InvestMacro

On Monday, February 23, the US stock market was hit by a wave of sell-offs, resulting in a deep decline across major indices. By the end of trading, the Dow Jones (US30) fell by 1.66%, the S&P 500 (US500) dropped 1.04%, and the Nasdaq (US100) closed 1.13% lower. The primary pressure on the market came from a sharp shift in White House trade policy: after the Supreme Court blocked previous duties, Donald Trump utilized the rare mechanism of Section 122 of the Trade Act of 1974, setting a global tariff at 15%. Investors fear that this measure, which remains in effect for 150 days without Congressional approval, will trigger full-scale trade wars, a concern already confirmed by the European Parliament’s decision to suspend work on a trade agreement with the US.

In parallel with political risks, the technology sector was struck by fears regarding the disruptive impact of artificial intelligence on established business models. IBM shares plummeted 13.1% as a reaction to Anthropic’s launch of new Claude Code tools capable of automating the modernization of legacy code (COBOL), threatening a significant portion of IBM’s consulting and mainframe business. Similar dynamics were observed in the financial sector: American Express shares fell 7.2% after the publication of a sensational report by Citrini Research, which predicts massive white-collar job cuts due to AI implementation, inevitably leading to a decline in consumer spending and transaction volumes.

On Monday, the Canadian dollar (CAD) declined to the 1.37 mark against the US dollar, holding near monthly lows. The currency’s dynamics reflect the market’s attempt to balance the sharp tightening of US trade policy against weakening domestic inflation expectations. Short-term optimism sparked by the US Supreme Court’s decision to overturn previous duties was entirely neutralized by Donald Trump’s retaliatory move. On the commodities front, even a moderate strengthening of oil prices failed to support the “loonie.” Renewed protectionist risks and the threat of a large-scale trade confrontation with its largest partner outweigh any positive signals from the energy market.

The Mexican peso (MXN) weakened to 17.27 per US dollar, retreating from its mid-2024 peaks under the pressure of a new wave of American protectionism. The main factor for the decline was Donald Trump’s decision to invoke Section 122 of the Trade Act to introduce a 15% global tariff. This step, taken by bypassing the Supreme Court’s decision, creates serious risks for Mexico’s export model, as the 150-day tariff period could become a tool for heavy pressure on Mexico City regarding migration and security issues. Despite positive macroeconomic data from Mexico itself, where Q4 2025 GDP grew by 0.9% thanks to service sector resilience and industrial recovery, investors prefer to exit the peso.

Equity markets in Europe mostly declined on Monday. The German DAX (DE40) fell by 1.06%, the French CAC 40 (FR40) closed down 0.22%, the Spanish IBEX 35 (ES35) rose by 0.56%, and the British FTSE 100 (UK100) closed at negative 0.02%. The German market demonstrated weaker dynamics compared to other European platforms as investors reacted painfully to Donald Trump’s new tariff initiative. The situation is exacerbated by legal confusion. The European Parliament’s decision to freeze the ratification of the trade agreement with Washington until March triggered mass sell-offs in the Eurozone’s export-oriented industries. Investors are redistributing capital toward less volatile assets while awaiting official clarifications from Washington regarding the fate of existing transatlantic agreements.

WTI oil prices traded around $66.50 per barrel on Monday, holding near six-month highs. The market is in a state of tense anticipation, balancing signals of a possible diplomatic detente against threats of new trade barriers. Traders’ primary focus is on the meeting in Geneva at the end of the week, where the Iranian Foreign Minister and US Ambassador Steve Witkoff will attempt to find a way out of the nuclear impasse. Optimistic statements from Tehran regarding a reachable compromise have somewhat calmed investors; however, the risk of failed negotiations is still priced into current quotes.

