InvestMacro

At the end of Tuesday, the Dow Jones Index (US30) was up 0.37%. The S&P 500 Index (US500) was down 0.47%. The Nasdaq Technology Index (US100) fell by 1.24%. Investor sentiment continued to be pressured by geopolitical and trade tensions after President Trump confirmed the imposition of tariffs on Mexican and Canadian imports, previously delayed by a month. There were also reports that the US was tightening restrictions on China’s chip industry. The technology, communication services, and utilities sectors fared the worst, while real estate, materials, and consumer staples were the gainers.

Today, investors are awaiting Nvidia’s earnings report, which could be a new catalyst for the market. Nvidia, like other AI-related stocks, has recently come under pressure due to concerns over China’s DeepSeek project, raising doubts about the sustainability of the AI rally. Market participants are also awaiting the second estimate of fourth-quarter GDP growth at the end of the week, as well as the upcoming PCE Price Index report, which will provide key insights into the outlook for the economy and monetary policy.

BTC/USD fell below $88,000, its lowest in 3 months, as concerns over a slowing US economy, rising inflation, and Trump’s aggressive trade policies eroded investor confidence. Bitcoin has fallen about 20% since Trump’s inauguration in January as initial optimism over his digital-asset-friendly stance fades. Other major digital assets, including ETH and SOL, have also declined, and bitcoin ETFs saw record outflows of nearly $1 billion in February. Industry issues such as the $1.5 billion hack of Bybit also dampened sentiment.

Equity markets in Europe traded flat on Tuesday. Germany’s DAX (DE40) fell by 0.07%, France’s CAC 40 (FR40) closed down 0.49%, Spain’s IBEX 35 (ES35) added 0.80%, and the UK’s FTSE 100 (UK100) closed positive 0.11%. Eurozone wages were 4.12% year-on-year in the fourth quarter of 2024, slowing from the 31-year high of 5.43% recorded in the previous quarter. The data brought some relief to European Central Bank policymakers as they continue their efforts to contain inflation while supporting sluggish economic growth. The ECB recently announced its plans to continue easing monetary policy, with money markets anticipating at least two interest rate cuts before the end of December.

The formation of a new government coalition in Germany also remains in the spotlight. Conservative leader Friedrich Merz intends to strike an agreement with the SPD “in the near future,” while talks on increased defense spending continue. On the corporate front, shares of Siemens Energy and Infineon Technologies are down 7.3% and 2.6% respectively amid concerns over US restrictions on the Chinese technology sector and ahead of Nvidia’s earnings report.

WTI crude oil prices were trading near $69 a barrel on Wednesday, near their lowest level since last December, as US economic concerns and broader market uncertainty put pressure on the outlook for energy demand. President Trump’s foreign policy also put pressure on oil, with the prospect of a peace deal between Russia and Ukraine raising expectations of the lifting of Russian sanctions, which would pave the way for more Russian oil exports.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) fell by 1.39%, China’s FTSE China A50 (CHA50) lost 1.14%, Hong Kong’s Hang Seng (HK50) decreased by 1.32%, and Australia’s ASX 200 (AU200) was negative 0.68%. Hong Kong stocks rose by 2.3% on Wednesday, reversing a weak session the previous day amid strong gains across sectors. The mood was upbeat as the city’s Financial Secretary Paul Chan is due to unveil his plan to reduce Hong Kong’s deficit while mitigating the negative effects of a slowing Chinese economy and rising trade tensions with the US.

The Australian dollar fell below $0.633 on Wednesday, nearing two-week lows, as weaker-than-expected economic data fueled expectations of further interest rate cuts by the Reserve Bank of Australia (RBA). Australia’s monthly Consumer Price Index was unchanged at 2.5% in January, defeating expectations of a slight rise to 2.6%. On the external front, the Aussie faced additional pressure from US President Donald Trump’s tariff proposals, which could disrupt global trade and negatively impact export-dependent economies such as Australia.

