SENIOR MARKET ANALYST
03 Mar 2025
March has arrived, bringing fresh market dynamics as investors navigate inflation concerns, geopolitical tensions, and a shifting trade landscape. Despite a late rally across Wall Street at the end of last week, equity markets struggled through most of February, with major indices posting losses.
Meanwhile, trade policy takes centre stage once again, as the US prepares to impose 25% tariffs on Mexico and Canada, postponed from January, with an additional 10% on Chinese imports.
Crypto got a boost overnight from President Trump’s announcement of a strategic crypto reserve. Bitcoin and other cryptos had come under sustained selling pressure over the last fortnight with sentiment undermined by a record $1.5 billion hack and theft from the Bybit exchange.
This week brings a string of important updates on the US labour market and a rate announcement from the European Central Bank. Can these help boost risk appetite?
US markets ended the week and month on a positive note as inflation data helped calm nerves after earlier volatility. However, February was a weak month overall: the Dow declined 1.6%, the S&P 500 dropped 1.4%, and the Nasdaq saw a steeper 4% loss.
Asian markets had a mixed start to the new month. Chinese manufacturing data surprised to the upside, hitting a three-month high, though mainland stock indices closed modestly lower. The Nikkei and Australia’s ASX outperformed, providing some optimism in the region.
European futures point to a higher open, with the European Central Bank’s meeting on Thursday being the key event for the region. Investors are watching for any policy shifts that could influence market sentiment.
US stock index futures edged slightly higher while the main feature of FX this morning was the weaker US dollar. Despite escalating tensions following the high-profile showdown between Ukrainian President Zelenskyy and former US President Trump, the euro gained.
Gold and silver saw initial gains, with geopolitical concerns and dollar weakness providing support. Oil prices drifted lower, with front-month US Light trading below $70 per barrel. The better-than-expected Chinese manufacturing data did little to support prices. Natural gas slipped slightly.
Cryptocurrencies, led by Bitcoin and ether, jumped overnight following Trump’s announcement of a strategic crypto reserve. The news injected fresh optimism into the sector after recent volatility.
The VIX dipped slightly below 19, reflecting a moderation in risk appetite. This morning, key economic data releases include Eurozone Manufacturing PMIs and CPI, followed by the all-important US ISM Manufacturing PMI later today.
Jobs data takes centre stage this week, culminating in Friday’s Non-Farm Payrolls report. Early estimates point to an increase of 150K jobs.
Tensions between Zelenskyy and Trump escalated after Friday’s meeting, during which the Ukrainian leader left the White House without securing a deal. However, he received widespread support following a separate meeting with European leaders in London on Sunday.
Meanwhile, Mexico and Canada are being urged to implement tariffs on China, aligning with the US measures set to take effect tomorrow. Warren Buffett weighed in on the issue, stating that tariffs act as a tax on goods.
The tariff rollout remains the dominant theme for the first half of this week, with investors assessing its potential impact on global trade and market sentiment. February was a weak month for stocks—historically, it often is. Crypto is emerging as an early standout on Trump’s latest announcement.
As a new week and month begin, the question remains: Can the bulls recover the ground lost in February?
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Trade Nation is a trading name of Trade Nation Financial UK Ltd, a financial services company registered in England & Wales under company number 07073413, is authorised and regulated by the Financial Conduct Authority under firm reference number 525164. Our registered office is 14 Bonhill Street, London, EC2A 4BX, United Kingdom.
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