The euro-area economy expanded a better-than-expected 0.4% in the first quarter, although the impact of US trade tariffs have yet to be felt. Germany and France grew in line with expectations, while Italy did better than economists had forecast. 

But there are clouds on the horizon. Business surveys indicate a growth weakening amid uncertainty over US intentions. The European Central Bank is considering further interest-rate cuts after a seventh reduction earlier this month, although its Chief Economist Philip Lane said last week there’s unlikely to be a recession. 

Separately, the US economy contracted for the first time since 2022, according to an initial estimate published today. US gross domestic product shrank because of a pre-tariff surge in imports and moderating consumer spending. The Federal Reserve’s preferred measure of inflation was unchanged in March from the previous month, another report showed. — Philip Lagerkranser

What You Need to Know Today

Ukraine is ready to sign a natural resources deal with the US, a source tells us. Ukrainian Economy Minister Yulia Svyrydenko is on her way to Washington for the signing, which could happen as soon as today. A deal, which will allow the US privileged access to new investment projects to develop Ukraine’s natural resources, could bolster Washington’s support for Kyiv by strengthening their economic partnership.

Spain has Europe’s “best electricity network,” the chairwoman of Spain’s power grid operator said, days after a historic blackout that left the country without electricity for hours. Redeia Corporacion SA’s Beatriz Corredor also said there was nothing wrong with how the grid operator dealt with the blackout, in a staunch defense of its performance. The hours-long collapse of the power grid affected some 45 million people in continental Spain on Monday. 

Beatriz Corredor Photographer: Europa Press News/Europa Press

Mercedes-Benz and Stellantis pulled their forecasts for this year as US President Donald Trump’s auto tariffs roil the industry. Volkswagen left its guidance largely unchanged but warned it isn’t yet factoring in the impact of the levies. The carmakers’ caution came even as Trump yesterday signed directives to lift some duties on foreign parts and prevent multiple levies from stacking on top of each other.

Veteran emerging-markets investor Mark Mobius is keeping 95% of his funds’ holdings in cash because of trade-related uncertainty. “At this stage, cash is king,” he told us, adding that the uncertainty is likely to persist for up to six months. Some emerging markets like India will do quite well in the current environment, said Mobius, who has been investing in developing markets for about three decades. Watch the full interview. 

The United Arab Emirates foiled an attempt to transfer weapons to Sudan’s army, the state-run WAM news agency said. Emirati officials seized ammunition and military equipment and arrested people during an inspection of a private aircraft at one of the UAE’s airports. Sudan’s army has been battling the paramilitary Rapid Support Forces since April 2023, in a brutal conflict in which at least 150,000 people may have been killed. 

Switzerland plans to hold a referendum on its new deal with the European Union, which would be structured in a way that should increase the chances of the agreement passing. Brussels and Bern agreed on an accord in December to ensure Switzerland’s access to the single market and to stabilize relations with the bloc. The government will now propose a so-called optional referendum, which would only need a majority of votes to pass. 

European consumers are prepared to shun US products and services because of Trump’s trade war, European Central Bank research shows. Respondents in a recent survey were “very willing” to find non-US alternatives, underscoring the extent of the backlash. Consumers’ reactions could signal a “possible long-term structural shift in consumer preferences away from US products and brands,” the ECB said. 

What You’ll Need to Know Tomorrow

For Your Commute

A group of D-tier characters from Marvel Cinematic Universe’s most uninspired projects — grappling with depression to boot — might not inspire high hopes. But MCU’s latest offering, the Thunderbolts*, is the best movie Marvel has put out in ages, mixing humor with actual depth, writes Esther Zuckerman. 

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