As we start a new week, let's take a look at the significant events in the global economy over the past week with our weekly financial update, presented by Bas Kooijman, the CEO and Asset Manager of DHF Capital SA.

U.S. equity markets posted gains last week, reversing multi-week declines. The Dow Jones Industrial Average led the way with a 1.2% increase, while the S&P MidCap 400 logged its first weekly advance since January. However, large-cap technology stocks lagged, putting pressure on the Nasdaq Composite, which ended as the weakest performer. The Russell 1000 Value Index continued to outperform its Growth counterpart, marking five straight weeks of leadership and extending its year-to-date edge to nearly 9 percentage points.

The Federal Reserve held interest rates steady at 4.25%–4.5% during its March meeting. While projections for 2024 rate cuts remained unchanged, policymakers revised inflation expectations upward for 2025 and trimmed growth forecasts. Fed Chair Jerome Powell struck a reassuring tone, suggesting the economic outlook remains stable despite rising global tensions. Investors welcomed the Fed’s stance, prompting a late-week rally across most equity sectors.

Economic data released during the week offered mixed signals. Retail sales came in below expectations, though core control group sales—which contribute to GDP—rose a solid 1%. Manufacturing data from New York showed a drop in activity and waning business optimism. Meanwhile, the housing sector provided a bright spot, with stronger-than-expected home sales and housing starts in February.

European stocks managed modest gains, with the STOXX Europe 600 rising 0.56% to break a two-week losing streak. Hopes for increased government spending supported sentiment, though concerns about impending U.S. tariffs tempered enthusiasm. Market performance varied by country: Germany’s DAX slipped slightly, while France and the UK saw marginal gains. Italy’s FTSE MIB led the region, up 0.98%.

Central banks across Europe emphasized caution, citing uncertainty surrounding global trade. The Bank of England held rates steady at 4.5%, with only one policymaker voting for a cut—suggesting inflation concerns remain front of mind. Sweden’s Riksbank and the European Central Bank (ECB) also kept rates unchanged. ECB President Christine Lagarde flagged rising trade tensions as a key risk, warning that proposed U.S. tariffs could slow eurozone growth and push inflation higher.

Switzerland diverged from the pack, with the Swiss National Bank cutting its key rate by 25 basis points to 0.25%, pointing to low inflationary pressures. Meanwhile, ECB watchers expect two rate cuts later this year, with the first potentially arriving in April. Economic growth remains fragile, and central bankers appear committed to a measured approach as they monitor evolving global trade dynamics and their impact on inflation.

Japan’s markets posted strong gains, with the Nikkei 225 rising 1.68% and the broader TOPIX up 3.25%. Support came from foreign investor inflows and optimism around corporate performance. The Bank of Japan maintained its benchmark rate at 0.5% and reiterated a cautious policy stance, citing trade risks. Inflation data remained elevated, with February’s core CPI up 3.0% year over year. Early results from spring wage negotiations showed steady income growth, potentially reinforcing inflation expectations.

Meanwhile, China’s markets declined following two weeks of gains. The CSI 300 Index fell 2.29%, and the Shanghai Composite dropped 1.60%. Despite the downturn, economic indicators for the January–February period exceeded expectations. Retail sales grew 4.0%, industrial output rose 5.9%, and fixed asset investment jumped 4.1%. These data points suggest a stable start to the year.

However, structural challenges remain. Property investment continued to contract—falling 9.8%—and urban unemployment rose to 5.4%, a two-year high. Still, market sentiment improved as brokerages raised GDP forecasts. At the National People’s Congress, Chinese officials reaffirmed a 5% growth target and pledged stronger fiscal and monetary support. Beijing emphasized boosting domestic consumption as a top priority for 2025, aiming to counter global headwinds and restore investor confidence.