Financial markets 15/04/2025
Financial markets continue to suffer from high volatility due to continuous changes in U.S. tariff policy. U.S. stocks rebounded last week, closing Friday with significant gains, with the S&P 500 at 5,363 points, a gain of 5.70%, and the Nasdaq 100 at 18,690 points or +7.42%. In Europe, movements were much less explosive, and the main indices still closed with slight corrections. The Euro Stoxx 50 fell 1.63% to close at 4,798 points, and the Ibex 35 did the same at -0.63% (12,304 points).
From the stock markets, we want to highlight the aggressiveness of movements in the indices (and in each of the listed companies), using the Nasdaq 100 as an example. After marking a historical high in mid-February at 22,222 points, its price plummeted to a low last week at 16,542 points, a drop of 25.56% in less than 30 trading sessions. The loss of confidence, lack of certainty, and continuous changes in political decisions have created an environment where valuing any asset becomes practically impossible, leading to a flight from risk assets in favor of safe-haven values, a circumstance seen in the last two weeks.
Fixed income markets have not been immune to the uncertainty created by tariffs. The fear of a U.S. recession has increased significantly, and what initially translated into a reduction in debt costs has materialized into a very significant increase in USD interest rates. China has probably been selling a significant amount of the U.S. debt it holds, but it has not been the only factor considered by investors, as tariffs will likely cause an increase in prices in the United States, which will not facilitate a rate cut by the FED. Additionally, it should be noted that 27% of U.S. debt matures in 2025 (about 10 trillion USD) that needs to be renewed, along with a budget deficit close to 7% that will put more paper on the market. Thus, the 10-year Treasury closed with a yield of 4.50% or 50bps more than last week. In Europe, there were barely minimal increases in the yields of the Bund and the Bono, which ended at 2.58% and 3.29%, respectively.
In alternative markets, gold rose 7.25% to close the week very close to the new historical high marked at 3,255.40 USD/Oz, global uncertainty continues to favor purchases of the safe-haven asset par excellence. Meanwhile, Brent fell 1.36% to close at 64.69 USD/b, but 6 USD/b above the weekly low (58.4 USD/b), a crude price level not seen since February 2021.
Last Friday, the earnings season for the first quarter of 2025 began in the United States. The start has been positive for the financial sector, where JP Morgan, Wells Fargo, and Morgan Stanley presented results that exceeded forecasts, favored by trading divisions that benefited from market volatility. Notably, none of them have lowered their estimates for 2025. This week it is the turn of Goldman Sachs, Bank of America, American Express, UnitedHealth, or Netflix, among others.
Macroeconomics remains in the background and seems to be going unnoticed by investors. Last week, we highlight the drop in the U.S. CPI by 4 tenths to 2.4%, expected at 2.5%, and the core figure fell by 3 to 2.8%, a level not seen since 2022.
The references for the current week are several: i) China, exports and imports, GDP, industrial production, and unemployment rate, ii) Europe, industrial production, ZEW investor confidence, final March CPI, and ECB meeting, which will lower at least 25bps, and iii) U.S., retail sales, industrial production, and a lot of activity from FED members throughout the week.
The Quote:
And we say goodbye with the following quote from Stephen Richards Covey, American writer, speaker, and professor: «The key is not to prioritize what’s on your schedule, but to schedule your priorities.»
Summary of the performance of major financial assets (14/4/2025)
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