At the end of Friday, the Dow Jones Index (US30) added 1.39% (for the week +0.80%). The S&P 500 Index (US500) gained 1.59% (for the week -1.20%). The Nasdaq Technology Index (US100) is up 1.62% (for the week -3.62%). The latest data showed PCE prices rose by 0.3% month-over-month in January, matching expectations, while the annualized rate fell to 2.5% from 2.6% in December. The report also showed an unexpected 0.2% drop in consumer spending, the first decline in nearly two years, while incomes rose by 0.9%, the biggest increase in a year. Market attention has now turned to US trade policy.

In recent weeks, US tariff threats and doubts about whether its defense commitments will hold up have become the biggest concern for businesses, investors, and politicians. This means uncertainty, and lack of visibility is often associated with business caution when making investment decisions. The postponement of tariffs on Canada and Mexico supported the assumptions of those who believe that tariffs were a negotiating tactic and may have contributed to the complacency that until tariffs are in place, they are not worth believing in until they are seen. Nevertheless, in late February, when Trump reiterated his threat to impose tariffs on Canada and Mexico on March 4, the Dollar Index posted its biggest gain in three weeks and ended February at two-week highs.

After the White House announced a digital assets’ summit this week, President Trump took to the social media platform Truth to explain some of the details, specifically mentioning a strategic reserve that would include XRP, SOL, and ADA. All three “altcoins” rose sharply against this backdrop, pushing the broad market higher over the weekend.

Equity markets in Europe were mostly up on Friday. Germany’s DAX (DE40) rose by 0.002% (for the week +0.36%), France’s CAC 40 (FR 40) closed higher by 0.11% (for the week -0.33%), Spain’s IBEX 35 (ES35) gained 0.58% (for the week +2.91%), and the UK’s FTSE 100 (UK100) closed positive 0.61% (for the week +1.74%).

German inflation was unchanged at 2.3% in February, but the core rate fell to a more than three-year low of 2.6%, while French inflation fell more than expected to a four-year low of 0.8%. Meanwhile, inflation in Italy and Spain accelerated to 1.7% and 3.0%, respectively, in line with expectations. The ECB is expected to cut interest rates for the fifth consecutive time on Thursday and signal further cuts amid slowing inflation and weak economic growth.

British Prime Minister Keir Starmer said Britain, France, and Ukraine are working on a ceasefire plan to present to the United States. Starmer’s Sunday leaders’ summit contrasted with Ukrainian President Volodymyr Zelenskyi’s meeting at the White House on Friday. Zelensky won the support of European leaders after a contentious White House meeting Friday in which a rare earth metals deal was canceled and Trump told Zelensky to return when he was ready for peace. Starmer also promised to increase military spending to 2.5% of gross domestic product (GDP) by 2027. A cut in US aid could force Europe to take more responsibility for Ukraine’s security.

WTI crude oil prices rose to around $70.1 a barrel on Monday, helped by strong data on manufacturing activity in China, the world’s largest oil importer, as well as ongoing tensions between the US and Ukraine that could lead to supply disruptions. Traders were also concerned about Trump’s announcement of new tariffs on Mexican, Canadian, and Chinese goods, raising fears of weakening global demand.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) decreased by 3.55%, China’s FTSE China A50 (CHA50) lost 0.58%, Hong Kong’s Hang Seng (HK50) was down 2.26%, and Australia’s ASX 200 (AU200) was negative 1.49%.

According to experts, if the US imposes 10% tariffs on goods from China, it will force the People’s Bank of China (PBoC) to cut rates by 20-30 bps. At the same time, analysts believe that the PBoC will be forced to reduce the rate by 50 bps without tariffs due to weak economic growth. Thus, by the end of 2025, we may see a cumulative reduction in the PBoC rate by 70-100 bps. For Asian indices, this would be a fundamental message for growth.

The Australian dollar, often seen as a proxy for the yuan’s exchange rate, also benefited from stronger-than-expected Chinese PMI data, while investors awaited potential stimulus announcements from the National People’s Congress in Beijing this week. A private survey showed China’s manufacturing PMI rose to 50.8 in February from 50.1 in January, beating expectations of 50.3 and hitting a three-month high. Domestically, attention turned to Australia’s upcoming fourth-quarter economic growth data due for release on Wednesday, with a moderate improvement expected.