Global News Summary of 3rd to 8th March 2025

United States (USD)

• Trade & Tariffs:

• President Donald Trump pressed ahead with 25% tariffs on all imports from Canada and Mexico from 5 March, rejecting last-minute negotiations.

• Canada prepared counter-tariffs on US-made products, while Mexico considered similar measures.

• Trump ordered an investigation into alleged lumber dumping and threatened new tariffs on China, Canada, and Mexico.

• Economic Data & Markets:

• ISM Manufacturing PMI fell to 50.3 in February (Jan: 50.9), reflecting steep declines in new orders and employment, suggesting slower economic momentum.

• US services PMI rose to 53.5, showing resilient demand and job expansion in the sector.

• The Conference Board’s Consumer Confidence Index recorded its sharpest drop since August 2021, reflecting growing anxiety over Trump’s trade policies.

• Stock markets fell sharply midweek, wiping out post-election gains, but later rebounded, with the S&P 500 gaining 0.6% and Nasdaq 100 up 0.7% on 8 March.

• Jobs & Inflation:

• Nonfarm payrolls increased by 151,000 in February, signalling moderate job growth.

• The unemployment rate rose to 4.1%, raising concerns about economic stability.

• Former Fed Chair Ben Bernanke warned that controlling inflation in the future could be more difficult due to recent global economic trends.

• Geopolitics:

• Trump temporarily exempted Mexican and Canadian car imports from tariffs if they comply with USMCA trade deal terms.

• US suspended military aid to Ukraine, increasing pressure on President Zelenskyy to negotiate with Russia.

• Trump’s meeting with Zelenskyy ended in a tense exchange, leading to the cancellation of a planned US-Ukraine minerals deal.

• Russia showed openness to ceasefire talks, marking a potential diplomatic shift.

United Kingdom (GBP)

• Labour Market & Inflation:

• Annual food inflation rose to 2.1% in February (Jan: 1.6%), increasing cost-of-living pressures.

• Rents for new tenancies rose 3% YoY in January, the slowest in three years, indicating easing demand.

• The government introduced employment law reforms, including stricter protections for workers against unfair dismissal and zero-hour contracts.

• Trade & Tariffs:

• UK MPs pushed for tougher workers’ rights reforms to prevent exploitative employer loopholes.

• The UK seeks a trade deal with the US to avoid tariffs, but disagreements over security guarantees for Ukraine stalled negotiations.

• Fiscal Policy:

• Chancellor Rachel Reeves submitted plans for spending cuts to the Office for Budget Responsibility (OBR), focusing on welfare reductions to improve public finances.

Eurozone (EUR)

• Economic Data & Inflation:

• Eurozone inflation fell to 2.4% in February (Jan: 2.5%), while core inflation eased to 2.6% (Jan: 2.7%), boosting ECB rate-cut expectations.

• German government borrowing costs rose to 2.79%, as investors anticipated economic recovery through major defence and infrastructure investments.

• Political & Defence Spending:

• Germany’s incoming Chancellor Friedrich Merz reached a deal with SPD to boost military spending and fund infrastructure, marking a significant fiscal shift.

• France proposed tax increases on the wealthy to support higher defence spending, amid pressure to tackle budget deficits.

• Trade & Relations with US:

• Germany’s Scholz-led SPD won a regional election in Hamburg, while the CDU secured power nationally in a coalition government.

• French authorities backed extending wealth taxes to fund defence, amid growing fiscal constraints.

Japan (JPY)

• Monetary Policy & Inflation:

• Bank of Japan (BoJ) Deputy Governor Shinichi Uchida indicated a gradual rate hike path, expecting the 2% inflation target to be met.

• Japanese firms increased stockpiling in the US, fearing Trump’s future tariffs.

• Japan’s lower house passed the 2025 budget, securing government funding ahead of a national election later this year.

China (CNY)

• Trade War & Economic Growth:

• China imposed retaliatory tariffs of up to 15% on US agricultural goods and banned trade with some US defence companies after Trump doubled tariffs on Chinese exports.

• Caixin Manufacturing PMI rose to 50.8 in February (Jan: 50.1), indicating economic resilience despite US tariffs.

• China set its 2025 GDP growth target at 5%, the highest in years, while raising its fiscal deficit to 4% of GDP to fund stimulus measures.

Australia (AUD)

• Economic Growth:

• Q4 GDP grew 0.6% QoQ, in line with expectations, with household spending rising 0.4% QoQ and 0.7% YoY.

Artificial Intelligence (AI)

• Investment & Innovation:

• TSMC announced a $100bn investment in US chip manufacturing, aiming to appease Trump and reduce reliance on Chinese suppliers.

• AI start-up Anthropic raised $3.5bn, tripling its valuation to over $60bn, as competition with OpenAI and DeepSeek intensifies.

• Microsoft’s $13bn investment in OpenAI was cleared by UK regulators, confirming that it does not have de facto control over the AI start-up.

• Musk’s xAI positioned itself as an edgier alternative to OpenAI, focusing on less censored content.

• Wayve, a UK-based self-driving start-up, raised $1bn for international expansion, with Japan as a key target market.

Energy & ESG

• Oil Markets:

• Oil prices declined as OPEC+ signalled increased production from April, just as Trump’s tariffs threaten global economic growth.

Inflation & Recession Risks

• US & Global Markets:

• Inflation concerns resurfaced as the US core PCE inflation index rose 0.3% MoM, pushing YoY inflation to 2.6%, the lowest since early 2021.

• US consumer spending dropped 0.5% in February, the biggest decline in almost four years, raising concerns over slowing demand.

• Investors remain uncertain about Federal Reserve rate cuts, with mixed economic data keeping rate policy in flux.

Summary & Outlook

• Global markets remain volatile, driven by trade war fears, geopolitical tensions, and monetary policy uncertainty.

• US markets rebounded late in the week after Powell reassured investors, but tariff concerns kept volatility high.

• Europe braces for economic shifts as Germany and France ramp up defence spending.

• China counters US tariffs with retaliatory trade measures, while its government prioritises economic stimulus.

• AI investment surges, with major funding rounds in the US, UK, and China.

• Oil markets adjust to OPEC+ production increases, amid Trump’s escalating trade war risks.

In the coming weeks, markets will closely watch tariff negotiations, inflation data, and geopolitical developments, particularly US-Russia-Ukraine peace talks.