logistics, and manufacturing sectors.

Others pointed to its alleged use by fentanyl traffickers, who exploited the lax reporting requirements to ship dangerous chemicals into the country.

The administration said drug traffickers were “exploiting” the loophole to ship fentanyl precursor chemicals and related materials into the United States without disclosing shipping details.

“It’s a big scam going on against our country, against really small businesses,” former President Donald Trump said at a White House cabinet meeting this week. “And we’ve ended, we put an end to it.”

Source: BBC

E-commerce retailers hike prices; some exit the US market altogether

Since tariffs on Chinese goods are punishingly high, de minimis goods are already starting to cost a lot more.

Temu has begun promoting goods already located in US warehouses under a new “Local” tag.

Shein has reassured shoppers that while some prices may change, the bulk of its offerings remain affordable.

Shoppers, however, say they saw prices for some items on Shein’s website rise over the weekend, according to a NYT article.

Both platforms have also recently cut back digital advertising in anticipation of the rule change affecting sales.

British clothing brand Oh Polly has also increased its US prices by 20%.

The American Action Forum estimated the change could impose $8 billion to $30 billion in new annual costs—ultimately borne by consumers.

Other firms, such as Understance (a Canadian underwear company), say they will halt shipments to the US altogether.

Beauty retailer Space NK has also paused US online orders, citing concerns over compliance and costs.

“I’ve seen a lot of small to medium-sized businesses just choose to exit the market altogether,” said Cindy Allen, CEO of Trade Force Multiplier, a global trade consultancy.

Who wins?

Industry groups in the US have welcomed the change.

Kim Glas, president of the National Council of Textile Organizations, said the exemption had “devastated the US textile industry” by allowing duty-free entry of unsafe and illegal goods, with textile and apparel items making up more than half of all de minimis shipments by value.

“This tariff loophole has granted China almost unilateral, privileged access to the US market at the expense of American manufacturers and US jobs,” Glas said in comments to the New York Times.

The impact has been visible across niche sectors too.

The Flag Manufacturers Association of America, in written comments to the US Trade Representative, said its members have faced an influx of deeply discounted American flags imported from China—often falsely labelled—which has led to a 25% to 35% decline in domestic flag sales last year.

Larry Severini, CEO of Embroidery Solutions Manufacturing LLC, which supplies embroidered star fields to US flag makers, said he was forced to close one of his two plants in South Carolina earlier this year due to pressure from low-cost imports.

Sales have fallen by about 20% since 2021, which he partly attributes to the de minimis provision.

“We need duties to level the playing field to make it fair,” Severini said.

The end of the de minimis exemption for Chinese goods could also offer an advantage to retailers less reliant on online platforms or Chinese manufacturing.

British fast-fashion retailer Primark, which serves US customers solely through its brick-and-mortar stores, sees an opportunity in the policy shift.

“With prices going up from this part of the trade, I wonder if some Americans might start going back to shopping centres to find value there,” said George Weston, CEO of Primark’s parent company, Associated British Foods, in an interview with Reuters on Tuesday.

Impact on logistics

The change is expected to impact airlines and private carriers such as FedEx and UPS, which have long relied on steady business transporting low-value goods to the United States.

UPS, FedEx, DHL, and the US Postal Service say they are ready to implement the changes.

Yet the economic model that underpinned fast e-commerce deliveries from overseas warehouses may soon be upended.

Logistics experts believe sellers with strong profit margins will continue shipping from China, while others may invest in US-based warehousing to manage costs.

“There’s going to be price hikes, but China’s manufacturing base is still too strong to abandon,” said Izzy Rosenzweig, CEO of logistics firm Portless.

“That said, a lot of razor-thin-margin sellers will likely go local.”

Experts debate likely impact on drug trade and strain on customs personnel

One of the administration’s justifications for ending de minimis was its alleged role in enabling the smuggling of fentanyl and its precursor chemicals.

