U.S. Equity Markets Plunge on Economic Fears
Global markets faced a significant selloff on Monday, with major U.S. indices posting steep losses:
- Dow Jones Industrial Average fell nearly 900 points
- S&P 500 declined 2.7%
- Nasdaq Composite dropped 4%, marking its worst single-day loss in two and a half years
The downturn was triggered by growing recession fears, following an interview with Donald Trump, where he did not rule out a possible economic downturn. Investor sentiment was further rattled by ongoing concerns over tariffs and slowing economic growth.
The Federal Reserve Bank of Atlanta’s GDPNow estimate for first-quarter GDP growth fell to -2.4%, a stark reversal from the 2.3% estimate in late February. The downward revision was attributed to:
- A surge in imports ahead of potential tariffs
- Weaker consumer spending amid declining confidence
Despite short-term risks, expectations remain that pro-growth policies, such as tax cuts, deregulation, and lower interest rates, could support a rebound later in the year.
Technology Sector Leads Market Decline
The tech sector suffered the biggest losses, driven by bitcoin’s drop below $80,000:
- MicroStrategy fell over 16%
- Coinbase declined 17%
- Tesla plunged 15.4%, wiping out all post-election gains
Tesla’s decline followed Elon Musk’s endorsement of Trump and his appointment to lead a government efficiency initiative.
Despite equity market losses, U.S. investment-grade bonds gained 2.1% year-to-date, and developed-market international large-cap equities rose 10.6%.
Key Economic Data to Watch
Investors are awaiting the February Consumer Price Index (CPI) release on Wednesday, which is expected to show a slight decline in inflation.
Meanwhile, bond yields edged lower, with the 10-year Treasury yield at 4.22%, as markets anticipate multiple Federal Reserve rate cuts in response to slowing inflation and economic growth.
Asian and European Markets React to U.S. Selloff
Asian Markets Decline
Asian equities mirrored Wall Street’s losses on Tuesday, driven by mounting U.S. recession fears:
- Japan’s Nikkei 225 fell 1.4%
- South Korea’s KOSPI dropped 1.2%
- Hong Kong’s Hang Seng lost 1%
However, Australia’s consumer sentiment surged to a three-year high, supported by an interest rate cut.
European Markets Slide
European markets closed sharply lower on Monday, with STOXX indices declining as concerns over:
- U.S. tariffs
- Higher public spending in the Eurozone
Major decliners included:
- Technology stocks: ASML, SAP, and Infineon
- Aerospace and defense stocks: Airbus, Safran, and Rolls Royce
Despite broad market losses, the defense sector continued to outperform due to increased military spending.
Currency and Commodity Markets
The U.S. dollar index weakened to 103.7, near a four-month low, as fears of a U.S. recession weighed on sentiment. The dollar fell against safe-haven currencies like the yen and Swiss franc, while the euro strengthened to 1.0843, driven by expectations of increased defense spending in Europe.
Oil Prices Near Three-Year Low
Oil prices declined further in Asian trade on Tuesday, pressured by:
- Fears of a U.S. economic slowdown
- Trump’s 20% tariffs on China
- Rising supply, as Trump ramped up U.S. oil production and urged OPEC to increase output
Markets are now awaiting OPEC’s monthly report for further insights.
Key Stock Movements
Delta Air Lines
- Cut its first-quarter profit forecast by half due to weaker consumer and business confidence
- Shares fell 14%, dragging airline stocks lower
- Now expects revenue growth of 3%-4%, down from 7%-9%
Oracle Corporation
- Forecasted strong growth for fiscal 2026 and 2027, with revenue expected to rise 15% and 20%
- Quarterly revenue of $14.13 billion, slightly below expectations
- Investing $16 billion in AI-driven cloud infrastructure
Apple Inc.
- Preparing a major software overhaul for iPhone, iPad, and Mac
- Inspired by the Vision Pro mixed-reality headset, the revamp will unify the design across Apple’s platforms
- Expected to be unveiled at WWDC in June
Novo Nordisk
- Shares fell over 9% after releasing trial data for obesity drug CagriSema
- While the drug met its primary endpoint, the results were underwhelming compared to rival treatments
Taiwan Semiconductor Manufacturing Co. (TSMC)
- February 2025 revenue surged 43.1% YoY, driven by AI and high-performance computing demand
- However, revenue fell 11.3% month-over-month due to seasonal factors and inventory adjustments
Bristol-Myers Squibb & 2Seventy Bio
- Bristol-Myers Squibb will acquire 2Seventy Bio for $286 million ($5 per share)
- Represents a 78.6% premium over Monday’s closing price of $2.80
- Acquisition is focused on cancer treatments, particularly Abecma, an FDA-approved myeloma therapy
Elon Musk’s X Platform Suffers Cyberattack
- Musk confirmed a massive cyberattack on X (formerly Twitter)
- Believed to be a coordinated attack or possibly nation-state backed
- Outages affected tens of thousands of users on Monday
BASF Prepares Agricultural Chemicals Listing
- BASF SE is exploring an IPO for its agricultural chemicals division
- Working with Deutsche Bank and Goldman Sachs
- Potential valuation over €20 billion, with a listing expected by 2027
Liverpool FC Signs Adidas Kit Deal
- Liverpool FC signed a multi-year deal with Adidas, replacing Nike
- The five-year contract is reportedly worth over £60 million annually
- Adidas previously partnered with Liverpool from 1985-1996 and 2006-2012
Upcoming Data & Market Events
Key events to watch today:
- JOLTS Job Openings Report – Offers insights into U.S. labor market conditions
- Earnings reports from Ciena and Dick’s Sporting Goods
For more information visit https://cc.com.mt/. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning investments or investment decisions, or tax or legal advice.
