Market Outlook for the Week: Key Global Economic and Market Updates

Global Stock Market Highlights

Last Friday, the headline and core PCE deflator data, closely monitored by the Fed for monthly price trends, came in line with expectations monthly while declining annually. As a result, Wall Street indices closed with gains of over 1%.

• Nasdaq Composite Index closed at 18,847.28, gaining 1.63% on the day but declining 3.47% for the week.
• NYSE Composite Index closed at 20,028.19, rising 1.11% on the day and 0.74% for the week.
• S&P 500 Index closed at 5,954.50, up 1.59% on the day but down 0.98% for the week.
• Dow Jones Industrial Average EW closed at 13,651.90, increasing 1.27% on the day and 1.14% for the week.

European stocks gave up some of their morning gains and ended slightly lower on Friday. It was a turbulent week as investors weighed the possible effects of US tariffs on the EU economy.

• Stoxx Europe 600 Index closed at 557.19, edging up 0.01% on the day and 0.60% for the week.
• DAX Performance Index closed at 22,551.43, unchanged for the day but rising 1.18% for the week.
• CAC 40 Index closed at 8,111.63, gaining 0.11% on the day but slipping 0.53% for the week.

Asia-Pacific markets experienced significant declines. The declines were mainly due to rising trade tensions after U.S. President Trump announced he would double tariffs on Chinese goods to 20%, increasing worries about a possible global trade conflict.

• Nikkei 225 Index closed at 37,155.50, dropping 2.88% on the day and 4.18% for the week.
• Hang Seng Index closed at 22,941.32, declining 3.28% on the day and 2.29% for the week.
• Shanghai Composite Index closed at 3,320.90, falling 0.98% on the day and 1.72% for the week.
• Australia S&P/ASX 200 Index closed at 8,172.40, down 1.16% on the day and 1.49% for the week.

• The Dollar Index (DXY), a closely watched gauge of the U.S. dollar’s performance against other major currencies, closed at 107.57, rising 0.29% on the day and 0.86% for the week.
• The Brent crude oil, the global oil price benchmark, settled at $72.81 per barrel, dropping 1.03% on the day and down 2.18% for the week.
• The Gold finished at $2,856.91 per ounce, declining 0.65% on the day and down 2.63% over the week.
• The 2-year U.S. Treasury yield particularly responsive to Federal Reserve policy rates, dropped 5.40 bps on the day to 4.01%, losing 19.50 bps over the week.
• The 10-year U.S. Treasury yield an indicator of long-term borrowing costs, fell 4.50 basis points on the day, closing at 4.22%, with a 21.00 bps decline for the week.

Upcoming U.S. Economic Indicators to Watch This Week

This week all eyes will be on the labour market report.

The upcoming U.S. jobs report, scheduled for release this Friday, is anticipated to show an addition of approximately 133,000 jobs for February, marking the smallest gain in four months. In January 2025, the economy added 143,000 jobs, falling short of expectations and down from the revised 307,000 increase in December.

The unemployment rate decreased by 0.1 percentage points to 4.0% in January, reaching its lowest level since May and slightly surpassing market expectations of 4.1%. A similar unemployment rate is anticipated for February.

A strong U.S. jobs report could reinforce concerns that inflationary pressures persist, potentially making the Fed more hesitant to lower interest rates.

Other key labour market data includes ADP Employment Change, Challenger job cuts, and final readings on productivity and labour costs.

The ISM Manufacturing PMI is expected to indicate a slight slowdown, while the ISM Services PMI could show stronger expansion.

Factory orders may have rebounded by 1.5% after January’s 0.9% drop.

Investors will also monitor trade data, S&P Global PMIs, and Fed speeches, particularly Chair Powell’s at the University of Chicago. Additionally, the Beige Book, compiled from assessments by the Fed’s 12 regional banks, will be released. The report will provide updated insights on the U.S. economy and outlook for the coming period.

European Economic Trends: This Week's Macro Insights

Markets will be closely watching the European Central Bank (ECB)’s meeting on Thursday, where a 25-basis-point rate cut is expected, bringing the deposit rate to 2.5%. This would mark the second-rate reduction of 2025, reflecting slowing growth and easing inflation.

The ECB had already lowered its key interest rates by 25 basis points in January 2025, reducing the deposit facility rate to 2.75%, the main refinancing rate to 2.90%, and the marginal lending rate to 3.15%. This move was driven by an improved inflation outlook, with price pressures easing as projected. While domestic inflation remains elevated due to delayed wages and price adjustments, wage growth is slowing, and corporate profits are helping to absorb some of the inflationary impact.

The rate cuts aim to gradually ease borrowing costs for businesses and households, with the ECB maintaining a cautious, data-driven approach to ensuring inflation stabilizes at its 2% target.

Ahead of this, investors tracked the Eurozone's flash inflation data on March 3rd, which showed headline inflation easing to 2.4% in February from January's six-month high of 2.5%, while core inflation fell to 2.6%.

In Germany, factory orders are expected to decline after December’s rebound, while unemployment data will be released for several European countries.

In the UK, focus will be on the Bank of England’s monetary indicators and housing market data. Other key releases include Eurozone Q4 GDP, retail sales, and trade and inflation figures from France, Italy, and Switzerland.

Asian Economic Data: This Week's Outlook

In China, all eyes will be on the first session of the National People’s Congress, set to take place the day after the start of the Two Sessions. Premier Li Qiang is expected to announce a 5% growth target for this year, along with a potential reduction in the inflation target and a higher fiscal deficit to support prior stimulus commitments.

This week brings a series of key economic updates, including official and Caixin PMIs, kicking off February's data releases. China's Caixin Manufacturing PMI rose to 50.8 in February 2025, the highest since November, driven by the strongest growth in output and new orders in three months.

Additionally, the trade balance for January and February will reveal how much Chinese companies have tried to bypass tariffs imposed by former US President Trump.

In Japan, investors are anticipating consumer confidence figures for February and labor data for January.

South Korea will release February updates for its PMI and inflation rate, while inflation data is also awaited from Indonesia and the Philippines.

In Australia, a busy week of economic releases is led by Q4 GDP, which is expected to show accelerated growth.

Other important data points include January's trade balance, building permits, retail sales, and the Ai Group Industry Index.

EquityRT's macro research team presents the weekly economic update, providing insights into the significant economic developments that shape the global markets.

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by ?zge Gürses I EquityRT Macro Research