During April, equity and fixed income markets showed mixed performance. In spite of the volatility observed throughout the month, the main stock market indexes recorded a notable recovery towards the last week of April to close with a slight drop of -0.76% in the case of the S&P 500, while the global ACWI and NASDAQ indexes achieved gains of 0.77% and 0.85%, respectively. This recovery is due to a more moderate rhetoric from the U.S. government towards its trading partners, as well as a 90-day extension for the entry into force of the measures. This reflects an openness to negotiate individual agreements that considerably reduce the tariffs initially proposed.

Meanwhile, the first quarter corporate reports of the companies comprising the S&P 500 have exceeded analysts' expectations. On an annual basis, sales grew by 4.8%, driven mainly by the information technology and healthcare sectors. Profits, meanwhile, rose by 12.8%, with a strong performance in the healthcare and communications sectors. However, in the last month, analysts have cut their earnings per share projections for the second quarter of the year by more than the average of the last 15 years.

On the economic front, recent U.S. data continues to show strength in the labor market. In April, 177,000 jobs were created, adding 398,000 in the first quarter of the year. Although initial jobless claims rebounded slightly, their levels continue to be consistent with an expanding economy. However, the preliminary GDP report for the first quarter showed an annualized contraction of -0.3%, largely the result of a one-time increase in imports. This rebound in foreign purchases corresponded to an attempt by companies to anticipate the entry into force of new tariffs.

This set of data suggests that the U.S. economy, while still healthy, may be entering a slowdown phase induced by new trade policies. Productivity - a key element for corporate profitability - could be eroded by inefficiencies stemming from trade barriers, reduced investment incentives and immigration restrictions. This pressure is already evident in the current earnings season as more than 60 companies have cut their earnings projections, the highest number since 2014.

The International Monetary Fund revised downward its growth forecasts for several economies, with the United States being one of the hardest hit: its growth estimate for 2025 fell from 2.7% to 1.8%; we think growth will be even lower. Countries highly dependent on exports to the US, such as Mexico, South Korea, Vietnam and Canada, also recorded sharp downward revisions, evidencing the side effects of the trade war.

Finally, in the face of a complex outlook, the Mexican Stock Exchange has stood out by accumulating a return of 13.62% in local currency during the year, together with a 5.82% appreciation of the peso during the period.

‍