At the end of Monday, the Dow Jones Index (US30) added 0.08%. The S&P 500 Index (US500) was down 0.50%. The Nasdaq Technology Index (US100) decreased 1.21%. Among individual stocks, Palantir, a key player in defense AI, fell sharply by 10.5% and is now down nearly 30% from its peak. Nvidia also fell by 3.1% as it prepares to release its earnings report on Wednesday, while Microsoft lost 1% amid concerns about slowing data center spending growth. On the other hand, Apple rose by 0.6% as it announced plans to invest $500 billion in the US over the next four years and plans to hire 20,000 new employees.

Bitcoin prices fell below $92,000, hitting their lowest level since last November. The collapse in risk assets began last week amid growing concerns about the outlook for the US economy, amplified by President Donald Trump’s escalating tariff threats and the Federal Reserve’s hawkish stance on interest rates. Meanwhile, MicroStrategy bought another 20,365 bitcoins worth nearly $2 billion, bringing the total number of bitcoins to 499,096 or roughly $33.1 billion.

Equity markets in Europe traded flat on Monday. Germany’s DAX (DE40) rose by 0.62%, France’s CAC 40 (FR40) closed down 0.78%, Spain’s IBEX 35 (ES35) added 0.47%, and the UK’s FTSE 100 (UK100) closed negative 0.01%. In Germany, Friedrich Merz’s conservatives won the election. Investors are closely watching for signs of Germany’s fiscal strategy, while economists remain divided on the government’s ability to enact significant economic reforms.

Ukraine and the United States are in the final stages of negotiating a mineral deal considered key to ending Russia’s three-year war in Ukraine. Kyiv and Washington are interested in US access to Ukraine’s underground wealth, but President Volodymyr Zelenskyy said any deal must include specific security guarantees. Zelenskyy refused to sign an initial draft of the agreement earlier this month, sparking displeasure at the White House.

WTI crude prices climbed above $71 a barrel on Tuesday, posting a second straight day of gains after the US imposed additional sanctions on oil trade from Iran, adding to fears of dwindling global supplies. On Monday, the US imposed sanctions on brokers, tanker operators, and shipping companies involved in the sale and transportation of Iranian oil, affecting 22 individuals and 13 vessels based in China, the UAE, India, and Hong Kong. This is the second round of sanctions as President Donald Trump seeks to zero out Iran’s crude oil exports to prevent the country from obtaining nuclear weapons.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) rose by 0.26%, China’s FTSE China A50 (CHA50) fell by 0.37%, Hong Kong’s Hang Seng (HK50) lost 0.58% and Australia’s ASX 200 (AU200) was up 0.14%. Hong Kong stocks fell 1.4% in Tuesday morning trading, marking a second session of sharp declines amid losses in the broad sector, especially consumer discretionary and technology. Traders retreated from risky assets after the US stepped up restrictions on Chinese investment and continued to impose tariffs on Canada and Mexico. Caution also intensified ahead of China’s official PMI data for February to be released over the weekend, with the reading expected to be lower due to the impact of the New Year’s Eve holiday break.

The offshore yuan remained weak around 7.26 per dollar as investors remained cautious amid escalating trade tensions between the US and China. President Donald Trump is reportedly planning to tighten controls on chip exports to China following a recent executive order to restrict Chinese investment in technology and other strategic US industries.

The Australian dollar traded near US$0.635 on Tuesday, remaining under pressure after falling for two consecutive sessions, driven by US President Donald Trump’s recent comments on tariffs that raised fears of a possible global trade war. On Monday, Trump said tariffs on Canada and Mexico “will be imposed” as soon as the one-month delay period ends next week. Domestically, investors are also awaiting Australia’s monthly inflation report on Wednesday, which is expected to provide crucial insight into the future direction of monetary policy.

