U.S. stocks fell for a 3rd consecutive week as Middle East tensions and oil market volatility weighed on investor sentiment. Concerns about potential supply disruptions through the Strait of Hormuz, stress in private credit markets, and trade policy uncertainty added to market pressure. The Dow Jones led losses (down about 2%) while the Nasdaq Composite declined less but still fell 1.26%. Recent U.S. data showed mixed signals on inflation and growth. Core CPI rose 0.2% in February (2.5% year over year), while headline CPI increased 0.3% monthly and 2.4% annually. Meanwhile, the Fed’s preferred inflation measure, core PCE, rose 0.4% in January, with the annual rate unexpectedly climbing to 3.1%, the highest since early 2024. U.S. economic growth was also revised lower, with Q4 GDP adjusted down to 0.7% annualized due to weaker exports, consumer spending, government spending, and investment. Housing data show modest improvement as affordability rises. US Treasuries yields rose amid geopolitical uncertainty and inflation concerns. Credit markets started to crack this week, with credit risk dramatically decoupling from equity risk. The STOXX Europe 600 Index declined over the week, slipping 0.47% in local currency terms as ECB signals it is prepared to react to higher energy prices. Japan’s Nikkei 225 Index declined 3.24% as JGBs yields rose while Yen declined. Oil prices surged as traders priced in the risk of supply disruptions. The dollar and bitcoin were bid while gold sank.
Have a great week-end
Charles & Syz Research Lab