ORLANDO, Florida, May 2 (Reuters) -

TRADING DAY

Choppier waters ahead?

One of the biggest surprises in a week overflowing with them -

from top-tier economic indicators, to company earnings and

policy decisions from around the world - was how steadfast

financial markets were.

Global and U.S. stocks closed the week with gains of up to

3%, the dollar advanced, Treasury yields rose, and the VIX index

of U.S. equity market volatility eased. On the surface, a strong

week for investor sentiment and risk sentiment.

But that would be only half the story.

Figures showed that the U.S. economy shrank in the first

quarter - a statistical anomaly due to a record hit from trade,

perhaps, but the first contraction in three years, nevertheless,

and putting the economy halfway towards a technical recession.

Some of that gloom was countered by unequivocally positive

GDP figures from the euro zone. And yields and stocks leaped

higher on Friday after April's non-farm payrolls report showed

the Trump administration's global trade war has yet to be

materially felt in the U.S. labor market.

On the corporate front, dozens of leading global firms cut

or declined to give forecasts in their first-quarter earnings,

such is the uncertainty surrounding tariffs. Yet the overall

tone from these calls this week was positive, and investors have

consistently bought the post-Liberation Day dip.

One of the most significant developments this week for world

markets came from Tokyo, where the Bank of Japan kept interest

rates on hold as expected but slashed its growth outlook and

lowered its inflation forecasts. The yen tumbled, but still

ended the week essentially flat.

So, some huge price swings in individual shares and assets.

In the U.S. and beyond, there's little evidence that trade

uncertainty is prompting companies to lay off workers or jack up

prices. Not yet anyway.

There's a growing belief that U.S. President Donald Trump is

backing away from his more belligerent tariff threats, and that

a more receptive Washington is closing in on several bilateral

trade deals. Tensions with China may even be cooling too.

However, the risks to growth and markets lie ahead, and a

"cliff-edge type of adjustment" in the coming months is

possible, warns RBC BlueBay Asset Management's Mark Dowding.

"There appear to be similarities to the Roadrunner cartoon,

in which Wile E. Coyote keeps on running, long after the ground

has disappeared beneath his feet, ahead of the inevitable moment

of realisation when gravity kicks in," he wrote on Friday.

With consumer sentiment sliding and inflation expectations

rising, stagflation looms. For markets, that suggests choppy

waters ahead rather than plain sailing.

I'd love to hear from you, so please reach out to me with

comments at . You can also follow me at @ReutersJamie and

@reutersjamie.bsky.social.

This Week's Key Market Moves

* Britain's FTSE 100 notches a record 15 consecutive

daily

gains, the longest winning streak since the index was launched

in 1984.

* Wall Street rallies on Friday, ending the week up

around

3%. The Dow has its best run since December 2023, the S&P has

its longest winning streak since November 2024.

* U.S. bond yields rise as much as 7 basis points, thanks to

a

sharp rise on Friday after the April employment report.

* Oil falls 8%, with Brent crude futures at a

four-year

closing low on Friday of $61.17/bbl ahead of Saturday's OPEC+

meeting.

* Japan's Nikkei 225 rises 3% on U.S. trade deal optimism

and

weaker yen. Index rises seven days in a row, its best run since

August-September, 2023.

* Gold slips 2.6% on the week, easing further back

from

its recent $3,500/oz high.

Chart of the Week

In his first term in office, U.S. President Donald Trump

regularly took credit on social media for the boom on Wall

Street. He has been less vocal this time around, and with stocks

down since his inauguration, this week he posted: "This is

Biden's Stock Market, not Trump's," adding that the recent slide

had "NOTHING TO DO WITH TARIFFS".

April 30 marked the first 100 days of Trump's second term,

and the following chart shows where they rank in history. Stocks

have clawed back some of these losses in the last two days, and

if the rebound continues, maybe it will be Trump's stock market

after all.

Here are some of the best things I read this week:

1. America's Economic Tailwinds Will Override Trump

and His

Tariffs

2. Trump and the Triumph of the Technolords

3. The Smoot-Hawley Trade War

4. Trump tariffs expose US weak flank in services

5. Remarks by Kevin Warsh - Commanding Heights:

Central

Banks at a Crossroads IMF Lecture Hosted by G30

What could move markets on Monday?

* Australia reaction to Saturday's general election

* Indonesia GDP (Q1)

* U.S. services ISM and PMI (April)

* U.S. 3-year Treasury note auction

Opinions expressed are those of the author. They do not

reflect the views of Reuters News, which, under the Trust

Principles, is committed to integrity, independence, and freedom

from bias.

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(Writing by Jamie McGeever; Editing by Nia Williams)