On Friday, the Dow Jones Index (US30) declined by 1.69% (for the week -2.89%). The S&P 500 Index (US500) fell by 1.71% (down -1.67% for the week). The Nasdaq Technology Index (US100) was down 2.06% (week-to-date -1.93%). The US stocks fell on Friday as economic data heightened concerns about a slowing US economy and persistent inflation, prompting investors to seek safer assets. Consumer sentiment also suffered, with the University of Michigan Index falling to 64.7, reflecting growing concerns about inflation, which consumers expect to rise to 4.3% next year. Meanwhile, S&P Global’s US manufacturing PMI rose to 51.6 in February 2025 from 51.2 in January, beating market expectations of 51.5, preliminary estimates showed. This is the highest reading since June 2024, indicating the sector’s continued recovery.

Mexico’s GDP contracted by 0.6% in Q4, the sharpest contraction since Q3 2021, underscoring the weakness in the economy. Nevertheless, strong remittances, fiscal discipline and Mexico’s attractiveness for asset transactions are supporting the peso, while dollar softness is generally adding to its resilience.

In Canada, a 0.4% decline in January retail sales, the first in seven months, points to a slowdown in consumer spending after a boom in December, raising concerns about domestic market dynamics. In addition, lingering uncertainty over US tariff threats targeting a significant portion of Canadian exports has dampened the outlook for loonie demand. Conversely, strong inflationary pressures have highlighted the Bank of Canada’s challenge in balancing growth and price controls.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) fell by 0.12% (week-to-date -1.34%), France’s CAC 40 (FR40) closed up 0.39% (week-to-date -0.33%), Spain’s IBEX 35 (ES35) lost 0.12% (week-to-date +0.06%), and the UK’s FTSE 100 (UK100) closed negative 0.04% (week-to-date -0.84%). European equities closed slightly higher, retreating from record highs reached earlier in the week. Markets were assessing the latest PMI data and corporate reports, and positioned ahead of the German elections. Friedrich Merz announces his victory in the German elections, while Scholz concedes defeat. Friedrich Merz, the leader of Germany’s conservative opposition, is expected to form a coalition government aimed at fiscal reforms. Also, Friedrich Merz actively supported Ukraine and condemned the Russian invasion during the election campaign. On February 24 (the anniversary of Russia’s invasion of Ukraine), many heads and officials of European countries will come to Kyiv to discuss the situation on the further settlement of the bloody conflict. In turn, the British prime minister will travel to the United States on Monday to present his plan for a settlement of the conflict.

Iraq’s oil ministry announced that it has completed all necessary procedures to resume oil exports through the Iraqi-Turkish pipeline, signaling a possible resolution to the nearly two-year dispute that has disrupted regional crude flows. Traders also continue to keep an eye on talks to end the war in Ukraine, as a peace deal could lead to an easing of sanctions on Russian oil, potentially boosting global supply. Meanwhile, in the Middle East, the Gaza ceasefire is facing problems, with Hamas accusing Israel of jeopardizing a five-week truce by delaying the release of Palestinian prisoners. The first phase of the truce ends in early March, and details of a planned follow-up phase have yet to be agreed.

Asian markets traded flat last week. Japan’s Nikkei 225 (JP225) was down 0.81%, China’s FTSE China A50 (CHA50) added 2.83%, Hong Kong’s Hang Seng (HK50) increased by 3.18%, and Australia’s ASX 200 (AU200) was negative 2.82%.

Singapore core consumer prices in January 2025 came in at 0.8% y/y on an annualized basis, down sharply from a revised 1.7% y/y in the previous month and below market estimates of 1.5% y/y. This is the lowest core inflation rate since June 2021, mainly due to lower inflation in almost all major categories.

The New Zealand dollar rose to around $0.577 on Monday, rebounding from the previous session’s losses and trading at a more than two-month high after domestic data showed strong retail sales. New Zealand’s Q4 2024 retail sales rose by 0.9% quarter-on-quarter, the biggest increase in three years, following a revised figure for the previous period. This supported expectations of a slower pace of rate cuts, consistent with the RBNZ’s statement last week that future cuts are likely to be smaller and that the easing cycle is nearing completion.

