Global News Summary: 24 Feb to 1 Mar 2025

United States (USD)

• Market and Economic Sentiment:

• US stocks fell sharply early in the week, posting their worst two-month performance due to weak economic data, trade war concerns, and declining consumer sentiment.

• The S&P 500 fell 1.7% on 22 February, its largest drop of 2025, while Nasdaq 100 declined 2.1%.

• By 1 March, markets rebounded, with the S&P 500 and Nasdaq 100 gaining 1.6%, and Dow Jones up 1.4%.

• Trade and Tariffs:

• Trump's tariffs expanded:

• New 10% tariffs on China and 25% levies on Mexico and Canada from next week.

• 25% tariffs threatened on the EU,

• US-Canada-Mexico Relations:

• Trump confirmed tariffs on Canada and Mexico are “moving along rapidly,” leading to fears of supply chain disruptions.

• Trump-Zelenskiy Conflict:

• A heated meeting between Trump and Zelenskiy led to the cancellation of a US-Ukraine minerals deal, worsening diplomatic relations.

• Federal Reserve and Inflation:

• Consumer spending fell 0.5%, the largest decline in nearly four years.

• Core PCE inflation rose 0.3% MoM, reaching 2.6% YoY, the lowest since early 2021.

• Treasury yields fell, with the 10-year yield declining to 4.21% by the end of the week.

• Fed policymakers remain divided on whether Trump’s tariffs will fuel inflation, with Christopher Waller stating price rises would be "modest and non-persistent."

• Legislative and Fiscal Changes:

• House of Representatives passed a budget resolution calling for trillions in tax and spending cuts.

• Trump introduced a $5 million “gold card” for permanent residency, granting “green card privileges plus” to wealthy foreigners.

• US launched a probe into copper dumping, paving the way for potential tariffs on imported metals.

United Kingdom (GBP)

• Economic Growth and Jobs:

• UK GDP grew 0.1% in Q4 2024, exceeding expectations of a 0.1% contraction, giving Labour a modest boost.

• Bank of England Governor Andrew Bailey warned the economy remains "static", despite the positive GDP figures.

• Recruitment and Employment data weakened, with a report showing the UK economy lacks hiring momentum.

• Trade Relations:

• Trump suggested Britain could avoid tariffs if a trade deal is secured but failed to guarantee security commitments for Ukraine.

• Britain and India relaunched trade deal negotiations, with British investment minister Poppy Gustafsson pitching the UK as a top destination for Indian capital.

• Housing Market:

• The price gap between UK houses and flats hit a 30-year high, as concerns over cladding and rising service charges dampen demand for apartments.

• Defence Spending:

• Prime Minister Keir Starmer pledged £6bn for defence, funded by foreign aid cuts, as he seeks to counter Russia's threat.

Eurozone (EUR)

• Economic and Trade Policy:

• The European Central Bank (ECB) is on track to cut rates to 2% by summer, but future decisions remain uncertain.

• ECB officials were advised to stop publicly debating interest rates, with inflation concerns still present.

• Germany’s Political Shift:

• Friedrich Merz’s CDU/CSU bloc won the German elections, promising to reduce reliance on the US and reform the country’s borrowing cap to allow increased defence spending.

• German investor sentiment rose sharply, with the Ifo expectations index climbing to 85.4 in February.

• EU-US Trade Tensions:

• The EU refused to adopt Trump's confrontational stance towards China, with Spain urging Brussels to forge its own path.

• The EU considered countering US steel and aluminium tariffs with its own measures.

Japan (JPY)

• Economic Growth and Monetary Policy:

• Japan’s Q4 GDP rose 2.8% MoM (Q3: +1.77%), driven by business investment and trade, keeping the Bank of Japan (BOJ) on track for further rate hikes.

• Tokyo’s inflation slowed to 2.2% YoY in February, down from previous estimates, but BOJ is still expected to tighten policy further.

• Bank of Japan officials supported gradual rate hikes, boosting the yen to a four-month high.

China (CNY)

• Trade and Investment:

• China imposed retaliatory tariffs worth $14bn on US goods, escalating the trade war.

• Chinese President Xi reassured private entrepreneurs that their sector remains vital to the economy.

• Beijing stabilised the yuan's exchange rate to mitigate trade war shocks.

• Property Market:

• New-home price declines slowed for the fifth straight month in January, showing tentative stabilisation.

Australia & New Zealand (AUD & NZD)

• Monetary Policy:

• Reserve Bank of Australia (RBA) cut rates by 25bps to 4.1%.

• Reserve Bank of New Zealand (RBNZ) slashed rates by 50bps to 3.75%, signalling further cuts to revive economic growth.

• Trade Policy:

• Australia sought an exemption from Trump’s steel and aluminium tariffs, with Trump reportedly considering it.

Artificial Intelligence (AI)

• US AI Policy and Corporate Developments:

• Trump considered tariffs on countries imposing digital services taxes on US tech firms, potentially escalating tensions with Europe.

• Microsoft warned that US export controls on AI chips could push allies towards Chinese technology.

• OpenAI launched GPT-4.5, with improved accuracy and fewer hallucinations.

• Anthropic neared a $3.5bn funding round at a $61.5bn valuation.

• Nvidia’s Q1 profits surged 78% YoY, but the company warned of tighter profit margins as it rushes to roll out its new AI chip design, Blackwell.

• China’s AI Expansion:

• Alibaba pledged $53bn for AI infrastructure over three years.

• Huawei significantly improved domestic AI chip production, boosting China’s self-reliance in semiconductors.

• Tencent released Hunyuan Turbo S to rival DeepSeek.

Inflation and Recession Risks

• US:

• Inflation slowed to 2.6% YoY, but consumer spending fell 0.5%, raising recession fears.

• US Treasury yields declined, with 10-year yield at 4.21%.

• Europe:

• ECB rate cuts expected in summer, but inflation still remains a concern.

• Japan:

• Rising consumer prices and wage growth are pushing BOJ to maintain a hawkish stance.

Market Summary

• Stocks fluctuated:

• Early losses due to trade war concerns reversed by end of the week.

• S&P 500, Nasdaq 100, and Dow Jones ended the week up 1.6%, 1.6%, and 1.4%, respectively.

• Currencies and Commodities:

• The dollar index rose 0.3%; euro, pound, and yen weakened.

• Bitcoin fell 0.2% to $84,138.87.

• WTI crude oil declined 0.4% to $70.06 per barrel.

• Gold dropped 0.8% to $2,854.71 per ounce.

Outlook

• Markets remain highly volatile due to Trump’s escalating trade war and Fed uncertainty.

• AI investment surges despite geopolitical challenges.

• Investors closely monitor Fed signals as economic slowdown fears grow.