Weekly Market Update (March 16, 2025)
- Market Hedwig
- Mar 15
- 3 min read
HIGHLIGHTS
Concerns over tariffs continue to weigh on market sentiment. S&P dropped around 4.5% year-to-date. The risk of government shutdown has been reduced given the new announcement of the support from the US Senate Minority Leader.
Safe-haven: The traditional safe-haven asset - gold has hit a new record high of above $3000, mainly driven by the demand from investors seeking diversification away from the US assets. Bitcoin also rebounded nearly 7% this week.
China: CSI 300, China’s equities index, is reaching its highest level of the year. Markets are expecting People’s Bank of China to lower the reserve requirement ratio and implement stimulus policies to encourage consumption. The negative CPI data reinforced the need for stimulus. China also implemented tariffs on US goods as a balancing act.
Canada: The Bank of Canada (BoC) cut its rate by 25bps amid concerns about ongoing inflation. The US-Canada trade tensions are leading to a bearish economic outlook. The BoC emphasized that monetary policy cannot offset the impact of a trade war, and urged the government to act on inflation.
MARKETS
17,754.09 | -2.43% | |
S&P 500 | 5,638.94 | -2.27% |
Dow | 41,488.19 | -3.07% |
10-Year | 4.30% | -2bps |
Brent | 70.58 | +0.28% |
DXY | 103.74 | -0.15% |
*Data as of market close. 5-day change ending on Friday.
VIEW FROM THE STREET
Equity
Morgan Stanley: We recommend adding financials and industrials rather than defensives and techs. Cyclical stocks are preferable, especially for domestic manufacturers, including mid-caps. Meanwhile, diversify regionally in emerging markets, Japan, and some European countries. Financials are likely to benefit from deregulation.
J.P. Morgan: S&P500 has given back all the post-election gains. Slowdown in growth, combined with higher valuations and inflation, is weighing on stock markets. Although the corporate fundamentals remain healthy, the US stock markets have been driven by policies recently, and the destination is unclear.
Fixed Income
Morgan Stanley: 10Y yields dropped around 60bps in 6 weeks because of the fear of economic growth slowdown. 3M/10Y curve was reinverted recently, which is a negative indicator for risk-taking and duration typically. Focus on seeking incremental yields in corporate credit and shortening duration.
Standard Chartered: US treasuries are benefiting from the increasing demand for safer assets. 10Y treasury yields dropped as a result. Market starts to price in a potential recession, also driving the yields lower. However, recession is not our base case. We expect economy to remain robust to keep default risks contained and the downside risks to bond yields are limited.
Economy
Goldman Sachs: US CPI reported below expectation. It is a temporary buffer for consumers, while other economic data signal persistent inflation pressures. The low number of initial jobless claims supported the resilience of job market. US growth forecast is revised down from 2.4% to 1.7% because of tariffs.
Morgan Stanley: The recent market turbulence has been mainly attributed to fears about stagflation, tariffs and growth slowdown. While these are legitimate concerns, the markets have overreacted, especially on cyclical stocks given the idiosyncratic backdrop.
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DISCLOSURE
This newsletter is meant for informational purposes only and is not investment advice. Always consult a licensed investment professional before making important investment decisions. Advertising and sponsorship do not influence editorial content or decisions. Market Hedwig is not responsible for the promises made or the quality or reliability of the products or services offered in any advertisement.
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