Weekly Market Recap & What's Ahead - 17 to 21 February 2025

Weekly Market Recap & What's Ahead
17 to 21 February 2025

Key Takeaways

• Equities: S&P 500 hit a record midweek before a Friday selloff (-1.7%); Walmart (-6.5%) led retail slump.
• Volatility: VIX jumped to 18.21 (+16.3%) as macro risks increased.
• Digital Assets: Bitcoin dropped below $96K; Bybit hack dented sentiment.
• Fixed Income: US 10-year yield fell to 4.43% amid risk-off moves.
• Commodities: Gold hit a new record on haven demand; crude fell on weak US data.
• Currencies: USD weaker on Fed signals; JPY strengthened on BoJ intervention risk.

Headlines & Macro News (17 to 21 February 2025)

Markets started strong but ended weak as inflation concerns, Fed policy shifts, and geopolitical risks weighed on sentiment.

• US CPI concerns persisted as the Fed minutes signaled a pause in rate cuts due to sticky inflation.
• Trump tariff threats impacted sentiment, with EU autos (-3-4%) and tech stocks declining midweek.
• US-Russia peace talks raised uncertainty, with Ukraine absent from negotiations in Saudi Arabia.
• China stimulus optimism fueled Hang Seng +2.9% late-week, led by AI and tech stocks.
• Germany's elections resulted in a CDU-led majority, with markets reacting positively to potential policy clarity.

Equities

US: Early week record highs in the S&P 500 and Nasdaq reversed into Friday’s selloff (-1.7%) as weak consumer sentiment and Walmart’s (-6.5%) weak outlook rattled investors. Tech stocks saw gains, but Palantir (-10%) dropped on CEO share sales. Nvidia’s upcoming earnings are now in focus.

Europe: DAX (-1.68%) & STOXX 600 (-1.4%) fell on tariff concerns. Philips (-11%) missed earnings expectations, while Novo Nordisk (+5.5%) surged on FDA resolution of shortages.

Asia: China stocks outperformed, with Hang Seng (+2.9%) fueled by AI optimism. Alibaba (+8.1%) surged on strong earnings, while Nikkei (-0.4%) lagged due to US trade risks.

Volatility

The VIX spiked to 18.21 (+16.3%) on Friday amid macro uncertainty and Nvidia's looming earnings. VVIX surged above 100, signaling heightened hedging demand. However, VIX futures eased (-3%) this morning as markets stabilized.

Digital Assets

Bitcoin fell below $96K (-0.6%), failing to reclaim the $100K level. The Bybit hack ($1.4B loss) dented sentiment, leading to broad altcoin weakness. Coinbase (-8.3%) and Riot (-9.8%) dropped, reflecting risk-off positioning in crypto-related equities.

Fixed Income

Treasuries rallied as investors fled to safety. The US 10-year yield fell to 4.43% (-7bps) after a steep equity selloff on Friday. Fed minutes suggested a pause in QT (quantitative tightening), further anchoring bond yields. Japan’s JGB yields surged midweek but were tempered by BoJ intervention threats on Friday.

Commodities

Gold hit a fresh record near $2,950, supported by haven demand amid trade tensions and Fed uncertainty. Crude fell 3% on weak US economic data, with Brent testing $74 support. Copper prices faced selling pressure as rising warehouse stocks raised concerns about near-term demand.

Currencies

The USD weakened after Fed minutes signaled a longer-than-expected QT pause. JPY strengthened, with USDJPY falling to 149.29, but later rebounding on BoJ verbal intervention. EURUSD tested 1.0500, supported by Germany’s election outcome.

Looking Ahead (24 to 28 February 2025)

• Earnings Spotlight: Nvidia (Wed), Salesforce, Stellantis, Dell, Warner Bros. Discovery.
• Macro Events: Fed’s PCE inflation report (Fri), US Q4 GDP revision (Thu), Consumer Confidence & Housing Reports (Tue).
• Global Central Banks: Fed officials speaking; BoJ in focus after CPI uptick.
• Trade & Policy: Trump’s trade stance, US-EU tariff talks, potential further China stimulus.

Markets are eyeing Nvidia’s earnings and the Fed’s PCE inflation report as key catalysts for next week’s price action.

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