USA
The major U.S. indices ended the week on a negative note on Friday, due to heightened inflation fears and uncertainty surrounding trade policies. On Friday, the S&P fell by 2%, the Dow Jones dropped by 715 points, and the Nasdaq tumbled by 2.70%. The sell-off was led by major tech firms, as Meta, Alphabet, and Amazon all declined by more than 4%, while Microsoft also slid 3%.
Inflation and growth concerns continued to increase after the University of Michigan’s final March consumer sentiment report showed that long-term inflation expectations were at their highest since 1993. Furthermore, the rise in the core PCE price index to 2.8% in February, which surpassed expectations, and an increase of consumer spending by 0.4% worried investors who fear a downward trend in U.S. stocks. Additionally, investors are also concerned about Trump’s 25% tariffs on autos that are set to begin next week, raising the risk of retaliatory actions from key trade partners and therefore putting pressure on U.S. equities.
For the week, the S&P slid by 1.53%, while the Dow Jones and Nasdaq also fell by 0.96% and 2.59% respectively.
Source: Yahoo Finance, Bocconi Students Investment Club
In the rates market, the yield on the US 10-year Treasury note fell around 5 bps for the week to 4.24% on Friday, dropping back from the one-month highs reached on Thursday. After the Trump administration announced a 25% tariff on foreign-made cars, the 30-year Treasury yield reached 4.75% on Thursday, the highest level since February 20, driven by concerns about long-term inflation. The spread between the 30- and 5-year yield had grown to more than 63 bps, the widest since early 2022. Shorter maturity yields didn’t rise as much, mainly due to expectations of rate cuts by the Federal Reserve later this year, because of slowing US economic growth.
Short-maturity yields are limited by expectations for eventual rate cuts, but longer-maturity yields remain vulnerable, considering inflation and Trump’s tariff policies. As of Friday, investors priced in more Fed easing. The chance of three or more quarter-point reductions in 2025 was seen at 63.2%, up from 51.1% on Thursday, while earlier this month, Fed officials penciled in two rate cuts for the year.
Over the next week, investors will continue to closely monitor developments in the trade war as well as the US jobs report. The US economy is expected to have added 128K jobs, down from 151K in February, while the unemployment rate is projected to edge up to 4.2%. Wage growth likely remained steady at 0.3%.
Source: U.S. Department of the Treasury, Bocconi Students Investment Club
Europe and UK
In the Eurozone, we saw a negative trend across major stock indices on Friday, marking the third consecutive negative close. For the week, in Europe, the STOXX Europe 600 fell by 1.38%, the German DAX by 1.88%, the French CAC 40 dropped 1.58%, and Italy’s FTSE MIB slid by 0.76% while the UK’s FTSE 100 remained flat with a gain of 0.14%. Of the STOXX 600 Europe index stocks, machinery company Konecranes Oyj saw the largest drop on Friday, as shares tumbled by 10%. Additionally, shares of retail firm CTS Eventim AG & Co. KGaA and hospitality company TUI AG both slid by 8.1%.
Investors responded to U.S. economic data, particularly the personal consumption price index (PCE), which unexpectedly climbed to 2.8%, indicating stubborn inflation. This added pressure to European markets, which were already under pressure following U.S. President Donald Trump’s announcement of new tariffs, set to begin on April 2nd. Trump further heightened trade tensions by threatening additional tariffs on the EU and Canada. On the inflation front, data from France and Spain came in below expectations, as France’s rate remained unchanged at 0.9%, while Spain’s fell to 2.2%.
The German DAX slid by 1.88% for the week, underperforming other European indices. Investor sentiment remained fragile due to mounting concerns over U.S. tariffs and escalating trade tensions, which could weigh on global, and especially German growth, as Germany is among the among countries that would suffer the most from a trade war. Germany’s banking and energy stocks were among the hardest hit, with Commerzbank tumbling 5.2%, Siemens Energy down 5%, and Infineon Technologies dropping by 3.8%.
In the UK, retail sales unexpectedly rose 1% in February, beating expectations of a 0.4% decline. Although growth slowed compared to January, it marked a second consecutive monthly increase, driven by strong performance in non-food stores. At the same time, the final GDP figures confirmed a 0.1% rise for the quarter, with the annual growth rate revised slightly higher to 1.5%.
Source: Yahoo Finance, Bocconi Students Investment Club
In the EU rates market, bond yields tightened across almost all major countries for the week. The UK’s 10-year gilt yield dropped to 4.71% on Friday as markets absorbed the details from the latest Spring Budget. The UK Debt Management Office announced plans to issue 299.2 billion pounds in bonds for the upcoming fiscal year, 2 billion pounds less than this year’s planned issuance, but slightly below the expected 304 billion pounds. In Germany, the 10-year Bund yield slid to 2.71%, the lowest level in over three weeks, as the expected inflation data from France and Spain bolstered hopes for ECB rate cuts.
Source: Trading Economics, Bocconi Students Investment Club
Rest of the World
Japan’s stock market declined over the week, with the Nikkei 225 down 1.30%. The drop was led by Trump’s 25% tariff on all car imports, which threatens Japan’s export-reliant economy, particularly its auto sector. Major carmakers recorded sharp losses, with Toyota down 4.5%, Honda 4.9%, Mazda 4.2%, Subaru 3.6%, and Nissan 3.9%. Meanwhile, minutes from the Bank of Japan’s March meeting reinforced expectations that the central bank could continue raising rates if economic and inflation conditions remain supportive.