The Dow Jones Index (US30) fell by 1.01% on Thursday. The S&P 500 Index (US500) was down 0.43%. The Nasdaq Technology Index (US100) fell by 0.48%. Despite beating earnings expectations, Walmart’s cautious outlook for fiscal year 2026 caused the company’s stock to fall 6.5%, pulling down other retailers such as Target (-2%) and Costco (-2.6%). Investor sentiment deteriorated further when Palantir’s shares fell 5.3% amid reports of impending Pentagon budget cuts and a new divestment plan by its CEO.

Banxico minutes signaled cautious easing amid global uncertainty. The minutes revealed that several board representatives expected a 50bp rate cut at the March 27 meeting if disinflation continues, signaling a potential acceleration in the easing cycle.

Equity markets in Europe were mostly falling on Thursday. Germany’s DAX (DE40) was down 0.53%, France’s CAC 40 (FR40) closed up 0.15%, Spain’s IBEX 35 (ES35) added 0.29%, and the UK’s FTSE 100 (UK100) closed negative 0.57%. European stocks closed mostly lower on Thursday amid mixed corporate earnings data, while markets continued to assess the impact of potential trade barriers from the US and increased defense spending from EU members. Airbus lost 2.3% after reporting pessimistic results and saying it may have to postpone deliveries to the US to focus on other customers if the US government continues to impose tariffs. At the same time, Mercedes Benz reported a 40% drop in sales of its automotive division in 2024. On the other hand, Schneider Electric jumped 3% after it posted record sales and earnings in 2024 and also provided strong expectations for 2025.

WTI crude oil prices rose to $73 a barrel on Thursday on the back of a weaker dollar and continued risks of supply cuts. OPEC+ delegates said they may postpone supply increases, citing concerns over market volatility as cartel members have previously failed to cut production to target levels. On the other hand, the latest EIA data showed that US crude inventories rose by 4.6 million barrels in the second week of February, exceeding market expectations for a 3 million barrel increase, and marking the fourth consecutive increase in inventories.

Asian markets were mostly down on Thursday. Japan’s Nikkei 225 (JP225) decreased by 1.24%, China’s FTSE China A50 (CHA50) was down 0.10%, Hong Kong’s Hang Seng (HK50) lost 1.60% and Australia’s ASX 200 (AU200) was negative 1.15%. Alibaba’s stock price rose more than 9% to a 3-year high after the company reported its strongest revenue growth in more than a year. The Hang Seng Index hit its highest in 19 weeks on Friday, kicking off its sixth consecutive week of gains and marking its longest winning streak in nearly a year, up about 2% thus far. Enthusiasm for China’s artificial intelligence sector, especially after the emergence of DeepSeek, continues to boost sentiment. Meanwhile, Beijing this week encouraged foreign companies to invest in the Chinese stock market, expecting foreign capital to encourage long-term investment.

The Australian dollar rose to around $0.64 on Friday, hitting its highest level in ten weeks, as strong economic data bolstered expectations of a more gradual easing cycle from the Reserve Bank of Australia. The data showed that private sector growth in Australia continued for the fifth consecutive month in February, with both manufacturing and services sectors maintaining positive momentum.

The offshore yuan slid to 7.24 per dollar despite the People’s Bank of China pledging to support the currency amid mounting pressure from a strengthening US dollar. In an attempt to stabilize the yuan, the PBOC has pledged to increase cross-border use of the currency and expand the offshore yuan market.

Malaysia’s annual inflation rate in January 2025 stood at 1.7%, unchanged for the second consecutive month and in line with market estimates. The rate remains the lowest in the past eleven months. Core consumer prices, excluding volatile fresh food and administrative expenses, rose by 1.8% y/y in January after rising 1.6% in December. On a month-on-month basis, consumer prices rose by 0.1%, maintaining the same pace as in December.

