Market Pulse: Global Economic Trends and Updates

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Index Update

US markets ended the week on a steady note, with the three major averages showing little change on Friday. This comes as traders digest weaker-than-expected retail sales, which fell 0.9% last month, sparking concerns about the strength of US consumer spending. Harsh weather and wildfires in LA likely played a role in the decline. Meanwhile, President Trump's directive to propose new country-specific tariffs has investors on edge, although they're hopeful negotiations can avert the levies.

Market Movers

Energy and materials led the pack, while consumer staples took the biggest hit. Nvidia, Apple, and Tesla saw gains, but Broadcom took a tumble. The S&P is up 1.5% on the week, with the Dow and Nasdaq adding 0.9% and 2.2%, respectively. Money markets are now pricing in around 40bps of Fed cuts in 2025.

Commodities Update

Gold is shining bright, reaching $2,910 per ounce on Tuesday, driven by uncertainty over US tariffs and safe-haven demand. The precious metal is approaching its record high of $2,940, despite hawkish remarks from Fed officials capping further gains. Meanwhile, silver is also on the rise, nearing $32.5 per ounce, as global trade uncertainties and industrial demand support prices. Investors are keeping a close eye on the Fed's meeting minutes and the Russia-Ukraine ceasefire agreement, which could impact demand for safe-haven assets. With the US preparing reciprocal tariffs and a potential wider trade war looming, it's no wonder investors are turning to gold and silver for security. And let's not forget, China's addition of 357 gigawatts of solar and wind power in 2024 is a major driver of industrial silver usage.

Futures Update

US stock futures are off to a strong start on Tuesday, as investors return from the holiday weekend and look ahead to the release of the FOMC minutes for clues on monetary policy. Fed Governor Waller suggests holding off on rate cuts unless inflation trends change. This week's packed earnings schedule includes reports from Arista Networks, Occidental Petroleum, Analog Devices, Walmart, and Constellation Energy. Meanwhile, February's US manufacturing and services PMI reports will provide further insight into the economy. After a positive week last week, with the Dow up 0.55%, S&P 500 up 1.47%, and Nasdaq up 2.58%, investors are hopeful for more gains.

Macro Update

European bond yields are on the rise, with Germany's 10-year bond yield hitting 2.5%, the highest in nearly three weeks. This comes as traders weigh the potential impact of increased defense spending and higher bond issuance across the Eurozone on inflation and interest rates. The ongoing Ukraine war is a major factor, with the US considering scaling back support and pursuing negotiations with Russia. European governments are exploring alternative strategies, but the cost of strengthening defense and aiding Ukraine could be steep - an estimated $3.1 trillion over the next decade. Meanwhile, the European Central Bank is expected to cut interest rates, with the deposit rate possibly falling below 2% by 2026. The situation is being closely watched, with the S&P/ASX 200 Index dropping 0.66% on Tuesday. Investors are cautious, awaiting further developments on the monetary policy front.

Following the rally seen during Thursday's session, stocks turned in a relatively lackluster performance during trading on Friday. The major averages bounced back and forth across the unchanged line before eventually ending the day mixed. While the tech-heavy Nasdaq climbed 81.13 points or 0.4 percent to 20,026.77, the S&P 500 edged down 0.44 points or less than a tenth of a percent to 6,114.62 and the narrower Dow fell 165.35 points or 0.4 percent to 44,546.08. From a technical analysis standpoint, the S&P 500 shows signs of a possible short-term upward trend. It found support at the bottom of an ascending channel, and the Relative Strength Index (RSI) rebounded from its midpoint, suggesting a positive outlook. Investors are closely monitoring key levels: 6,170 as a potential resistance point, and 6,050 as a support level.