20 Mar 2025
Stocks rebound on quieter US tariff news
Markets
- Local and global stocks mounted a recovery this week as US tariff news quietened, whilst investors in Europe and China were buoyed by fiscal fresh stimulus.
- Global investor allocations to US stocks saw the biggest drop ever in March with concerns over stagflation, trade wars, and budget repair driving investor sentiment lower.
- In local stock news, Woodside Energy has signed an agreement with China Resources Gas International to send LNG to China in the first binding supply deal for the fuel between our two countries. This comes after China implemented tariffs on US fuel.
- The gold price moved higher to sustain itself above US$3,000 per ounce with investors looking for safe havens in light of rising Middle East tensions and a looming US interest rate decision from the Fed.
Economics
- The US central bank held the cash rate steady for the second straight meeting, with Chairman Jerome Powell acknowledging the high degree of uncertainty from significant Trump policy changes whilst repeating they are in no hurry to adjust rates.
- The US central bank also released their fresh economic forecasts lifting their expectations of inflation to 2.8% at the end of this year and reducing their expectations for economic growth to 1.7% with a slight tick up in unemployment now expected.
- US Treasury Secretary Scott Bessent said the underlying economy is healthy and there’s no reason for the US to experience a recession.
- US consumer sentiment fell sharply in February, coming in below expectations and at the lowest level since November 2022.
- US retail sales rose 0.2% in February, coming in below expectations.
- A key US manufacturing index fell sharply in March, coming in below already negative expectations.
- US industrial production rose by 0.7% in February, coming in above expectations. Import and export prices lifted, against expectations of a flat and negative read, respectively.
- US housing starts lifted 11.2% to a 1.5 million annualised rate in February whilst building permits fell.
- Germany’s much watched spending plan passed through the German parliament as they break away from long held fiscal constraints. A big spending package covering defence and infrastructure aimed at lifting their economy out of the doldrums.
- The Bank of Japan maintained its cash rate settings at 0.5%, in line with expectations.
- China’s consumption and industrial production grew faster in January/February, coming in above expectations.
- Chinese new home prices fell, worsening for the first time in six months.
- Beijing unveiled comprehensive measures aimed at boosting domestic consumption and driving up China’s economic growth. A report from the State Council outlined plans to strengthen the consumer by increasing wages, offering more subsidies, and increasing social welfare.
Politics
- The US defence secretary stated US military strikes on Yemen’s Houthi militants will be unrelenting until the group stops shooting at civilian and military vessels in the Red Sea. US President Trump followed this up with a direct threat to Iran saying he’d hold them responsible.
- The UK government will abolish more regulators to reduce costs for business and scale back welfare spending as it seeks to ignite economic growth.
- Israel launched military strikes across Gaza putting a shaky ceasefire to an end. This came as tensions rose between Syria and Lebanon which, together with US attacks on the Houthis, has ended the Middle East’s relative calm in recent weeks.
- Russia agreed to a 30-day halt to strikes on Ukrainian energy infrastructure during a call with US President Trump.
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