The Shanghai Composite slipped 0.67% to close at 3351.31 on Friday. In addition to Trump’s auto and reciprocal tariffs that come on top of the existing 20% duties on Chinese goods, market sentiment was also dampened by ongoing economic uncertainty and the absence of strong policy stimulus from Beijing. Although China has set a 5% GDP growth target for 2025, weak domestic demand and global risks have cast doubt on its feasibility. Notably, BYD Company fell by 1%, Ningxia Baofeng Energy fell 3.5%, and Naura Technology slid 3.4%. For the week, the Shanghai Composite dropped 0.4%, marking its second consecutive weekly decline.
Source: Yahoo Finance, Bocconi Students Investment Club
After the Turkish BIST 100 almost fell to the 9000 level last week amid a wave of political chaos in Turkey, this week it climbed back up by 6.80% for the week and closed at 9659.48 on Friday. To prevent further losses, Turkish regulators expanded the short-selling ban to cover all listed stocks, while the central bank took emergency action by hiking its key overnight lending rate by 200 bps to 46% and had been in close contact with major banks to help stabilize the financial system.
The Ibovespa slid by 0.9% on Friday, reversing weekly gains to a drop of 0.33%. The drop was mainly driven by rising unemployment and increasing trade tensions. The unemployment rate rose to 6.8% in the three months ending in February, up from 6.5% in January, indicating initial signs of a weakening labor market. Most Brazilian equities were down last week, with Embraer falling by 2.7%, and both BRF and Gerdau sliding 2.6%, leading last week’s declines.
Source: Yahoo Finance, Bocconi Students Investment Club
FX and Commodities
The euro climbed above $1.083, the highest in one week, after weaker-than-expected inflation data in France and Spain fueled expectations of more ECB rate cuts. Additionally, French consumer spending declined, and Germany’s unemployment rate edged higher, reinforcing the case for monetary easing. While uncertainty over tariffs is weighing on markets, analysts believe the initial announcement could pave the way for further negotiations, potentially softening the final impact.
The Japanese yen climbed to around 150.7 per dollar on Friday, rebounding from a four-week low as strong inflation data and hawkish signals from the Bank of Japan reinforced expectations of tighter monetary policy.
Fresh data showed Tokyo’s core inflation, a key indicator of nationwide price trends, accelerated to 2.4% in March, up from 2.2% in February, defying forecasts of no change. As already mentioned above, a summary of opinions from the BOJ’s March meeting suggested the central bank could continue raising interest rates if its economic and price outlook holds, making the yen more attractive to investors.
Source: Trading Economics, Bocconi Students Investment Club
WTI crude oil futures fell 0.8% to close at $69.4 per barrel on Friday, as escalating trade tensions, especially between the U.S. and major trading partners, raised fears of a potential global recession. Despite the daily drop, oil still notched its third straight weekly gain, driven by U.S. sanctions targeting Venezuela and Iran. U.S. crude stockpiles fell by 3.3 million barrels, reflecting ongoing robust demand. Tariffs on Venezuelan oil are expected to further cripple the country’s already declining output, while sanctions on Iran and supply constraints from Venezuela continue to tighten the global oil market. Traders remain focused on geopolitical developments and their influence on price movements.
Regarding metals, gold prices rose above $3,080 per ounce on Friday, hitting a record high as investors sought safety amid fears of a global trade war sparked by U.S. President Trump’s new tariffs. Gold has risen nearly 2% this week, marking its fourth consecutive weekly gain. In addition, silver prices rose above $34 per ounce, hitting the highest level since October 2024 and extending weekly gains to nearly 4%. Copper futures, on the other hand, dropped below $5.10 per pound on Friday, retreating further from record highs reached earlier this week as traders locked in profits while awaiting updates on potential US tariffs on copper imports.
US natural gas futures remained around $3.9/MMBtu, near a four-week low, as record production and mild weather weighed on prices. Forecasts indicate above-normal temperatures across the Lower 48 states through April 9, likely curbing heating demand and enabling storage builds. Analysts predict March could see the first net inventory increase for this month since 2012.
Source: Trading Economics, Bocconi Students Investment Club
Next Week Main Events
Source: Trading Economics, Bocconi Students Investment Club
Brain Teaser #32
A sultan has captured 50 wise men. He has a glass currently standing bottom down. Every minute he calls one of the wise men who can choose either to tum it over (set it upside down or bottom down) or to do nothing. The wise men will be called randomly, possibly for an infinite number of times. When someone called to the sultan correctly states that all wise men have already been called to the sultan at least once, everyone goes free. But if his statement is wrong, the sultan puts everyone to death. The wise men are allowed to communicate only once before they get imprisoned into separate rooms (one per room). Design a strategy that lets the wise men go free.
Solution
Every one of the 49 (equivalent) wise men should flip the glass upside down the first time that he sees the glass bottom down. He does nothing if he glass is already upside down or he has flipped the glass once. The spokesman should flip the glass bottom down each time he sees the glass upside down and he should do nothing if the glass is already bottom down. After he does the 49th flip, which means all the other 49 wise men have been called, he can declare that all the wise men have been called
Brain Teaser #33
You are invited to a welcome party with 25 fellow team members. Each of the fellow members shakes hands with you to welcome you. Since a number of people in the room haven’t met each other, there’s a lot of random handshaking among others as well. If you don’t know the total number of handshakes, can you say with certainty that there are at least two people present who shook hands with exactly the same number of people?
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