Hopes of a swift end to the war in Ukraine faded after Presidents Trump and Zelenskyy clashed in a meeting at the White House. The meeting had been meant to culminate in the signing of an agreement granting the US joint rights to exploit Ukraine’s mineral wealth, with Ukraine pushing for US security guarantees in response.
The US president also pressed ahead with imposing 25% tariffs on Mexico and Canada as of 4 March – the tariffs had been delayed with just hours to go in early February – and slapped a further 10% tax on Chinese imports. He also threatened the EU with 25% tariffs and said he would bring in levies on other major trading partners.
UK
The FTSE 100 rallied 1.7% over the week.
US
The S&P 500 lost 3.2% over the week while the Nasdaq tumbled 6.0%, marking its sharpest weekly decline since last September as shares of NVIDIA fell despite it beating quarterly earnings forecasts.
The Conference Board’s Consumer Confidence Index fell to 98.3 in February, marking the steepest monthly drop since August 2021. Consumer expectations dropped below 80 for the first time since June 2024 while one-year inflation expectations rose sharply to 6%.
The final reading of US fourth-quarter GDP growth was confirmed as an annualised rate of 2.3%.
The core PCE price index, the Federal Reserve’s preferred gauge of underlying inflation in the US economy, rose by 2.6% on an annual basis in January, easing from December’s rate of 2.9%.
Europe
The Eurofirst 300 rose 0.7% over the week.
In Germany’s elections, the conservative CDU/CSU, won the largest shares of the vote but fell short of an overall majority. The far-right AfD came second while the outgoing Social Democratic Party came third. The CDU/CSU is in talks with the Social Democrats regarding the formation of a coalition government.
Preliminary estimates of inflation at a country level for February were mixed. Inflation held steady at 2.8% in Germany but was unchanged in Italy at 1.7%. In France, the rate fell to a four-year low of 0.9% from 1.8% in January.
The minutes of the European Central Bank’s January meeting indicated that policymakers were confident that inflation was heading back to the 2% target but also called out “there was some evidence suggesting a shift in the balance of risks to the upside since December.” Some rate setters argued for “greater caution” on the size and pace of further interest rate cuts.
Japan
The Nikkei 225 dropped 4.2% over the week amid growing concerns over a global trade war and the Bank of Japan’s push to normalise monetary policy.
Pacific Basin ex Japan
China’s NBS Composite PMI Output Index increased to 51.1 in February from January’s five-month low of 50. The manufacturing PMI rose to 50.2 from 49.1 in January, while services activity improved to 50.4 in February, up from 50.2.
Emerging Markets
The MSCI EM Index fell 0.7% in USD terms over the week.
India’s inflation rate softened to 4.3% due to a moderation in food prices.
