Weekly market recap

Your weekly global financial market newsletter

Markets experienced significant turbulence last week, driven by escalating tariff concerns between the U.S. and Europe and a fresh round of interest rate cuts from the European Central Bank (ECB). The ECB lowered its three key interest rates by 25 basis points, marking the sixth consecutive cut and bringing the main lending rate down to 2.50%. This move was prompted by mounting worries over economic growth, exacerbated by recent tariff hikes imposed by President Trump.

Indices

U.S. indices faced sharp declines early in the week after former President Donald Trump confirmed tariffs targeting Canada, Mexico, and China, particularly impacting automotive and technology sectors3. The S&P 500 fell 3,1%, with the Nasdaq 100 dropping 3,27% as investors priced in potential supply chain disruptions. Semiconductor stocks bore the brunt, with Nvidia plunging nearly 9% amid reduced Chinese demand for AI chips.

European markets reacted positively to the ECB’s decision initially, with Germany’s DAX index climbing 1.18% to a record high. However, broader sentiment remained cautious given ongoing trade tensions and uncertainty surrounding future ECB actions. The ECB also revised its economic growth forecast downward for 2025 to just 0.9%, citing trade policy uncertainties and weakened investment.

US30

-2.37%

US100

-3.27%

US500

-3.10%

GER30

+2.03%

Commodities

Commodity markets experienced significant volatility last week. Brent crude oil declined sharply by 3.36% weekly amid OPEC+ signaling plans to incrementally raise production in Q2 2025.

Natural gas prices surged by nearly 15%, driven by a significant uptick in demand amid ongoing production concerns. This rapid increase reflects a tightening supply environment that fueled market speculation and heightened overall volatility in the commodity sector.

Gold remained stable around $2,900/oz, reflecting its role as a steady safe-haven asset amid market uncertainty.

In contrast, silver surged by approximately 4.42%, fueled by strong industrial demand and investor enthusiasm. This divergence underscores gold’s traditional appeal for stability, while silver’s dynamic performance highlights its growing significance in both investment portfolios and industrial applications.

Gold

+1.91%

Silver

+4.42%

BRENT

-3.36%

NATGAS

+14.74%

Forex

The DXY’s decline accelerated after Federal Reserve officials signaled openness to three rate cuts in 2025, reversing earlier hawkish guidance. Markets interpreted Chair Jerome Powell’s emphasis on “ongoing policy uncertainty” as confirmation of prolonged dovishness. This shift eroded the dollar’s yield advantage, particularly against the euro and yen, which capitalized on improving risk sentiment.

The DXY’s 3.5% weekly loss underscores the fragile interplay between monetary policy, geopolitics, and technical flows. While oversold conditions hint at a tactical rebound, the dollar’s trajectory hinges on March’s CPI data and ECB decisions—a reminder that in 2025’s markets, volatility is the only certainty.

EUR/USD

+4.39%

USD/JPY

-1.67%

GBP/USD

+2.68%

USD/CAD

-0.50%

Macro

The Eurozone economy showed signs of tentative recovery last week, with S&P Global Ratings forecasting 2025 GDP growth at 1.4%, up from 0.7% in 2024, driven by lower energy prices and resilient consumer spending. However, structural challenges persist: record-high labor costs continue to hinder disinflation, with inflation projected to reach 2.2% in 2025, slightly above the ECB’s target. Spain emerged as a bright spot, with upward revisions to its growth outlook due to rising productivity and robust household balance sheets, while Germany lagged amid industrial stagnation.

The European Commission’s Spring 2024 forecast aligns with this cautiously optimistic view, projecting euro area growth at 1.4% in 2025, though risks from geopolitical tensions and China-EU trade frictions loom large.

The latest ISM data revealed a modest deceleration in U.S. economic activity, with the manufacturing PMI edging down slightly to 50.3, just above the neutral mark, indicating minimal growth amid ongoing supply chain issues and subdued demand. Meanwhile, the services PMI moderated to 53.5, still comfortably in expansion territory but reflecting slower momentum due to rising labor costs and cautious consumer spending. Overall, these figures suggest a mixed economic landscape—manufacturing activity is approaching stagnation, while the services sector continues expanding at a reduced pace, highlighting increased uncertainty around future growth prospects.

What to watch out for this week

JOLTS Job Openings: Following solid employment data released late last week and reassuring comments from Fed Chair Powell, markets will look to the JOLTS report for additional clarity on labor market strength. A robust number could reinforce confidence in the U.S. economy despite political uncertainties.
This week, markets will closely watch the Bank of Canada's rate statement and overnight rate decision, following January's 25 basis-point cut to 3.0% amid heightened economic uncertainty linked to U.S. tariffs and slowing inflation. Investors will pay particular attention to the central bank's forward guidance, given recent signals of a cautious approach toward further easing and concerns about trade-related risks impacting Canada's economic recovery.
Consumer Price Index (CPI): Inflation remains a central theme this week, with expectations pointing to a slight decline in both headline and core CPI. Lower inflation would generally support bond markets; however, equity market reactions may be mixed—stocks could benefit only if inflation moderation isn't driven by weakening consumer demand.
The EIA Crude Oil Inventories report, set for release this week, will offer insights into U.S. supply-demand dynamics amid recent price pressures. A larger-than-expected inventory build could further weigh on crude prices, while a drawdown might signal tightening supply conditions.
Producer Price Index (PPI): PPI data will provide insight into cost pressures faced by producers amid tariff uncertainties and supply chain disruptions. Higher-than-expected producer prices could signal persistent inflationary risks despite softer consumer price trends.
Initial jobless claims in the U.S. are forecast to rise slightly to 226,000 this week, up from the previous 221,000, reflecting a potential softening in labor market conditions. While recent claims data have remained relatively muted, continuing claims have been climbing, signaling that unemployed individuals may be facing greater challenges in finding new jobs.
The UK GDP growth forecast for Q1 2025 has been revised down to 0.1%, a significant drop from the previous estimate of 0.4%, reflecting mounting economic challenges.

Disclaimer

All information provided on this site is intended solely for the study purposes related to trading on financial markets and does not serve in any way as a specific investment recommendation, business recommendation, investment opportunity, analysis or similar general recommendation regarding the trading of investment instruments. The content, in its entirety or parts, is the sole opinion of FTMO and is intended for educational purposes only. The historical results and/or track record does not imply that the same progress is replicable and does not guarantee profits or future profitable trading records or any promises whatsoever. Trading in financial markets is a high-risk activity, and it is advised not to risk more than one can afford to lose!