Week of 2 March

A quiet week on the data front left the markets attentive to geopolitical considerations as rotation out of AI continued despite solid earnings from Nvidia. Gold rose to a three-week high on Monday at $5,150 and crossed over $5,250 at one point before heading to end the week just below $5,200.

A more active week on the economic front is ahead, with highlights including global PMIs and Eurozone CPI, ahead of US NFP on Friday.

Week in Review

Markets started the week reacting to the US Supreme Court ruling that rescinded the "Liberation Day" tariffs and to Trump's reimposition of 15% global tariffs under a different statute. Markets were inclined to be risk-averse at the start of the week, then fell sharply after a report on the potential effects of AI rattled traders.

The Nasdaq rallied ahead of Nvidia's earnings but struggled to maintain the gains even as the leading AI chipmaker posted solid results. AI continues to lead the conversation, with Dell stock surging after it reported rising demand for servers, and Block jumping after CEO Jack Dorsey announced he was going all-in on artificial intelligence and cutting half the company's workforce. Meanwhile, Netflix popped after it pulled out of the fight for Warner Bros, leaving Paramount the winner.

Crude prices fluctuated through the week amid the third round of talks between the US and Iran over the latter's nuclear programme. No deal was struck, but both sides agreed to keep talking next week, which helped ease tensions, though the continued US military buildup in the region boosted Brent. 

Bitcoin fell below $63K with analysts blaming increased uncertainty from tariffs, but cryptos staged a recovery later in the week after Jane Street was sued for market manipulation. However, BTC is still set to end the week lower.

On Friday, China's PBOC cut its FX risk reserve in a bid to slow the rise of its currency. The Chinese Yuan has risen to its strongest level since early 2023 amid strong exports and a rising US trade deficit.

Australia's January CPI came in hotter than expected, leaving the market expecting more rate hikes from the RBA. Some analysts are predicting as many as three hikes by the end of the year amid increases in housing prices.

Biggest Market Movers

• Gold jumped on Tuesday amid a market sell-off and remained elevated for the rest of the week, setting it up for the seventh consecutive month of gains.
• The yen was the worst performer of the major currencies amid a stronger dollar and reports that PM Sanae Takaichi expressed concern about BOJ plans to raise rates.
• Aussie was among the best performers as markets price in more rate hikes amid rising house prices.
• Stoxx600 reached an all-time high, supported by mining stocks that have benefited from high commodity prices.

Top Events in The Week Ahead

There is a more active data schedule in the coming week, but some geopolitical events could still take precedence. The US and Iran are expected to resume talks in Geneva to avoid escalation in the region. In China, the National People's Congress will begin its annual meeting on Thursday, and is expected to set the nation's annual GDP growth target. In terms of economic data, economic growth could be the theme for the week, as investors parse global PMIs and US NFP.

Global Economy Recovering

Major economies will report their PMIs on Monday, with both the US and China readings expected to remain in expansion. However, after disappointing US Q4 GDP data, traders could be looking for signs of deceleration to justify further monetary policy easing. That includes January retail sales data expected on Friday, which is expected to slow to 0.0% from 0.2% in December. SP500 could revert towards the 7k handle again if US PMIs are positive or deteriorate further to this week’s low of 6820.

Eurozone CPI and ECB Stance

The release of flash Euro Area February CPI figures could move the market, following ambivalent data from French and German readings on Friday. The headline rate is expected to fall to 1.7% from 2.0%, while the core rate remains unchanged at 2.2%. After ECB President Christine Lagarde emphasised concerns about the effects of wage growth this week, traders will be looking at the final PMI figures to see where inflationary pressures lie. Price could break outside the tight zone between 1.1760 and 1.1830, opening the door to 1.1888 or 1.1700.

Another NFP Beat?

The US February NFP is expected to fall back to 70K on Friday, after the surprise 130K in January. However, many analysts expect last month's figure to be revised downward to align with projections. The unemployment rate is projected to stay unchanged at 4.3%. Ahead of the data, US ADP employment is expected to show 19K jobs created compared to 22K reported in January. With gold crossing and maintaining $5100, nextmajor resistance lies at $5400. On the downside, support waits at the $5k handle, with a breakdown exposing $4860.

Other Events and Earnings

Monday includes UK Nationwide housing price data. The UK Spring Economic Statement is expected on Tuesday. Wednesday has Japanese consumer sentiment. Australia's trade balance comes out on Thursday. For Friday, Canada's Ivey PMI is scheduled.

Earnings season is unofficially over, but there are several notable names expected to report this week, such as CrowdStrike, AutoZone, Broadcom, Costco, Marvell, Kier, Reckitt Benckiser and Smith & Nephew. Alibaba has not confirmed a date for its Q3 earnings, but is widely expected to report this week.