Markets Last Week - 21/02/2025

U.S. Market Trends: Stocks Dip Amid Economic Concerns 

Last week, was a bit of a rollercoaster week for the U.S. stock market. After a solid start on Tuesday, with major indexes like the S&P 500 hitting new record highs midweek, things took a turn towards the end of the week. By Thursday and Friday, worries over tariffs and weaker consumer spending sent the market into a decline, wiping out earlier gains. 

One key moment was Walmart’s earnings report: While the retail giant posted strong results for the fourth quarter, its cautious outlook for the year ahead raised eyebrows about the broader economy’s health. This news, coupled with a surprising drop in retail sales, the biggest dip in almost two years, left the market feeling a little uneasy. 

As we know sentiment from week to week can change and none of the above is any reason to panic or start to sell down. 

Tariff Concerns and Consumer Confidence 

Economic data didn’t do much to lift spirits. A survey showed that homebuilders are feeling less optimistic, with high mortgage rates and housing costs taking a toll. New home construction also saw a nearly 10% drop from December. 

On the business side, the Purchasing Managers’ Index (PMI) revealed slower growth, with the services sector even contracting. Consumer confidence took a big hit too, with many fearing that tariffs could lead to higher prices, especially on long-lasting goods. 

Again, in times of uncertainty it makes sense not to panic or do anything rash.  There will always be bad news and good news coming from the market.  It’s important to remain invested as no one can predict what will happen. 

Bond Market Reactions 

Meanwhile, in the bond market, U.S. Treasury prices climbed after the Federal Reserve’s meeting minutes suggested there wouldn’t be any immediate rate hikes. By the end of the week, weaker economic data gave Treasuries an extra push. Corporate bonds, however, saw mixed results, with investment-grade bonds facing some pressure. 

With bond prices rising higher, it is an interesting time to be investing into this asset class as it is likely we will see a big surge in the secondary market prices when interest rates start to decline.   

Having a diversified portfolio and this matching your risk profile and goals that you wish to achieve is very important. 

Market Snapshot: 

• Dow Jones: 43,428.02 (-1,118.06, +2.08% YTD) 

• S&P 500: 6,013.13 (-101.50, +2.24% YTD) 

• Nasdaq: 19,524.01 (-502.77, +1.10% YTD) 

• Russell 2000: 2,195.35 (-84.63, -1.56% YTD) 

European Markets: Mixed Performance 

While European markets were more stable, with the STOXX Europe 600 Index edging up 0.26%, performance varied by country. Germany’s DAX fell 1% ahead of national elections, while Italy’s FTSE MIB saw a 1.17% increase. The UK’s FTSE 100 slipped 0.84%. 

Marginal increases and decreases in the week mean little over the longer run, we are more committed to long term growth of assets. 

Economic Trends in Europe 

In the Eurozone, business activity remained just above stagnation, with slight growth in February. Germany showed modest growth, but France struggled, and the rest of the region held steady. The UK’s economy stayed in positive territory, though the job market saw its biggest drop since 2020.  

UK Economy: Inflation and Retail Sales Rise 

The UK saw inflation rise faster than expected in January, with consumer prices jumping 3% from the previous year—driven by higher transport and food costs. Wages were up too, suggesting a stronger-than-anticipated labor market. 

Retail sales showed a glimmer of hope, jumping 1.7% in January, the first monthly increase since August. Most of this growth came from food sales, though spending on clothing and non-food items still struggled. 

Australian Market Update 

The Australian stock market saw a modest dip last week, with the ASX 200 dropping 27 points, closing 0.3% lower at 8,296. Banking stocks remained under pressure, and the Consumer Discretionary sector took the biggest hit, down 1.5%, as cautious consumer spending impacted retail and travel stocks.  

Looking ahead, the SPI Futures Index points to a weaker start to the week, with a 64-point drop. The Australian dollar also fell 0.7% against the U.S. dollar, while the 10-year treasury yield dipped slightly to 4.51%. 

Despite these short-term movements, Australia's market fundamentals remain strong. Steady employment figures and resilient corporate earnings continue to support long-term investment confidence. 

 Staying Invested: Why Market Trends Shouldn't Dictate Your Strategy 

The ups and downs in the market can spark uncertainty, but history tells us that long-term investors who stay the course typically come out on top. Reacting to short-term market movements can lead to decisions driven more by emotion than strategy. 

Rather than jumping on every headline, the best strategy is sticking with a disciplined, long-term investment plan. Markets have consistently rewarded patience, with downturns often offering opportunities rather than reasons to panic. Focus on building a well-diversified portfolio that aligns with your long-term financial goals, not just the latest news cycle. 

If you're unsure about how current trends may impact your investment strategy, our team of experienced advisers is here to help guide you through these turbulent times. 

If you're uncertain about your investment strategy or need guidance on how to manage market conditions, speak to one of our experienced advisers today.