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Concerns over global growth outlook undermine market mood

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Oil tumbles more than 1%

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China's factory activity falls sharply as Trump tariffs

bite

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Dollar set for worst month in over two years

By Rae Wee and Alun John

SINGAPORE/LONDON, April 30 (Reuters) - Shares struggled

for direction on Wednesday and oil prices slid as investors

awaited a raft of important economic data that could underscore

this week's corporate warnings about the impact of U.S.

President Donald Trump's tariffs.

The U.S. is due to report advance first quarter GDP data at

1330 GMT (0830 ET), which is expected to show the economy

stalled or even contracted in the first quarter, swamped by a

deluge of imported goods by businesses eager to avoid higher

costs.

Data on Tuesday showed the U.S. goods trade deficit surged

to an all-time high in March, prompting economists to sharply

downgrade their GDP estimates.

BNP Paribas on Wednesday revised down its forecast to a 0.6%

contraction from a previous 0.4% increase saying the

"late-breaking data warrant a shift," though they did not see

the data as a "gamechanger" for Federal Reserve policy.

PCE inflation, the Fed's preferred gauge of price pressures,

is also due at 1330 GMT. The figure will be closely watched as

it will give an indication of how much scope the Fed has to cut

rates.

There was also a batch of earnings for investors to digest

on Wednesday, and European car companies were the latest to

strike a downbeat tone.

Both Mercedes and Stellantis ( STLA ) suspended

their profit guidance due to the uncertain impact of the

tariffs, echoing a move by General Motors ( GM ) the previous

day. Swiss bank UBS also warned of an uncertain outlook.

But investors were still struggling to get a grip on what it

all meant, and the broad European share benchmark was actually

0.3% higher partly because some of the gloom is already

priced, and as the mood music continues to point to a softening

of trade tensions even if the details remain unclear.

Trump signed a pair of orders to soften the blow of his

auto tariffs on Tuesday. Commerce Secretary Howard Lutnick said

he had reached one deal with a foreign power, though he declined

to name them.

Data showing the

euro zone economy

grew faster than expected in the first quarter also helped

at the margin.

U.S. S&P and Nasdaq futures were both slightly lower

however.

OIL SLIPS

The market reaction was clearer in oil. Brent crude futures

were down 1.85% to $63.06 a barrel, having tumbled 2.4%

overnight. U.S. crude lost 1.7% to $59.38 per barrel.

The key benchmarks are also set for their largest monthly

drop in almost three and a half years with Brent having lost

15.4% and WTI 17%.

In the mix on Wednesday was tariff fallout in China, where

data showed factory activity contracted at the fastest pace in

16 months in April.

"The hit from sky-high U.S. tariffs meant the new export

orders index dropped back to its lowest level, COVID-19

disruptions aside, since August 2012," said Zichun Huang, a

China economist at Capital Economics.

"The sharp drop in the PMIs likely overstates the impact of

tariffs due to negative sentiment effects, but it still suggests

that China's economy is coming under pressure as external demand

cools."

The dismal figures hobbled a rise in Chinese shares, with

the CSI300 blue-chip index reversing earlier gains to

last trade 0.1% lower, but Hong Kong's Hang Seng Index

ticked up 0.5%.

The economic fears caused U.S. Treasuries to continue to

rally, and the 10 year U.S. yield was at its lowest in three

weeks at 4.16% if only down one basis point on the

day.

The two-year Treasury yield also hit a three-week

trough of 3.6400%.

Moves were fairly muted in the foreign exchange market,

though early April volatility meant the monthly returns were

still dramatic. The dollar is on track for its worst monthly

performance since November 2022 with a 4.7% loss against a

basket of peers.

On the other hand, the yen - a beneficiary of safe-haven

demand - was set for a monthly gain of more than 5%, the most

since July 2024. Similarly, the euro was headed for

its largest monthly gain in more than two years and last bought

$1.1375.

Elsewhere, spot gold fell 0.9% to $3,286 an ounce.