Hey Folks, markets are showing signs of stress, and we are seeing bigger swings in price action as well. Get my take on these markets in this week’s market round up.
MARKET SOUND BITES;
Most U.S. stock indexes declined for the 2nd consecutive week, although the DOW finished a bit higher, adding to its YTD outperformance vs. other major indexes. Nasdaq recorded its worst weekly drop since early September as tech stocks, particularly the “Mag 7”, declined amid ongoing regulatory uncertainty and concerns that the multiyear artificial intelligence-fueled rally losing steam. Tariff fears also continued to be a drag on equities as Trump reiterated plans to impose new levies on several trade partners by March 4.
The highlight of the week’s economic calendar came from the Labor Department’s release of its PCE price index on Friday morning. The Feds preferred inflation gauge showed prices rising on a year-over-year basis, prices rose 2.6%, down from December’s reading of 2.9%, but still above the Fed’s long-term target of 2%. The report also noted that while personal incomes rose 0.9% in January, spending contracted, a sign that consumers may be exercising caution in the face of persistent inflation and uncertainty. In addition, February Consumer Confidence Index on Tuesday fell 7 points to 98.3, the steepest monthly drop since August 2021. In other economic news, the Commerce Department reported that the U.S. GDP grew at an annualized rate of 2.3% in Q4 of 2024.
U.S. Treasuries generated positive returns heading into Friday amid the week’s generally disappointing economic data. Treasury yields were lower across most maturities.
The minutes of the ECB’s January meeting indicated that policymakers were confident that inflation was heading back to the 2% target but also called out “there was some evidence suggesting a shift in the balance of risks to the upside since December.”
Japan’s stock markets retreated over the week, with the Nikkei 225 Index falling 4.18% and the broader TOPIX Index down 1.99%. Domestic chip- and artificial intelligence-related stocks led the declines amid a sell-off in the U.S. technology space. Concerns also grew about how an escalation of tariffs by the U.S., including an additional 10% duty on Chinese imports, could impact the outlook for Japan’s economy and the path of further monetary policy normalization by the Bank of Japan (BoJ). The Japanese currency logged significant gains for the month of February, strengthening on expectations that the BoJ will raise interest rates again this year.
Mainland Chinese stock markets fell for the week after the U.S. ratcheted up measures targeting China’s economy. Most of the week’s declines occurred on Friday, a day after President Trump announced an additional 10% levy on Chinese imports effective March 4, along with 25% tariffs on Canada and Mexico. Analysts also expect China to reveal a fiscal deficit ratio of 4% of GDP—a record high target—and a consumer inflation target of around 2%, down from the previous year’s 3%, reflecting deflationary pressures on the economy. many investors are eyeing China’s Two Sessions, an annual political event in which Beijing unveils its economic priorities and targets for the coming year. China will likely maintain a gross domestic product growth target of “around 5%” for the third straight year.
Enjoy this week’s market round-up
Don’t Be A Rat Brain Trader – Be the Red Stripe Zebra !!
Trade Smart !
hpb
