Weekly market recap

Your weekly global financial market newsletter

  • Despite reaching new record highs, U.S. stocks had one of their worst weeks of the year. In contrast, gold set a new all-time high for the fourth consecutive week, while U.S. natural gas hit a two-year high.

Indices

U.S. stocks posted significant losses in the shortened trading week, with the DJIA recording its worst weekly performance since October last year. Although the S&P 500 index reached new all-time highs on Tuesday and Wednesday, the markets reversed course on Thursday.

The shift in market sentiment was initially driven by Walmart’s disappointing outlook for the coming year, raising concerns about consumer spending and the overall health of the economy. Then, on Friday, the situation worsened as preliminary PMI data revealed a decline in activity in the services sector.

European stocks also failed to sustain their upward momentum and ended the week lower, primarily due to ongoing speculation about Donald Trump’s new tariffs and uncertainty surrounding the situation in Ukraine, where U.S. negotiators have alarmingly begun to align more closely with Russia. The pan-European STOXX Europe 600 ended 0.26% higher, Germany’s DAX fell 1.00%, France’s CAC 40 eased 0.29%, and the UK’s FTSE 100 Index lost 0.84%.

US30
-2.51%
US100
-2.26%
US500
-1.66%
GER30
-1.00%

Commodities

Gold has been a standout performer in recent weeks, rising for eight consecutive weeks and reaching a new all-time high for the fourth straight week, this time surpassing $2,950 per troy ounce. As was the case last week, gold dipped slightly on Friday, but this had little impact on its overall weekly gain.

Gold’s strength has been driven primarily by Donald Trump’s latest policy plans. He intends to impose tariffs of around 25% on foreign cars and has hinted that semiconductor chips and pharmaceuticals could be next. Additionally, investor speculation about a potential withdrawal of aid to Ukraine, following Trump’s pro-Russian rhetoric and his labeling of the Ukrainian president as a dictator, has raised concerns about instability in Europe.

Another factor that could support further gains in gold is the price disparity between gold futures in New York and the cash market in London. Some large banks are covering losses on short positions, as futures prices in New York are rising faster than in London. Continued buying activity could further drive up the price of the yellow metal.

U.S. natural gas continued its strong rally, gaining over 13% during the week to reach a 25-month high, breaking above the $4/MMBtu level for the first time since late 2022. The main drivers of this surge were the significant drop in temperatures, which were expected to persist through the end of the week.

Additionally, supply constraints further contributed to the price increase, as low temperatures led to production disruptions. Over the past 15 days, output has declined by 6.7 bcf/d, reaching a four-week low of 100 bcf/d on Thursday.

Gold
+1.85%
Silver
+1.17%
BRENT
-0.41%
NATGAS
+13.66%

Forex

The British pound reached a two-month high on Friday and is one of the strongest-performing currencies in 2025 against the U.S. dollar. Supporting the pound’s strength over the past week were relatively strong macroeconomic data, including a robust labor market, where wages rose by 5.9% in January. Additionally, inflation hit a 10-month high last month, and consumer spending saw an unexpected increase in January. The economy grew by 0.1% in the latest quarter, leading economists to believe that slower growth combined with persistent inflation will force the central bank to limit the number of interest rate cuts this year to a maximum of two.

The U.S. dollar, as measured by the dollar index, posted its third consecutive weekly decline, reaching a two-month low. One possible reason for this is investor concerns about the state of the U.S. economy, as last week’s macroeconomic data suggest that the Fed may need to implement a larger-than-expected interest rate cut.

EUR/USD
-0.29%
USD/JPY
-2.03%
GBP/USD
+0.37%
USD/CAD
+0.33%

Macro

In the U.S., January housing starts—a measure of new, privately owned home construction—declined nearly 10% from December to a seasonally adjusted annual rate of 1,366,000. Additionally, Friday’s data on existing home sales came in below expectations, showing a 4.9% decline to a seasonally adjusted annual rate of 4.08 million in January.

Friday’s data from S&P Global pointed to sluggish business activity in the U.S., as the flash composite PMI fell to a 17-month low of 50.4. The decline was primarily driven by the services sector, which slipped into contraction at 49.7—the lowest reading in two years. The manufacturing sector, on the other hand, rose to 51.6, slightly offsetting the overall decline.

Consumer sentiment, as measured by the University of Michigan’s index, also weakened by nearly 10%, dropping to 64.7 points. Meanwhile, Germany’s ZEW index unexpectedly rose to 26, surpassing market expectations of an increase from 10.3 to 19.9.

In Europe and the UK, the composite PMI remained above 50 points, though in both cases, this was largely driven by the services sector. While the EU’s services PMI fell to 50.7, the UK’s exceeded expectations, rising to 51.

UK inflation also surprised with an increase, as consumer price growth accelerated to 3% in January—the fastest rate since March 2024—up from 2.5% in the previous month. Core inflation, which excludes volatile food and energy prices, also picked up, rising to 3.7% from 3.2%.

What to watch out for this week

  • The most closely watched event of the new week will likely be Friday's PCE Price Index, widely regarded as one of the Federal Reserve’s preferred inflation indicators. Inflation has yet to fall below 2%, and with Donald Trump’s tariffs potentially driving prices even higher, it will be interesting to see how personal consumption holds up.
  • The second estimate of Q4 2024 GDP growth is expected to confirm that the U.S. economy expanded at an annualized rate of 2.3%, in line with the initial estimate. Other key reports to watch include durable goods orders, CB Consumer Confidence, and housing market data, such as pending and new home sales.
  • After the German elections drew attention late last week, macroeconomic data from Germany will take center stage in Europe this week. Headline inflation in Germany is expected to remain at 2.3%, economic sentiment is projected to improve, and GDP is likely to show further declines on both a year-over-year and quarter-over-quarter basis.

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