Global Markets were spurred by strong corporate earnings and tariff fatigue this week. Early in the week investors were apprehensive of the possibility of additional taxes on automobiles, pharmaceuticals and semiconductor imports; proposed by President Trump. The possibility of a Russia-Ukraine peace deal encouraged global inflows into European equities during the week. Disappointing earnings guidance by Walmart lowered investor optimism.

The center-right CDU lead Chancellor Scholz’s SPD, ahead of the elections in Germany scheduled for Sunday. Argentina’s senate voted to suspend primary elections for 2025 amidst a crypto scandal that wiped out $4.6 billion from the market. The Trump administration planned to lay off 7,000 employees from the Internal Revenue Service department, this week.

Global Updates
  • The MSCI All Country World Index edged up slightly this week driven by the inflows into European equities. The $8.55 billion global inflows into European markets were bolstered by the continued hope of an end to the Russia-Ukraine war.  
  • The Eurozone Manufacturing PMI reached nine months high of 47.3 in February, even though weak consumer demand continues to weigh on European manufacturing. The HCOB Eurozone Composite PMI came in at 50.2 for February.
  • Alibaba Group listed in U.S. markets gained due to the company’s higher-than-expected third quarter EPS of $0.37 with a revenue of $38.60 billion.
  • Nissan stock price gained on the news of Nissan seeking Tesla investments in its U.S. plants.
  • Standard Chartered posted 18% growth in 2024 profits and announced a $1.5 billion share buyback program.
  • Japan equities trended lower this week due to weak GDP growth in 2024, tariff apprehensions, 4% inflation in January and shrinking manufacturing. Investor apprehensions were partially assuaged by Bank of Japan governor Kazuo Ueda’s assertion of the bank’s willingness to increase purchases of government bonds, conditional on a rise in long term interest rates.
  • Gold futures trended higher this week driven by the additional tariffs proposed by President Trump on lumber, cars, semiconductors, and pharmaceuticals. Goldman Sachs has projected prices to reach $3,100/oz by the year end. Morgan Stanley’s forecasted a lower $2,700/oz by the fourth quarter citing reduced demand and recycling due to price effects.
U.S. Equity
  • The S&P 500 and Nasdaq ended this week higher, while the Dow Jones ended the week significantly lower due to Walmart’s guidance for fiscal 2026 undermining expectations. Earlier this week the S&P 500 index touched record highs spurred by strong corporate earnings and the markets shrugging off tariff fears.
  • The number of newly filed weekly jobless claims rose by 5,000 to 219,000 and continuing claims rose by 24,000 to 1.869 million. The downstream effects of federal government layoffs and spending reductions are yet to manifest in the labor market or economy.
  • Software engineering firm Epam Systems’ stock price fell after the company’s full-year earnings guidance were lower-than-expected. The company’s fourth quarter revenue of $1.25 billion and adjusted profits per share of $2.84 were higher than expected.
  • Retail behemoth Walmart a posted higher-than-expected EPS of $0.66 with a revenue of $180.55 billion for the fourth quarter of fiscal 2025. However, the company’s earnings guidance for the first quarter and full year of fiscal 2026 came in lower-than expected. The company projected revenue growth of 3% and EPS of $0.57 for the first quarter; and 4% and $0.58 for fiscal 2026.  
  • Toymaker Hasbro’s stock posted gains after the company posted a better-than expected fourth-quarter revenue of $1.10 billion and EPS of $0.46.
  • Garmin stock price rose due to the company posting a 40% higher fourth quarter EPS of $2.41 and a 23% revenue growth to $1.82 billion. Garmin’s performance was drive by its fitness, auto and outdoor divisions. Garmin’s full year revenue was $6.3 billion.
  • Microchip Technology stock gained after the company release of AI enabled chat assistant for software developers.
  • Palantir stock trended lower following news of Pentagon officials receiving orders to slash defense budgets 8% annually by 2029. 40% of Palantir’s fourth quarter revenue was earned from the company’s defense contracts.
  • The U.S. Department of Justice has initiated an investigation into the Medicare billing practices of UnitedHealth Group’s Medicare Advantage plans.
Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index edged lower this week.
  • The U.S. 10-year Treasury yield was slightly lower at 4.49% and the yield on the 2-year note fell slightly to 26% over the week.
  • The S. Dollar Index depreciated to 106.48 this week, with the markets pricing in rising unemployment claims and investors suffered tariff-fatigue.

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