The week ending 21 February 2025 proved turbulent for stock markets worldwide, with significant fluctuations and mixed performances across different regions. This article provides a comprehensive summary of the major stock market movements in the USA, Europe, Asia, India, and Oceania, highlighting key trends, influencing factors, and expert opinions.
USA
The US stock market experienced a volatile week, with the S&P 500 reaching fresh all-time highs before succumbing to selling pressure. Concerns about waning consumer spending, rising inflation expectations, and potential US government policy changes weighed on investor sentiment1.
Major Indices and Performance:
- S&P 500: Despite reaching record highs, the index fell 1.7% on Friday, marking its worst day in two months2.
- Dow Jones Industrial Average: The Dow Jones also dropped 1.7% on Friday, influenced by a confluence of factors, including a sharp pullback in UnitedHealth stock, Walmart’s weak outlook, and broader market concerns2.
- Nasdaq Composite: The tech-heavy Nasdaq tumbled 2.2% on Friday2.
- Russell 2000: The Russell 2000 index, which tracks smaller companies, fell 2.9% on Friday1.
Influencing Factors:
- Weaker-than-expected economic data: Reports on US business activity, consumer sentiment, and home sales fell short of expectations, raising concerns about the economy’s health1.
- The S&P Global US Services PMI unexpectedly shrank in February, representing the first contraction in 25 months1.
- The University of Michigan’s consumer sentiment index dropped to its lowest reading since November 20231.
- Existing home sales were weaker than economists had anticipated6.
- Inflation concerns: The University of Michigan’s consumer sentiment survey revealed rising inflation expectations, with consumers predicting a 3.5% annual price increase over the next five to 10 years7.
- Policy uncertainty: Investors remained cautious about potential policy changes under the Trump administration, including trade tariffs and domestic spending cuts5.
- The Federal Open Market Committee (FOMC) minutes indicated that trade and immigration policies could hinder the disinflation process1.
- Walmart’s weak outlook: A disappointing profit forecast from Walmart triggered a broad selloff in retail stocks, further impacting market sentiment4.
Expert Opinions:
- Analysts warn of potential market volatility and consolidation in the coming weeks5.
- Market strategists suggest that the market may have already priced in some of the tariff news, but adjustments are likely as new policies are announced9.
- Schwab analysts point to record highs occurring on lower-than-average volume as a potential sign of market fatigue and potential choppiness ahead8.
Europe
European stock markets displayed a mixed performance, with major indices showing modest gains and losses. Concerns about the upcoming German election, US trade policies, and global economic growth contributed to market uncertainty10.
Major Indices and Performance:
- FTSE 100 (UK): The FTSE 100 ended the week down 0.8%11.
- CAC 40 (France): The CAC 40 closed up 0.4% on Friday11.
- DAX 40 (Germany): The DAX fell 0.1% on Friday11.
- STOXX 600 (Europe): The STOXX 600 ended the week with a 0.2% loss, breaking its eight-week winning streak12.
Influencing Factors:
- German election: Investors were cautious ahead of the German election, with potential implications for European stability and economic policies10.
- US trade policies: Concerns about potential US tariffs on European exports and the impact on global growth weighed on market sentiment7.
- Earnings reports: Mixed earnings reports from European companies contributed to market fluctuations11.
- Standard Chartered exceeded market expectations for its fourth-quarter results, providing a boost to the FTSE 10011.
- Global economic outlook: Uncertainty about the global economic recovery and geopolitical tensions added to market volatility13.
- Russia-Ukraine War: The ongoing conflict and its potential impact on energy prices and regional stability influenced investor sentiment13.
Expert Opinions:
- Some analysts believe that European equities have already priced in potential positive catalysts, and further gains may be limited14.
- Others suggest that a potential ceasefire in Ukraine or fiscal stimulus in China could drive further upside7.
- Saxo Bank analysts highlight the potential for increased volatility due to US tariff-related newsflow15.
Asia
Asian markets presented a mixed picture, with Hong Kong leading gains while other indices faced declines. Strong performance in Chinese tech stocks, driven by Alibaba’s strong earnings report, boosted the Hang Seng Index12.
Major Indices and Performance:
- Hang Seng Index (Hong Kong): The Hang Seng surged 2.9%, reaching a three-year high12.
- Hang Seng Tech Index: The Hang Seng Tech Index, which tracks technology companies listed in Hong Kong, climbed 4.67%12.
- Nikkei 225 (Japan): The Nikkei 225 fell 0.43%12.
- Kospi (South Korea): The Kospi dropped 0.42%12.
- S&P/ASX 200 (Australia): The S&P/ASX 200 rose 0.59%12.
Influencing Factors:
- Alibaba’s strong earnings: Alibaba’s better-than-expected earnings report boosted optimism for Chinese tech stocks and drove the Hang Seng Index higher12.
- Japan’s inflation data: Japan’s inflation rate rose to 4% in January, its highest level since early 2023, potentially influencing the Bank of Japan’s monetary policy12.
- US tariff concerns: Lingering concerns about US trade policies and their impact on Asian economies contributed to market uncertainty12.
- Bank of Japan intervention: The Bank of Japan intervened in the bond market to curb rising yields, impacting the Japanese yen and potentially signalling further policy adjustments15.
