Global equity markets lagged this week due to the expected economic and financial impacts of the global tariff conflict. U.S. markets entered correction territory following the Trump administration’s indifference to the possibility of a recession. Rising U.S. stock futures indicated recovering investor sentiments after the aversion of a government shutdown. Japan and China’s markets outperformed global markets this week.

The possibility of a U.S. government shutdown has been averted following Senate Minority Leader Chuck Schumer’s decision to vote for the GOP’s proposed stopgap spending bill. Mark Carney succeeded Justin Trudeau as the 24th Prime Minister of Canada. Ontario Premier Doug Ford expressed optimism about a U.S.-Canada deal after his meeting with U.S. Commerce Secretary Howard Lutnick. President Putin awaits President Trump’s response to his ceasefire agreement proposal.

Global Updates
  • The MSCI All Country World Index trended lower this week, weighed down by 25% duties imposed by the Trump administration on all U.S. steel and aluminum imports. Europe and Canada also planned retaliatory tariffs on the U.S. China’s equity markets recovered from global headwinds and weak inflation, driven by potential policy stimulus and technology stocks. Japan’s equities were another prominent exception to the global economic downtrend, driven by technology stocks.
  • The U.K. reported a 0.1% contraction in economic output in January due to a 1.1% drop in manufacturing, owing to poor performance in the metals, pharmaceutical, and energy sectors.
  • Bundesbank’s President, Joachim Nagel, has cautioned policymakers that the German economy is vulnerable to a recession if the global trade war persists further.
  • The Bank of Canada (BoC) lowered its policy rates by 25 basis points to 2.75% to bolster domestic demand and economic activity. The BoC expects the ongoing trade war to have a significant impact on economic activity.
  • Foxconn reported a miss in its fourth-quarter net profits of $1.41 billion due to a 13% drop in profits. Although the company did not issue any numerical guidance, it expects first-quarter revenue to benefit from increased sales of its cloud and networking products.
  • BMW has estimated a $1.09 billion decrease in its earnings in 2025 due to the prevailing U.S. import tariffs and EU duties on its EVs manufactured in China.
  • Japan’s largest trade union, representing 7 million workers, the Rengo trade union, has negotiated the largest pay hike for workers in 34 years of 5.46%. Record profits due to a weak yen and labor shortages motivated companies to agree to the labor union’s demands, essential for countering the inflation-induced high cost of living in Japan.
  • OPEC+ reported increased production of 41.01 million barrels per day (bpd) in February, led by Kazakhstan. OPEC+ also reiterated its estimated growth in demand of 1.4 million bpd for 2025-2026, driven by increased demand from the travel and automotive sectors. The organization also clarified its expectation of markets correcting for trade tariffs in the long run despite short-term volatility.
  • Gold continued to rise this week, hitting a record $3000 per ounce, driven by investors’ risk-off stance due to the continuing global faceoff on tariffs.
U.S. Equity
  • The S&P 500 index closed in correction territory this week, and the Dow Jones and Nasdaq also trended lower. Trade and policy uncertainty continued to weigh on the markets. The markets sharply dipped on March 10th, with the Nasdaq dropping 4%, the S&P 500 by 2.7%, and the Dow Jones by 2.1%; the largest single-day selloff since September 2022. The possibility of a short-term recession also hurt investor sentiments. Technology stocks also lagged due to expectations of tighter export restrictions on semiconductors and AI technology because of China’s recent strides in developing AI platforms.
  • These market trends have pushed Goldman Sachs analysts to lower their projected growth for the S&P 500 to 5% in 2025, from the earlier estimate of 10.5% growth. On the other hand, Bank of America strategist Michael Hartnett suggested that the current market downtrend should be bought into, as it is a correction and not a bear market.
  • Cost of living inflation softened in February, with CPI inflation declining to a lesser-than-expected 2.8% from 3% in January. Markets continue to be apprehensive about higher inflation in the coming months due to increasing costs from tariffs.
  • Broadcom reported strong fiscal first-quarter revenue growth of 25% to $14.92 billion and adjusted net income of $7.82 billion. The 77% growth in Broadcom’s AI revenue, to $4.1 billion in the first quarter, drove the company to project a larger-than-expected $4.4 billion AI semiconductor revenue and $14.9 billion total revenue for the second quarter.
  • Technology stocks received a boost from the news of TSMC’s proposed joint venture with Nvidia, AMD, Broadcom, and Qualcomm for operating Intel’s foundries. The Trump administration had requested TSMC to lead the turnaround of Intel’s foundry division.
  • Walgreens Boots Alliance has arrived at a $10 billion private acquisition deal with Sycamore Partners.
  • Costco reported higher-than-estimated fiscal second-quarter sales of $63.72 billion; however, the net income of $1.79 billion missed expectations due to a 9% escalation in merchandise costs.
  • The Nasdaq (NDAQ) exchange will be moving to a 24-hour trading model in the second half of 2026 to increase accessibility.
  • UBS analysts lowered their price target on Tesla stock to $225 from $259 due to softening demand. Tesla’s estimated delivery forecast for Q1 2025 has been lowered to 367,000 from 437,000. Tesla also reported a sharp decline in vehicle deliveries to China in February. On Wednesday, Evercore and Guggenheim analysts also lowered their price targets for Tesla.
  • Regeneron Pharmaceuticals’ stock price gained following the reporting of positive results in the skin medication clinical trials.
  • NextEra Energy stock gained after CEO John Ketchum projected a 55% higher energy demand over the next 20 years, driven by rising demand from the upcoming AI boom.
  • Delta Airlines stock lagged after the airline cut its first-quarter guidance to 3% to 4% growth in revenue and EPS of 30 cents to 50 cents.
Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index was lower this week.
  • The U.S. 10-year Treasury yield was slightly lower at 4.276% and the yield on the 2-year note dipped slightly to 951% over the week.
  • The U.S. Dollar Index edged up to 103.98 this week due to investors consolidating their positions.

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