However, experts caution the policy’s effectiveness in stemming drug flows may be limited.

Many synthetic opioids still enter through the southern border with Mexico, not through international air freight.

Besides, pro-trade groups like the National Foreign Trade Council argue that removing de minimis could stretch already thin customs resources.

“CBP would need to hire and train new personnel, costing the agency millions or causing them to move agents from the already overburdened southern border,” the group warned.

US Customs and Border Protection, however, says it is prepared.

“We are equipped to carry out enhanced package screenings and enforce orders effectively,” a spokesperson said.

The economic stakes for China

The decision comes at a delicate time for China’s export-driven economy.

The end of de minimis treatment for its e-commerce shipments is expected to hurt companies like Shein, Temu (owned by PDD Holdings), and others that have built thriving US operations under the now-defunct rule.

Bob Chen, a director at Shenzhen-based venture firm Mangrove Capital, said the policy shift would “have a large impact on China’s low-cost goods-selling platforms.”

Sellers may be forced to either absorb the tariff costs or pass them on to consumers, jeopardising their price competitiveness.

Yet Chen also noted that even after price adjustments, Chinese platforms may remain attractive due to their efficient supply chains and economies of scale.

“They are still competitive on price,” he said. “And I don’t think other platforms such as Amazon [could replace them].”

In 2023, China’s cross-border e-commerce exports surged to $93.6 billion, a 42% year-on-year jump, making it the country’s second-largest export category.

A significant portion of that was destined for US consumers.

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The GBP/USD exchange rate has formed a giant cup-and-handle pattern that could trigger more gains ahead of the upcoming Bank of England (BoE) and US nonfarm payrolls (NFP) data. It was trading at 1.3300, a few points below the year-to-date high of 1.3430. This article highlights the bullish outlook for pound sterling. 

US nonfarm payrolls data ahead

The GBP/USD pair will react to the upcoming US nonfarm payrolls (NFP) data, which will provide more color about the state of he economy. 

Wall Street analysts are not optimistic about the labor market due to the actions of Donald Trump. 

He announced large tariffs on imported goods from other countries, weakening business confidence. The administration has also fired thousands of workers through the Department of Government Efficiency (DOGE). 

A report released by ADP earlier this week showed that the US private sector created just 61k jobs in April as employers slowed their hiring process.

Economists expect the data to show that the economy created 138k jobs in April after adding an additional 228K in March. There are odds that the official figures will be lower than expected. Also, as it has done in the past, the Bureau of Labor Statistics (BLS) may downgrade the numbers it released last month. 

The other key data to watch will be on wages and the unemployment rate. Analysts expect the numbers to reveal that the jobless rate rose to 4.3%, while the average hourly earnings rose to 3.9%.

These numbers follow the US’s release of weak data. The US GDP contracted by 0.3% last quarter, while the consumer confidence has plunged to pandemic levels. Therefore, there is a likelihood that the Fed will start to pivot by hinting of more rate cuts.

Bank of England decision ahead

The next important GBP/USD news will be the upcoming Bank of England (BoE) interest rate decision, scheduled for next Thursday.

There are odds that the BoE will cut interest rates by 0.25% next week since they remain higher than in other countries. The bank has left rates at 4.50%, higher than the European Union’s 2.4%.

Recent data indicate that the UK economy is softening and inflation is declining. The headline Consumer Price Index (CPI) fell from 2.8% to 2.6%. Analysts believe that the ongoing trade war could be deflationary, as China redirects goods intended for the US to European countries. 

GBP/USD technical analysis

The daily chart reveals that the GBP/USD exchange rate has been in a strong bull run in the past few months. It jumped from a low of 1.2100 in January and reached a high of 1.3431.

Along the way, the pair formed a cup and handle pattern, a popular bullish continuation pattern with a depth of about 10%.  It is now forming the handle section of the C&H pattern.

Therefore, measuring the same distance from the cup’s upper side shows that the pair will ultimately surge to 1.4700. 

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