Asian markets traded with mixed dynamics last week. The Japanese Nikkei 225 (JP225) and the Chinese FTSE China A50 (CHA50) did not trade yesterday, the Hong Kong Hang Seng (HK50) rose by 2.53%, and the Australian ASX 200 (AU200) showed a negative result of 0.61%. Market sentiment is largely defined by uncertainty surrounding Washington’s tariff policy. Donald Trump’s decision to introduce a 15% global tariff in response to the Supreme Court verdict and his threats against countries “playing games” with trade agreements are forcing investors to seek refuge in Chinese and Hong Kong protective government assets. Trump’s new flat rate may actually reduce the overall tariff burden on Chinese exports compared to previous “emergency” duties, which is preventing the market from entering a state of panic selling.

The yield on China’s 10-year government bonds decreased to 1.79% on Tuesday, February 24, returning to three-month lows. The return of investors after the Lunar New Year celebrations took place in an atmosphere of caution, caused by both external trade shocks and Beijing’s restrained stance. The People’s Bank of China (PBoC) maintained its Loan Prime Rates (LPR) for the ninth consecutive time at 3.0% for one-year and 3.5% for five-year loans, confirming that authorities do not plan aggressive policy easing in the near term, preferring targeted support measures for specific sectors.

Also in the spotlight were sensational reports from Japanese media regarding hidden mechanisms for supporting the yen. It was revealed that in January, the US authorities, on their own initiative, conducted “rate checks”, a procedure that usually precedes actual currency interventions. This operation was led by US Treasury Secretary Scott Bessent. Washington took this step without an official request from Tokyo, fearing that the political vacuum and volatility ahead of the recent general elections in Japan (held on February 8) could destabilize not only the Yen but also the global bond market.

On Thursday, trading on the US stock market concluded with a decline. By the end of the day, the Dow Jones index (US30) fell by 0.54%. The S&P 500 (US500) declined by 0.28%. The tech-heavy Nasdaq (US100) closed lower by 0.41%. The catalyst for profit-taking was the FOMC minutes, which pointed to the risk of prolonged deflation and the permissibility of additional policy tightening, heightening investor caution. Against this backdrop, long-term government bond yields rose. Rising commodity prices supported the energy sector, while banking stocks came under pressure.

European markets ended the day with a drop. Germany’s DAX (DE40) declined by 0.93%, France’s CAC 40 (FR40) closed down 0.36%, Spain’s IBEX 35 (ES35) fell by 0.99%, and the UK’s FTSE 100 (UK100) closed at negative 0.55%. Within the European region, investor sentiment is dictated by potential reshuffles in the financial leadership. Reports of a likely early resignation of Christine Lagarde as head of the ECB, as well as the resignation of Bank of France Governor François Villeroy de Galhau in June 2026, are creating a backdrop of political uncertainty. Despite the personnel rumors, a stable inflation level in the Eurozone suggests that the regulator will keep current monetary policy parameters unchanged until the end of this year.

WTI oil quotes closed in on the $66.5 per barrel mark, hitting half-year highs amid a sharp escalation of geopolitical tensions. The primary driver of growth is the risk of a large-scale military conflict between the US and Iran, fueled by statements regarding a potential forceful operation and Israel’s demands for a change in Tehran’s political course. The situation is exacerbated by a narrowing diplomatic space for maneuver and the potential threat of a blockade of the Strait of Hormuz, which is a key artery for one-third of the world’s maritime hydrocarbon exports. In parallel with foreign policy factors, price support came from unexpected data from the US Department of Energy, which recorded a rapid drop in domestic crude reserves by 9 million barrels. This significant decline in inventories during the second week of February completely refuted conservative analyst prognoses that had expected a moderate market surplus.

Natural gas prices (XNG) in the US stabilized around $3.0 per MMBtu, holding near four-month lows amid a noticeable weakening of the market balance. A key downward factor is the active recovery of production in the Lower 48 states, which in February approached historic highs, reaching 108.7 billion cubic feet per day (bcf/d). Despite continued LNG exports at record levels, total supply confidently covers current system requirements, neutralizing concerns regarding resource shortages. EIA data confirms that the rate of inventory decline is trailing both last year’s figures and the five-year averages. Although the current volume of reserves remains 6% below the norm, experts expect this gap to be fully eliminated by the beginning of March. The combination of excess production and expected warming deprives quotes of growth incentives, consolidating the downward trend in the gas segment.

