8 min readWeekly recap:
U.S. stocks booked declines across the week after investors reacted to uncertainty surrounding Trump’s global trade tariffs at the start of the week, whilst renewed AI jitters struck at the end of the week, even after Nvidia beat earnings and revenue forecasts for the 14th straight quarter.
The Dow Jones fell 1.3% last week while the S&P 500 fell 0.44%. The risk-off time supported US Treasuries, and 10-year Treasury yields fell below 4% for the first time since November.
The US economic calendar was relatively quiet last week. Producer Price Inflation was hotter than expected on Friday, rising 0.5% MoM, supporting the view that the Federal Reserve will keep interest rates on hold for longer.
Separately, consumer confidence improved in February, primarily due to less pessimistic expectations about labour market conditions.
Geopolitical tensions
The US and Israel launched the fiercest attacks on Iran in decades on Saturday in an operation that killed the Supreme Leader Ayatollah Ali Khamenei. One reason the US and Israel attacked Iran was that they said Iran was close to producing a nuclear weapon. The attack came after nuclear talks in Geneva last week and ahead of planned talks in Vienna this week. Iran has already retaliated with drones and missiles.
Hostilities in the region threaten to upend the energy market and send shock waves through the global economy. All markets are reacting to these developments, but the main focus will be on the oil markets. The Middle East is the largest oil-producing region, and Iran is the third-largest supplier in OPEC. Furthermore, Iran has blocked the Strait of Hormuz, a key chokepoint for oil transportation, through which 20% of global oil passes.
The prolonged shutdown of the Strait could see oil prices remain high for longer. This has implications way beyond the energy markets, with knock-on effects for monetary policy and inflation. Developments in the Middle East will likely overshadow economic data this week.
Safe havens such as Gold and Silver are also opening sharply higher on Monday. These will be driven by geopolitical developments across the week, which will likely overshadow data points, including Friday’s NFP report.
OPEC+ (Sunday)
On Sunday, OPEC+ agreed to a modest 206,000-barrel-per-day output increase for April, just as the US-Israel war on Iran and Tehran’s retaliation raised the risk premium on oil prices. The news is unlikely to have much impact on the oil price, which will be driven by worries of supply disruption.
However, it’s worth noting that the group has little spare capacity to add to supply, except Saudi Arabia and the United Arab Emirates, which could struggle to increase output until navigation in the Gulf returns to normal.
US ISM manufacturing (Monday)
Manufacturing PMIs remain in focus amid Trump’s drive to bring manufacturing back to the US. Using the S&P manufacturing PMI as a comparison point, this fell to 51.2 in February, down from 52.4 in January, marking a 7-month low and pointing to softening demand despite continued sectoral expansion.
Input costs remained elevated, though output price inflation cooled to a 14-month low as firms discounted to support sales. Investors will be watching to see whether this same trend occurs in the IMN manufacturing PMI. Expectations are for the PMI to ease to 52.3 from 52.6. Weak data could pull US equities, such as the Dow Jones, lower.
UK Spring Statement (Tuesday)
The chancellor will present her spring statement at midday on Tuesday, followed by the OBR forecasts. The chancellor has made it clear that she wants it to be a non-event for the market and is not expected to make policy changes, with no major new spending or tax adjustments.
The OBR’s forecasts are expected to show whether debt is continuing to fall as a share of GDP. The market will be watching for any signs of pressure on public finances and how much headroom the Chancellor has.
The Spring Statement is not expected to have a big impact on GBP/USD, which is more likely to be driven by sentiment.
Eurozone CPI (Tuesday)
Expectations are for CPI to remain at 1.7% YoY in February. Looking at regional inflation readings, France and Spain came in slightly above expectations, whilst Germany was below forecasts. In January, the CPI inflation rate was 1.7%, down from 2% in December and slightly below the ECB’s projection of 1.9%.
Despite inflation running below target, the ECB is in no rush to cut rates again, with Christine Lagarde, the ECB president, reiterating that inflation and policy remain in a good place. A cooler-than-expected CPI could pressure EUR/USD.
ECB minutes will also be released on Thursday; these are not usually market-moving and are expected to reinforce expectations that the ECB will leave rates unchanged.
Australian GDP (Wednesday)
Expectations are for economic growth to rebound strongly in Q4 2025, with 0.9% quarter-on-quarter growth, taking annual growth to 2.4%. This comes after Q3 saw softer growth of 0.4%.
High-frequency indicators, including household spending and credit growth, strengthened in the December quarter, suggesting solid momentum into the year-end. Strong growth could help support the AUD/USD higher, which has rebounded strongly as inflation points to the RBA hiking rates again.
Chinese PMIs (Wednesday)
The Chinese official NBS manufacturing PMI for February is expected to remain close to 50, the level that separates expansion from contraction, as Lunar New Year distortions weigh on activity due to factory closures and survey timing. January’s data showed manufacturing at 49.3 and non-manufacturing at 49.4, both in contraction territory amid weak domestic demand.
Meanwhile, the Caixin manufacturing PMI remained in expansion at 50.3, highlighting the divergence between large state-linked firms and smaller export-oriented businesses. The markets will be monitoring whether holiday travel provided support for services. Strong data could support Chinese equities such as the Hang Seng.
ISM services PMI (Wednesday)
Services are the largest contributor to the US economy, and therefore, the PMI data provides timely insight into the health of the US economy. Using S&P services PMI as a comparison, the index fell to 52.3 in February from 52.7 in January, marking a 10-month low but still in expansion territory.
Growth in new business was softer, and employment rose only marginally due to subdued demand and elevated costs. Input inflation remained high with service prices rising to a seven-month peak, although business expectations also improved to a 13-month high.
The services ISM PMI is expected to rise modestly to 54 from 53.8 in January, which could lift the USD and stocks.
US non-farm payroll (Friday)
The market will be watching whether the February jobs report is as strong as the January report, which added 130,000 jobs and saw an unexpected fall in unemployment to 4.3%. The question here was whether this was a one-off or a turning point for the labour market.
Expectations are for payroll growth of 70 to 90,000, and unemployment could potentially edge higher. Weekly initial jobless claims were steady over the comparable survey period. Whilst continuing claims rose very slightly.
On the policy front, Fed officials view the labour market as stabilising after a period of cooling, which has shifted some officials’ stance towards slightly more cautious rate hikes. Stronger-than-forecast data could lift the USD, boosting USD crosses such as USD/JPY, although safe-haven flows will also influence this pair.
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