Market Report.
🔥 Russian President Vladimir Putin agreed to a temporary ceasefire on attacks against Ukrainian energy facilities, but declined to endorse a full 30-day ceasefire proposed by President Trump. Ukraine said it would support the scaled-back energy infrastructure ceasefire, but President Zelenskyy criticized Putin for rejecting the full ceasefire proposal. The talks between Trump and Putin did not result in a comprehensive ceasefire or a path to a permanent peace deal, with Putin raising concerns about Ukraine rearming during a ceasefire. The limited ceasefire agreement is seen as a small step forward. Russia’s demands for the war’s resolution include Ukraine dropping NATO ambitions, easing Western sanctions, and holding a new presidential election in Ukraine.
🇪🇺 Commission President Ursula von der Leyen has urged the EU to use at least 65% of €150 billion loans for European-produced goods, citing Moscow’s “irreversible path” towards a war economy. She emphasized the need for the EU to regain its security capacities and defend itself by 2030. Former Italian Premier Mario Draghi suggested Europe should create a regional command structure and integrate its military forces. The idea of a stronger European pillar within NATO has gained more support after Trump’s shift away from Europe.
📉 US: Consumer sentiment fell to its lowest level since 2022, according to the University of Michigan’s Survey of Consumers, which was published on March 14. The March editions of the CNBC Fed Survey and Bank of America’s Global Fund Manager Survey both indicate that Wall Street is in a similarly gloomy mood. The release of new processors by Nvidia didn’t significantly change public opinion. The shares of the firm really closed 3.4% down. Right now, there doesn’t seem to be much that can improve the state of the markets and economy.
🏦 Federal Reserve officials are expected to hold interest rates steady at this week’s meeting, but they may adjust their views on the economy and the future path of interest rates. The Fed may update its projections for GDP, inflation, and unemployment, potentially raising its 2025 inflation outlook while lowering its GDP projection. Fed members are concerned that the Trump administration’s trade policies, particularly tariffs, could reignite inflation, making the Fed more reluctant to cut rates. However, Markets are still pricing in two or three rate cuts this year. In summary, the Fed is likely to strike a more cautious tone, and this, to make matters worse, would be something that the markets do not want.
🪙 This scenario is positive for non-yielding gold as it thrives in a low-interest-rate environment. If the Fed takes on a dovish tone in response to the uncertainty over how tariffs may impact growth, it could provide further support for gold prices to push above $3,050 per ounce.
📊 The data shows a mixed picture for Japan’s economy: Japan’s trade balance recorded a surplus of JPY 584.5 billion in February 2025. The surplus was primarily attributed to an 11.4% year-over-year rise in exports, the fastest growth since May 2024, while imports decreased by 0.7%, marking the first contraction since November. Japan’s industrial production declined by 1.1% month-over-month in January 2025, accelerating from a 0.3% drop in the previous month. The monthly Reuters Tankan survey revealed that sentiment among Japanese manufacturers turned negative in March due to concerns over U.S. tariff policies and economic weakness in China. The Nikkei 225 Index and the broader Topix Index both gained on Wednesday, extending recent gains, while the Japanese yen slipped to around 149.5 per dollar after the Bank of Japan kept interest rates unchanged at 0.5%.
🇩🇪 After the Bundestag, or parliament, of Germany voted in favour of a significant fiscal package on Tuesday afternoon, the country’s DAX index increased by 0.98%.
💶 Germany’s parliament approved plans for a massive spending surge, throwing off decades of fiscal conservatism to revive economic growth and scale up military spending for a new era of European collective defense. The approval gives conservative leader Friedrich Merz, the chancellor-in-waiting, a windfall of hundreds of billions of euros to ramp up investment after two years of economic contraction. The plans include creating a 500 billion euro fund for infrastructure and easing constitutionally enshrined borrowing rules to allow higher spending on defense. The reforms mark a major rollback of the “debt brake” imposed after the 2008 global financial crisis, which had put Germany into a fiscal iron discipline. Critics, including within Merz’s own party, have accused him of “voter fraud” for promising spending restraint during the campaign and then announcing the fiscal policy shift after winning.
💷 The data suggests that pay growth in the UK has fallen back in line with inflation: Pay increases granted by British employers have fallen back in line with inflation for the first time since October 2023, according to data from human resources firm Brightmine. A quarter of firms planned a hiring freeze or team restructuring in response to the April increase in employers’ social security contributions, with some considering pay freezes and delays to increases. The Bank of England is watching for signs that inflation pressure in the jobs market is abating sufficiently for it to continue cutting interest rates. So far, these numbers will support future interest rate cuts. The BoE is widely expected to keep borrowing costs on hold after its March meeting.
🛢️ The boost to oil prices from the flare-up in Middle East tensions was short-lived, as broader market weakness and concerns about a global crude glut later in the year outweighed the escalation of fighting in Gaza. Israeli air strikes in Gaza killed over 400 people, according to Palestinian authorities, ending a ceasefire that had halted fighting since January. Another key factor that could influence prices is the peace agreement in Ukraine and the lifting of sanctions against Russia, as requested by Putin. Even if a ceasefire is reached, analysts believe it will take a long time before Russian energy exports increase significantly. Trump also threatened to continue the U.S. assault on Houthi rebels in Yemen unless the group ends attacks on ships in the Red Sea. Finally, As we predicted in our previous reports, now the OECD warned that U.S. tariffs would reduce economic growth in the U.S., Canada, and Mexico, and weigh on global energy demand.
🌍 Geopolitics:
🛡️ Erik Prince, the founder and former CEO of the private military company Blackwater, has disputed the effectiveness of the American weapons being used by Ukraine in the conflict with Russia. Prince stated that the Russian military has become “infinitely smarter” in countering the US-supplied weapons, such as Javelin missiles, HIMARS, and Copperhead guided artillery shells, which often become ineffective within weeks as the Russians figure out how to jam the navigation or command links. Prince pushed back against assertions that the Russian forces have been significantly weakened, arguing that the Russian army has gotten “infinitely smarter” in its counter-artillery capabilities, with the response time to incoming artillery fire now reduced from around 90 minutes to just 2 minutes.
📈 Market View:
📉 The S&P 500 futures, which started yesterday’s session in positive territory, took a turn for the worse a few hours later and are now struggling to stay above 5,600 points, currently standing at 5,660 points. Meanwhile, Nasdaq 100 futures, which managed to momentarily exceed 20,000 points, fell back again and are now trading at 19,665 points.
💵 The dollar has resumed its upward trend as the Fed’s interest rate decision approaches. The DXY index is once again above 103.50 points, causing the EUR/USD pair to fall back below 1.09, currently trading at 1.0895.
📊 On the other hand, bond yields in the United States continue to rise. The 10-year bond is currently close to 4.3%, which indicates that interest rates are unlikely to be cut this week.
🇪🇺 Europe, however, is moving at a different pace. DAX 40 futures yesterday reached new record highs, celebrating the fact that the German Parliament has approved an end to the fiscal discipline that characterised it. The DAX 40 approached 23,500 points yesterday, but has started today’s session by falling back and is now at 23,250 points.
🛢️ Crude oil continues to fall despite the geopolitical tensions that we have explained in detail in the news section. A barrel of Brent has once again fallen to around $70.25.
🥇 What is not falling is gold, which, faced with a Fed fearful of higher future inflation and an increasingly unstable geopolitical scenario, is benefitting from the fear and rising to $3,050 an ounce.
₿ Finally, bitcoin, which yesterday was falling and struggling to stay above $81,000, has rebounded to the current $83,215.
