Markets Last Week - 07/03/2025

United States: Market Volatility Amid Geopolitical Uncertainty

Stock markets had a rough week due to concerns over global politics and mixed messages on U.S. trade policy. The S&P 500 is set for its worst week since September, with tech companies like Nvidia taking a hit.

However, Broadcom gave investors some relief with strong earnings. The Federal Reserve remains in the spotlight as inflation data influences decisions on potential interest rate cuts.

Key Takeaway: 

• Short-term: Market fluctuations driven by uncertainties about tariffs and upcoming economic data figures created volatility but should not be a cause for concern.
• Long-term: Staying invested through volatility allows investors to benefit when markets recover. Remember: The best market days often follow the worst ones.

Europe: Defense Spending Boosts Stocks

European markets performed well, especially in Germany, where a major defense spending plan pushed stocks higher. However, the cost of this spending has led to a jump in German bond yields.

The Eurozone interest rate declined by 25 BPS.

Key Takeaway: 

• Short-term: Optimism is driving stock gains, but rising debt levels could bring challenges.
• Long-term: Diversifying your portfolio by investing in a mix of global markets helps spread risk and capture growth opportunities.

United Kingdom: A Mixed Economic Picture

The UK market ended the week with mixed results. While London’s FTSE 100 showed some recovery on Friday, it still closed down 1.5% for the week. Other indexes, like the FTSE 250 and AIM All-Share, also experienced losses.

Global concerns, such as worries over tariffs, continued to weigh on market performance. Despite this, the recovery seen towards the end of the week offers a glimmer of hope.

Key Takeaway: 

• Short-term: The UK market is facing challenges but remains resilient.
• Long-term: A well-balanced portfolio can help you through economic shifts while capturing long-term growth potential.

Asia Pacific

Chinese tech stocks were a bright spot this week, helping push the Hang Seng Tech ETF higher. Meanwhile, Japan’s stock was almost flat, with currency fluctuations balancing minor losses.

Key Takeaway: 

• Short-term: Chinese tech stocks are holding strong, but the broader market remains uncertain.
• Long-term: A diversified investment approach helps manage risks from regional ups and downs.

U.S. Economy: Mixed Signals

Personal income grew by 0.9% in January, helped by Social Security adjustments. However, consumer spending dropped slightly, with fewer people buying durable goods. Inflation came in slightly higher than expected, which could influence Federal Reserve decisions on interest rates.

Key Takeaway: 

• Short-term: The Federal Reserve may adjust interest rates based on inflation trends.
• Long-term: Interest rate changes impact markets temporarily, but investors who stay committed to their plans tend to do well over time.

Jobs and Manufacturing: Signs of a Slowdown?

Unemployment claims dropped to 221,000, showing a strong labor market overall, but claims from federal workers increased. Meanwhile, manufacturing activity slowed, hinting at weaker demand.

Key Takeaway: 

• Short-term: The labor market remains mostly strong, but some areas are softening.
• Long-term: Employment trends affect the economy, but markets typically recover from temporary slowdowns.

• Tech Stocks: Semiconductor ETFs took a hit due to economic concerns, though Broadcom’s strong earnings helped stabilise the sector.
• S. Stocks: The Nasdaq 100 and S&P 500 saw selling pressure.
• Global Stocks: European investments helped balance out weaker U.S. performance.
• Asia: Chinese tech stocks stood out as strong performers.
• Japan: Little movement, as currency shifts offset minor stock declines.
• UK: Financial and energy sectors remained stable, while consumer confidence weighed on growth.
• Gold: Gained value as investors sought safety.
• Bonds: Some losses in long-term Treasury funds, but overall performance remains solid.

• U.S. Inflation Data: A crucial update on price pressures and economic stability, which could impact Federal Reserve interest rate decisions.
• Bank of England Interest Rate Decision: Potential effects on the UK economy and inflation outlook.
• CPI Data Report: The latest Consumer Price Index data will provide insights into inflation trends, influencing future monetary policy and economic forecasts.

Market fluctuations are inevitable, and while it’s natural to feel uneasy during periods of volatility, reacting impulsively can hurt long-term success. Staying calm and committed to your investment plan is key.

History shows that those who remain disciplined, ride out the ups and downs, and keep their focus on the bigger picture tend to see the most significant returns over time. Patience and consistency are essential to achieving lasting success in the market.

If you have any questions about your investments or the market, we’re here to help. Get in touch with one of our advisers today.