Asian markets traded mostly higher yesterday. Japan’s Nikkei 225 (JP225) rose by 0.57%, China’s FTSE China A50 (CHA50) did not trade due to Lunar New Year celebrations, Hong Kong’s Hang Seng (HK50) also did not trade, and Australia’s ASX 200 (AU200) showed a positive result of 0.88%.
The New Zealand dollar (NZD) showed a notable weakness, settling at a four-week low near the $0.595 level. Pressure on the currency was exerted by the rhetoric of the new head of the Reserve Bank of New Zealand (RBNZ), Anna Breman, who, after maintaining the base rate at 2.25%, signaled no rush to tighten monetary conditions. Although inflation at the end of 2025 slightly exceeded the target range, reaching 3.1%, the regulator expressed confidence in its return to the 2% target within the year without aggressive intervention. A revision of investor expectations led to a sharp drop in the probability of a rate hike in the coming months: the chances of an increase in September plunged from 68% to 40%.

Bank Indonesia (BI) in February 2026 maintained its benchmark interest rate at 4.75%, which was fully in line with analyst projections. This decision by the regulator was dictated by the need to stabilize the national currency, which is under pressure near historic lows due to risks of sovereign rating downgrades by Moody’s and MSCI. Against a backdrop of global financial volatility, the central bank aims to keep inflation within the target corridor and ensure the sustainability of economic growth.

On Tuesday, trading on the US stock market concluded with moderate gains. By the end of the day, the Dow Jones Index (US30) rose by 0.07%. The S&P 500 (US500) climbed by 0.10%. The tech-heavy Nasdaq (US100) closed higher by 0.14%. The financial sector outperformed the broader market: shares of JPMorgan Chase and Citigroup strengthened following statements from FOMC representatives regarding the likely maintenance of tight policy, which supports expectations for net interest margins. Investors are now awaiting the publication of the regulator’s minutes and core PCE inflation data to assess the sustainability of the disinflationary trend.

The Canadian dollar (CAD) weakened to 1.367 per US dollar, retreating from a 16-month high reached in late January amid slowing inflation and deteriorating foreign trade conditions. Consumer price growth slowed to 2.3% in January, while the Bank of Canada’s (BoC) core indicator dropped to 2.4%. This reinforced expectations of a pause in policy tightening at a rate of 2.25% and narrowed the yield differential that had previously supported the currency. Additional pressure is coming from the commodities factor: oil quotes are being held back amid discussions within OPEC+ regarding a potential production increase starting in April.

European markets ended the day with gains. Germany’s DAX (DE40) rose by 0.80%, France’s CAC 40 (FR40) closed up 0.54%, Spain’s IBEX 35 (ES35) gained 0.60%, and the UK’s FTSE 100 (UK100) closed up 0.79%. The German DAX 40 closed Tuesday at 24,998 points, a one-week high, reflecting improved sentiment across European trading floors.

WTI oil prices held above $62 per barrel, breaking the recent decline as markets assessed the outcome of negotiations between the US and Iran regarding the nuclear program. Tehran reported reaching a general understanding on key points of a potential deal, while the American side announced the continuation of dialogue in Geneva. However, uncertainty remains: Iran temporarily restricted shipping in the Strait of Hormuz due to military exercises, and the US dispatched a second aircraft carrier to the region.

Platinum (XPT) prices dropped to approximately $2,000 per ounce, hitting a two-month low amid a general decline in the precious metals segment and reduced trading activity due to holidays in Asia and the US. Despite the slowdown in US inflation, which bolstered expectations of Fed rate cuts later this year, investors remain cautious ahead of the release of new data and the regulator’s minutes.

