Global Market Overview
Global equities experienced significant volatility last week, with the S&P 500 entering correction territory after declining more than 10% from its February highs, while the Nasdaq saw a 14% year-to-date decline. Concerns over slowing U.S. economic growth, weak consumer sentiment, and rising trade tensions between the U.S. and Europe contributed to the market pullback.
Despite the downturn, such corrections are historically common and do not necessarily indicate a prolonged bear market or recession. Markets rebounded on Friday, with equities rising and U.S. Treasury yields increasing. However, gold reached a record high earlier in the session, as investors turned to safe-haven assets.
Diversification and Market Performance
Amid heightened uncertainty, investors sought diversification, with bonds outperforming equities as a safer alternative. European and Chinese markets outperformed the U.S. due to attractive valuations and policy support. The EuroStoxx index rose over 10% year-to-date, driven by central bank rate cuts and fiscal stimulus, while Chinese technology shares also posted gains.
In currency markets, the euro strengthened on optimism over Germany’s fiscal policies, while the U.S. dollar gained against the yen. Meanwhile, gold briefly surpassed $3,000 an ounce before pulling back, and oil prices fluctuated as geopolitical risks impacted market sentiment.
While volatility may persist, market corrections can present opportunities for long-term investors to rebalance portfolios and add quality investments across equities, bonds, and other assets.
Latest Market and Economic Developments
- Asian Markets: On Monday, Asian stocks gained on optimism over China’s targeted stimulus measures, though trade tensions and upcoming central bank meetings limited further advances. China’s plan to boost consumer spending, financial support, and investment in key sectors lifted market sentiment.
- U.S. Equity Futures: Overnight, U.S. futures fell, signaling renewed investor caution ahead of the Federal Reserve meeting and continued concerns over trade policies.
- European Equities: European stock markets rebounded on Friday, with the DAX rising 2%, the CAC 40 gaining 1.2%, and the FTSE 100 up 1.1% as they recovered from prior losses caused by trade war concerns. Key stock movements included BMW (-0.8%) and Daimler Truck, both of which faced pressure due to weaker earnings reports.
- Currency & Commodities: The U.S. dollar remained near 103.7, hovering around five-month lows, weighed down by trade and economic uncertainty. Meanwhile, the euro strengthened against the dollar, with the EUR/USD exchange rate reaching 1.0884 following Germany’s fiscal deal, expected to boost defense spending and stimulate economic growth.
- Oil Prices: Oil prices rose this morning amid concerns over trade disruptions following U.S. airstrikes against Yemen’s Houthis. Additionally, China’s plan to boost domestic consumption further improved sentiment. The conflict threatens global shipping routes, potentially impacting global oil supply.
Equities in Focus
Several companies saw significant share price movements due to earnings reports, analyst ratings, and corporate developments:
- Porsche SE denied reports that it is considering selling its Volkswagen voting shares, reaffirming its commitment as a long-term anchor shareholder. The holding firm stated there were no concrete plans or investor discussions regarding a sale, despite previous speculation of a potential reallocation between its Volkswagen and Porsche AG holdings.
- Baidu introduced two new AI models: ERNIE X1, which it claims rivals DeepSeek R1 in performance at half the cost, and ERNIE 4.5, which boasts enhanced multimodal understanding, logic, and memory.
- Apple is facing delays in key Siri enhancements, with internal sources describing the situation as “ugly and embarrassing.” The timeline for the release has now been pushed to next year at the earliest.
- GE Aerospace secured a $5 billion contract with the U.S. Air Force to supply F110-GE-129 engines for F-15 and F-16 aircraft. The company also plans to invest nearly $1 billion in U.S. factories and its supply chain in 2025.
- PepsiCo is in advanced negotiations to acquire healthier soda brand Poppi for over $1.5 billion. The deal is expected to be announced soon, though finalization could be delayed.
- Thyssen-Krupp canceled its planned sale of its marine division (TKMS) to Rheinmetall due to disagreements over costs, government intervention, and strategic direction.
- BMW warned that newly imposed trade tariffs could reduce its earnings by €1 billion this year (2024), with tariffs on its China-made EVs and U.S. imports impacting profitability. Despite a 34% slump in net profit for 2024, the company remains optimistic, forecasting a 5-7% earnings margin for its car segment in 2025 and maintaining its dividend payout ratio.
- UniCredit received European Central Bank approval to acquire up to 29.9% of Commerzbank, though it is likely to wait until next year before considering a full takeover.
- Kering shares dropped by up to 13% on Friday after appointing Demna as Gucci’s new head designer. Analysts are concerned about his streetwear background, which contrasts with Gucci’s need for timeless elegance. The move follows Gucci’s ongoing sales decline and leadership changes, with Demna facing the challenge of revitalizing the brand, particularly in the critical Chinese market.
- Daimler Truck shares rose last Friday after reporting better-than-expected Q4 results, with strong performances in North America and Europe driving revenue and earnings growth. The company expects EBIT growth of 5% to 15% in 2025, despite potential trade and regulatory challenges.
- Country Garden Services forecasted a significant increase in 2024 profit, estimating net earnings between 1.60 billion and 2 billion yuan, up from 292.3 million yuan last year, due to lower impairment charges. Its parent, Country Garden, is also working on a proposal to restructure $11.6 billion in debt after facing financial difficulties.
- Tesla was downgraded by Wells Fargo, with a new price target of $130, citing weak fundamentals, slowing sales, and pricing pressures. Tesla’s sales have dropped 16% year-to-date, with European sales also declining significantly.
- Peloton Interactive was upgraded to “Buy” by Canaccord, citing its return to profitability and a strong position in connected fitness. The firm forecasts strong EBITDA and free cash flow growth for FY25.
- Ahold Delhaize received a “Buy” rating from Goldman Sachs, with a price target of €40, reflecting stronger European sales and a U.S. turnaround.
- L’Oréal saw a downgrade from Bank of America, which lowered its 2025 revenue and earnings projections by 2% and 3%, respectively, due to slower-than-expected first-quarter sales.
Key Economic Events to Watch This Week
Investors will closely monitor several major economic reports and central bank decisions:
- Federal Reserve Interest Rate Decision & Economic Projections
- U.S. Data: Retail sales, industrial production, and housing market indicators
- European Reports: UK unemployment figures, German economic sentiment, and Eurozone consumer confidence
- Japan Inflation Data
Market fluctuations are expected to continue, making diversification and strategic asset allocation essential for investors navigating ongoing uncertainty.
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