Markets Last Week - 21/03/2025

U.S. Markets: Stocks Under Heavy Pressure  

Between March 4 and March 8, 2025, U.S. stock markets experienced ups and downs, driven by Federal Reserve policy signals and job market data. Fed Chair Jerome Powell's speech to Congress suggested a cautious stance on interest rate cuts, leading to mixed reactions. 

Despite the markets being down during the week, the US markets ended the week higher: 

• Dow Jones: +1.2%
• S&P 500: +0.5%
• Nasdaq Composite: +0.2% 

 Key Takeaway: 

• Short-term: The markets remains sensitive to Federal Reserve policy signals and labor market data.
• Long-term: Market pull backs are normal – infact the average drawdown in US markets has been nearly 13% a year.  However out of the past 35 years, we have had only 9 negative years during this time. 

Europe: Market Jitters Over Central Bank Moves  

The STOXX Europe 600 Index, which tracks stocks across Europe, went up by 0.56%, ending a two-week downwards trend. The increase was driven by hopes that the government would spend more money, but concerns about U.S. tariffs set for early April held the gains back. 

Key Takeaway: 

• Short-term: European markets reacted to central bank policy decisions.
• Long-term: Having a well-diversified portfolio helps manage regional economic risks over the long term.  Markets are priced off expected future earnings of the companies withing them.  Whilst the tarrifs are relevant today, it is unlikely that all European companies will fail because of them.  Companies within the market manage to propser even during hard times as they adapt to the chaning economic landscape!  

UK: Inflation and Interest Rate Stability 

The FTSE 100ended the week 0.17% higher. Inflation remains a concern, as energy costs and wages keep price levels high. The Bank of England held interest rates steady to balance inflation control with economic stability. 

 Key Takeaway: 

• Short-term: Inflation remains a challenge, influencing investor sentiment.
• Long-term: The UK economy has weathered past inflationary periods, and disciplined investing remains key.  

Asia: China’s Tech Sector Gains Momentum 

Mainland China's stock markets dropped as investors became more cautious after two weeks of gains. The CSI 300 Index, which tracks the largest companies in China, fell by 2%, and the Shanghai Composite Index dropped by 1.60%. In Hong Kong, the Hang Seng Index also went down by 1.13%. 

Key Takeaway: 

• Short-term: Government support is driving investor confidence in China’s markets. 

• Long-term: Global diversification provides opportunities beyond U.S. equities, reinforcing the value of broad-based investing. 

 How Markets Performed  

Stocks: U.S. markets bounced back from midweek declines.  

Tech: Semiconductor ETFs recovered after early losses.  

China: The Hang Seng Tech ETF outperformed U.S. tech stocks.  

Bonds: U.S. bond yields fell, while European bond yields rose due to higher government spending.  

Gold: Continued to rise as investors sought safe-haven assets. 

 Why Staying Invested Matters  

Market downturns can be unsettling, but history shows that long-term investors tend to benefit. Those who panic and sell often miss market recovery periods, which can significantly impact long-term returns.  

Market ups and downs are normal. The best strategy? Stay invested, diversify, and remain focused on your long-term financial goals.  

If you have any questions about your investments or market trends, we’re here to help.