OUR ALGORITHMS HAVE PULLED US FROM THE MARKET
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Mixed economic data in wake of Beige Book:
Manufacturing growth slowed in February as the ISM manufacturing PMI dipped to 50.3%, with new orders falling sharply into contraction at 48.6% and prices surging to 62.4%, while the services sector continued to expand, with its PMI rising to 53.5% for the eighth consecutive month of growth. The Federal Reserve’s Beige Book, released Wednesday, indicated modest economic growth but noted weaker consumer spending, increased price sensitivity, and ongoing uncertainty regarding tariffs, which were mentioned 49 times in the report. Fed Chair Jerome Powell acknowledged the heightened uncertainty surrounding trade, immigration, and fiscal policy, emphasizing that policymakers would take a cautious approach and wait for greater clarity before making further monetary policy adjustments.
Europe
The pan-European STOXX Europe 600 Index fell 0.69%, breaking a 10-week winning streak, as uncertainty over U.S. trade policy weighed on sentiment, though expectations of increased defense and infrastructure spending in Germany and the EU helped limit losses. Major European indexes had mixed results, with Germany’s DAX rising 2.03% and France’s CAC 40 edging up 0.11%, while Italy’s FTSE MIB slipped 0.16% and the UK’s FTSE 100 dropped 1.47%. Meanwhile, the European Central Bank (ECB) cut its key deposit rate by 0.25 percentage points to 2.5%, with President Christine Lagarde emphasizing the high level of economic uncertainty, particularly regarding a potential trade war with the U.S. This uncertainty has already impacted investment and exports, prompting the ECB to lower its 2025 eurozone growth forecast to 0.9% while raising its inflation projection to 2.3% from 2.1%. Recent data also showed eurozone inflation slowed to 2.4% in January from 2.5% in December, with core inflation declining to 2.6% from 2.7%.
Japan
Japan’s stock markets had a mixed performance, with the Nikkei 225 Index slipping 0.72% while the broader TOPIX Index gained about 1.0%, as uncertainty over U.S. tariffs and other policies dampened global risk appetite. The yen strengthened on safe-haven demand, rising to the mid-147 range against the U.S. dollar from around 150.6 the previous week. Meanwhile, the yield on the 10-year Japanese government bond climbed to 1.53%—its highest level since 2008—amid expectations that the Bank of Japan (BoJ) will continue raising interest rates. In a significant policy shift, Japan’s government is set to declare an official end to long-term price deflation, with Economy Minister Ryosei Akazawa noting that all key deflation indicators have turned positive. This development could influence the timing of the BoJ’s next rate hike, as the central bank reaffirmed its stance that further increases would be contingent on economic forecasts being met.
China
Mainland Chinese stock markets advanced as Beijing unveiled economic growth targets aligned with forecasts and hinted at further stimulus amid an escalating U.S. trade war, with the CSI 300 Index rising 1.39% and the Shanghai Composite Index gaining 1.56%, while Hong Kong’s Hang Seng Index surged 5.94%. At the National People’s Congress (NPC), China set a 5% growth target for 2025 for the third consecutive year and raised its fiscal deficit goal to 4% of GDP—the highest since 1994—while lowering its inflation target to 2%, the lowest since 2003, reflecting deflationary pressures. While most targets met expectations, analysts remain skeptical about China’s ability to sustain 5% growth amid trade tensions and a persistent housing slump. The decision to increase the fiscal deficit target marked a significant shift, signaling the government’s readiness to ramp up borrowing and spending to meet its growth objectives. Premier Li Qiang emphasized boosting consumption as the top priority for 2025, though Beijing provided little detail on specific measures in its annual economic blueprint.
What We’re Showing:
Midway through the 2020s, it’s time for a quick look back at how the world’s top 20 economies have performed since 2015. This graphic ranks countries by their forecasted gross domestic product (GDP) in 2025, and visualizes their inflation-adjusted growth since 2015. The 2015 figure was calculated by reversing the effects of real GDP growth for every intervening year. All figures are in 2025 dollars.
Data for this chart is sourced from the International Monetary Fund.