Natural gas (XNG) prices in the US fell by 5% to approximately $3.07 per MMBtu, hitting a low since October. Pressure on quotes was intensified by near-record production volumes and prognoses of warmer weather through early March, which weakens heating demand and allows for the accumulation of large inventories in storage. Average production in the Lower 48 states rose to 108.5 billion cubic feet per day (bcf/d) in February, up from 106.3 billion in January, with daily figures recently hitting 111 billion bcf/d, approaching historic highs. Additional market support comes from rising exports to LNG terminals, which increased to 18.6 bcf/d in February and could surpass the December record.

Asian markets traded without a uniform trend yesterday. Japan’s Nikkei 225 (JP225) declined by 0.42%, China’s FTSE China A50 (CHA50) will not trade for the entire week due to Lunar New Year celebrations, Hong Kong’s Hang Seng (HK50) also did not trade yesterday, and Australia’s ASX 200 (AU200) showed a positive result of 0.24%.

The New Zealand dollar (NZD) declined to $0.601 following the Reserve Bank of New Zealand’s (RBNZ) decision to maintain the key rate and confirm a dovish policy stance. The regulator signaled that supportive conditions will remain in the near term, and further steps will be gradual as the economy strengthens and inflation returns to the target level. Meanwhile, updated expectations allow for a possible 25 bp rate hike as early as the end of the year – significantly earlier than previous guidance for 2027.

There was no trading on the US stock market on Monday.

European markets ended Monday mixed, maintaining the subdued momentum of the previous week as investors assessed the impact of a strong euro and expectations that benchmark rates will remain unchanged. Germany’s DAX (DE40) declined by 0.46%, France’s CAC 40 (FR40) closed up 0.06%, Spain’s IBEX 35 (ES35) gained 0.99%, and the UK’s FTSE 100 (UK100) closed up 0.26%. Trading activity was low due to holidays in North America and China.

The Swiss franc (CHF) traded around 0.77 per US dollar, remaining near historic highs amid expectations that the Swiss National Bank (SNB) will maintain a loose monetary policy in the near term. Safe-haven demand continues to provide additional support to the currency, though its influence has diminished slightly of late. Preliminary Q4 GDP data showed economic growth of 0.2% following a 0.5% contraction in Q3. This points to the relative resilience of the Swiss economy even under external pressure, including the 39% tariffs imposed by the Donald Trump administration.

On Tuesday, silver (XAG) fell by more than 2% to drop below $76 per ounce, continuing a three-week correction amid low liquidity due to holiday closures in China, Hong Kong, and several other Asian countries. The speculative surge in January, largely driven by Chinese traders, has been replaced by a sharp reversal, prompting regulators to take measures to mitigate market risks. After reaching record levels above $120 in late January, prices fell toward $64 early this month due to the closing of leveraged positions and forced asset liquidations.

West Texas Intermediate (WTI) crude oil prices fluctuated near $63 per barrel on Monday following two consecutive weeks of declines. Markets are monitoring the second round of negotiations between the US and Iran amid an increased US military presence in the region and tough rhetoric from Donald Trump. Iran, for its part, has signaled a readiness to make concessions on its nuclear program in exchange for sanctions relief. Despite the geopolitics, pressure on prices persists due to oversupply. OPEC+ nations are discussing a potential production increase in April, while the International Energy Agency confirmed its projections of a significant oil surplus in 2026 and lowered its estimate for global demand growth.

Asian markets traded without a uniform trend last week. Japan’s Nikkei 225 (JP225) fell by 0.24%, China’s FTSE China A50 (CHA50) will not trade for the entire week due to Lunar New Year celebrations, Hong Kong’s Hang Seng (HK50) rose by 0.52%, and Australia’s ASX 200 (AU200) showed a positive result of 0.22%.

On Tuesday, the Australian dollar (AUD) fell toward $0.70 after the publication of the Reserve Bank of Australia (RBA) meeting minutes, which provided no clear guidance on the future interest rate trajectory. The regulator emphasized that future decisions will depend on incoming data and the balance of risks, noting that without further tightening, inflation could remain above the 2-3% target range for longer. Markets are now awaiting Q4 wage data and the January labor market report to assess the outlook for inflation and RBA policy.