The Dow Jones (US30) was up 0.16% on Wednesday. The S&P 500 Index (US500) was up 0.24%. The Nasdaq Technology Index (US100) was up 0.05%. The minutes from the Fed’s January meeting emphasized that policymakers are drawing attention to the need for more evidence of sustained disinflation but warned of inflation risks from potential changes in trade, immigration, geopolitical shocks, and high household spending. The minutes echoed Chairman Powell’s previous statement that the Fed was in no hurry to cut rates further. At the same time, President Donald Trump announced plans to impose 25 percent tariffs on imports of automobiles, semiconductors, and pharmaceuticals beginning April 2. Investors are currently factoring in one rate cut for 2025, with some suggesting the possibility of a second.

The Mexican peso (MXN) weakened to 20.4 per US dollar, nearing a three-year low, amid increased risk aversion following renewed tariff threats from US President Donald Trump. The peso was also pressured by the Bank of Mexico’s (Banxico) recent 50 bps rate cut to 9.50% and its recommendations for further easing, which could narrow the policy gap with the Fed, whose cautious stance reflects stalled disinflation.

Equity markets in Europe mostly fell on Wednesday. Germany’s DAX (DE40) fell by 1.80%, France’s CAC 40 (FR40) closed down 1.17%, Spain’s IBEX 35 (ES35) lost 1.63%, and the UK’s FTSE 100 (UK100) closed 0.63% yesterday. On the political front, European leaders held a second, larger summit in Paris to discuss defense spending plans after US authorities signaled a reduction in defense integration and a softening stance towards Russia.

WTI crude prices fell below $72 a barrel on Thursday, halting three days of gains, after an industry report showed another increase in US crude inventories. API data showed that US crude inventories rose by more than 9 million barrels last week, well above expectations for a 2.8 million barrel increase. If official data is confirmed later today, this could be the fourth consecutive weekly increase.

The US natural gas (XNG) prices climbed to $4.3/MMBtu, nearing a two-year high reached on January 16, as extreme cold weather boosted heating demand and froze oil and gas wells, reducing production. Over the past 13 days, production has fallen by 6.7 Bcf/d to a four-week low of 100.1 Bcf/d.

Palladium (XPD) prices climbed above $1,000 an ounce, extending their 13% gain this year, led by the precious metal’s rally amid growing trade war fears. US President Trump’s tariff threats against countries that continue to impose duties against the US have raised fears of a contraction in global trade, prompting investors to buy safe-haven assets. At the same time, dovish policies from central banks, including the ECB, PBoC, and others, also supported prices.

Asian markets were mostly declining on Wednesday. Japan’s Nikkei 225 (JP225) was down 0.27%, China’s FTSE China A50 (CHA50) was up 0.26%, Hong Kong’s Hang Seng (HK50) decreased by 0.14% cheaper, and Australia’s ASX 200 (AU200) was negative 0.73% for yesterday.

China’s central bank (PBoC) left key lending rates unchanged for the fourth consecutive month in February 2025 amid fluctuations in the yuan and the continued impact of US President Trump’s aggressive trade policies. The one-year prime rate, which serves as a benchmark for most corporate and home loans, remained unchanged at 3.1%, while the five-year prime rate, used as a benchmark for real estate mortgages, remained unchanged at 3.6%. These rates remain at record lows after declines in October and July 2024.

Malaysia’s trade surplus narrowed to MYR3.6 billion in January 2025 from MYR10.2 billion in the same month in 2023, well below market estimates that suggested an increase of MYR14.1 billion. This was the smallest trade surplus since April 2020, when the trade balance showed a deficit, mainly due to a surge in imports.

Australia’s seasonally adjusted unemployment rate rose to 4.1% in January 2025 from December’s 4.0%, matching market estimates. This is the highest unemployment rate since October last year, as the number of unemployed rose by 23,400 to 627,500.