Expert Opinions:
- Analysts suggest that the Hang Seng Index’s rally may be sustainable, driven by AI optimism and strong corporate earnings17.
- Market watchers are closely monitoring the Japanese yen’s strength and its potential impact on the Bank of Japan’s policy decisions12.
- Saxo Bank analysts note that the commodities sector is heading for a fourth weekly gain, led by natural gas, aluminium, and crude oil18.
India
Indian stock markets continued their downward trend, with the BSE Sensex and Nifty 50 extending losses for the fourth consecutive session. Concerns about US monetary policy, persistent foreign fund outflows, and potential changes in electric vehicle import rules weighed on investor sentiment19.
Major Indices and Performance:
- BSE Sensex: The Sensex fell 0.56% to close at 75,311.0619.
- Nifty 50: The Nifty 50 declined 0.51% to end at 22,795.9019.
Influencing Factors:
- US Federal Reserve policy: The hawkish tone in the US FOMC minutes raised concerns about prolonged higher interest rates in the US, potentially impacting liquidity in emerging markets like India20.
- Foreign fund outflows: Persistent selling by foreign institutional investors (FIIs) contributed to the market decline20.
- India is underperforming compared to its Asian peers due to these FII outflows, with a ‘sell India, buy China’ narrative gaining traction20.
- Potential EV policy changes: Reports suggesting that the Indian government might reduce import duties on electric vehicles triggered a sell-off in auto stocks20.
Expert Opinions:
- Analysts believe that Indian markets are likely to remain under pressure with continued volatility in the near term20.
- Market experts suggest that investors will closely monitor US economic data, corporate earnings, and policy decisions for future market direction21.
- Liquide analysts note that the Nifty has formed a bearish candle on the daily chart, with resistance at 22,850 and support at 22,70022.
Oceania
The Oceania stock market, primarily represented by the Australian S&P/ASX 200, showed resilience despite global market volatility. The index closed down 0.32% on Friday but recorded a weekly gain23.
Major Indices and Performance:
- S&P/ASX 200 (Australia): The S&P/ASX 200 ended Friday with a 0.32% decline but recorded a 1.68% year-to-date gain24.
Influencing Factors:
- Global market sentiment: The ASX 200 was influenced by global market trends, particularly the performance of US equities and commodity prices25.
- Strong company earnings: Positive earnings reports from Australian companies, including Telix Pharmaceuticals, supported the market25.
- Gold price: The gold price reaching a new record high provided a boost to ASX 200 gold shares25.
Expert Opinions:
- Analysts suggest that the ASX 200 may continue to attract buyers despite intraday dips26.
- Market experts remain optimistic about the Australian market, citing strong earnings and potential exemption from US tariffs26.
- Goldman Sachs maintains a buy rating on Telstra, suggesting that the company’s shares are a good value25.
US Trade Policies and Global Markets
The impact of US trade policies under the Trump administration reverberated across global markets. Concerns about potential tariffs on imports from China, Mexico, and Canada created uncertainty and influenced investor sentiment in various regions.
- US Market: The US market experienced a sell-off following the announcement of new tariffs, but it recovered after delays were announced27.
- Europe Market: The potential for US tariffs on European exports raised concerns about the region’s economic growth and market stability7.
- Asia Market: Uncertainty about the impact of US trade policies on Asian economies contributed to market volatility12.
- India Market: Concerns about US retaliatory tariffs added to the negative sentiment in the Indian market21.
- Oceania Market: The Australian market showed resilience, with some experts suggesting that the country might be exempt from US tariffs26.
Conclusion
The week ending 21st February 2025 witnessed a mixed performance across global stock markets. The US market, after reaching new highs, experienced a pullback driven by concerns about inflation, policy uncertainty, and weaker-than-expected economic data. Notably, there was a divergence in market breadth, with the S&P 500 showing strength while the Russell 2000, which tracks smaller companies, indicated weakness in the broader market1. In Europe, markets were subdued ahead of the German election and amid concerns about US trade policies. However, the potential settlement of the Russia-Ukraine war offered a glimmer of hope for improved regional stability and economic growth28. Asian markets were mixed, with Hong Kong surging on strong tech performance, particularly driven by Alibaba’s strong earnings. Meanwhile, Japan’s rising inflation and the Bank of Japan’s intervention in the bond market signalled potential shifts in monetary policy12. Indian markets continued to decline due to various factors, including US monetary policy, FII outflows, and potential changes in electric vehicle import rules. The ‘sell India, buy China’ narrative highlighted a shift in foreign investment flows in the region20. The Oceania market, primarily represented by the Australian S&P/ASX 200, showed resilience, supported by strong company earnings and the gold price rally.
Overall, markets may continue to experience fluctuations and unpredictable movements in the coming weeks as investors navigate a complex global landscape with potential policy changes, economic challenges, and geopolitical tensions. The impact of US trade policies, the evolving AI landscape with the emergence of new technologies like DeepSeek from China 29, and the potential for a resolution to the Russia-Ukraine war are among the key factors that will shape global stock market performance in the near future.
Disclaimer
The information provided in this article is for informational purposes only and should not be considered financial advice. Investment decisions should be made based on individual financial circumstances and risk tolerance. Investing in the stock market involves risk, including the potential loss of principal. Consult with a qualified financial advisor before making any investment decisions. The authors are not liable for any losses incurred as a result of relying on this information.
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