🔍 The focus this week: Investors want America’s numbers

This year has been a shaky one for the US. So, anxious about the outlook for the economy and markets, investors will be poring over any data that can offer more insight. Next week, that’ll include consumer sentiment and inflation data prints. And, of course, any surprise policy announcements from the president, or news of retaliation measures from the countries facing US tariffs.

That consumer sentiment number will be worth watching. The measure fell to 64.7 in February, the lowest level since November 2023. And you can’t blame any wildcards for throwing off the average, either: the drop was widespread across groups by age, income, and wealth. Analysts expect the stat to work its way up to 67.2 this time – but with tariffs worrying price-conscious consumers, that’s far from guaranteed.

January’s inflation reading came in a touch higher than expected at 3%, suggesting that interest rates may be struggling to curb rising prices. Analysts have predicted the same number for February. Either way, the Federal Reserve will likely take its time before lowering interest rates. See, the jury’s out on how new government policies – namely, tariffs and immigration – will play out, but they risk stoking inflation. Of course, the other side of the equation is to allow the economy to progress. That’s why, concerned about a possible economic slowdown, traders expect between two and three interest rate cuts this year.

Investors have already reduced their expectations for US stocks a little. But if trade wars escalate, or if the murky economic outlook impacts investment and spending, there could be further for them to fall. The S&P 500 and Nasdaq indexes have both slipped to trade close to their 200-day moving averages. Technical analysts, investors, and hedge funds – all of whom offer serious support to stocks – watch this indicator, so you’ll want to keep tabs next week too. And to make sure you can sleep soundly at night, you might consider hedging concentration risks by diversifying your portfolio.

📅 On the calendar

• Monday: Japan household spending (January). Earnings: Oracle.
• Tuesday: US small business confidence index (February). Japan producer price index (February).
• Wednesday: US inflation (February). Earnings: Adobe.
• Thursday: Eurozone industrial production (January), US produce price index (February). Earnings: Docusign.
• Friday: UK economic growth (January), UK industrial production (January), US consumer sentiment (March).

👀 What you might’ve missed last week

Global

• The US president’s tariffs came into force on Mexico, Canada, and China, although a few American-friendly products were granted a one-month exemption.
• Saudi Arabian oil company Aramco slashed the world’s biggest dividend, its hand forced by sliding oil prices and capped production.
• Alibaba launched its latest AI model, which could rival DeepSeek in both cost and efficiency.

US

• The US added fewer jobs than expected in February, while the unemployment rate ticked up.
• The manufacturing purchasing managers’ index came in below expectations at 50.3, and the count of new orders fell the hardest since March 2022.

Europe

• The European Central Bank cut its key interest rate by a quarter of a percentage point to 2.5%.
• Germany announced a nearly $1 billion spending package that sent its borrowing costs north by the most for nearly three decades.
• European leaders held an emergency summit to discuss increased defense spending.

✍️ What does all this mean?

The US slapped 25% import taxes on imports from Mexico and Canada, as well as an extra 10% on Canadian energy. He didn’t miss China, either, handing the country another 10% in levies on top of the previous tax of the same figure. The small concession: products that comply with USMCA – that essentially means they’re made using a lot of American parts – won a month-long reprieve.

The US economy created 151,000 jobs in February, slightly lower than the 160,000 forecast. Plus, the unemployment rate came in a touch higher than expected at 4.1%. Government employment declined, marking early signs of the Department of Government Efficiency (DOGE) layoffs, while healthcare was the main sector for new jobs.

Germany announced plans to borrow nearly a trillion dollars – a sudden “whatever it takes” moment designed to bring the biggest European economy’s spark back. The money will be pushed into two main funds, focused on defense and infrastructure. The spending package led to Germany’s ten-year borrowing costs increasing by the most in nearly 30 years. Although they’re still sitting below a manageable 3%, since the country’s debt-to-economic output ratio is a relatively low 64%. For context, the US had a ratio of 124% in December.

The rest of Europe made big financial plans, too. European politicians held an emergency summit to plan defense spending. Remember, with the US withdrawing its previously always-on support, the region now needs to spend more on its own frontline. Investors bought up related stocks – including Rheinmetall, BAE Systems, and Thales – as they expect their order books to look a little thicker going forward.

Stay classy ✌️

Your Finimize Analyst team