Market Update

U.S. stocks ended the week lower, pressured by declines in the "Magnificent Seven." Nvidia's Q4 earnings exceeded expectations but highlighted a slowdown in data center revenue growth. However, the company reported $11 billion in Blackwell product revenue, surpassing forecasts and alleviating demand concerns.
On Thursday, President Trump announced new tariffs on Mexico and Canada, set to take effect on March 4th, along with an additional 10% tariff on Chinese goods. In response, Asian markets experienced a sharp pullback on Friday, wiping out much of their earlier weekly gains. Trump also proposed 25% tariffs on imports from the European Union, particularly targeting the automotive sector. Despite this, European markets closed the week slightly higher, bolstered by strong corporate earnings and gains in defense stocks.
While markets have remained relatively stable amid Trump’s tariff announcements, uncertainty around trade negotiations is beginning to weigh on investor confidence. His unpredictable approach—balancing negotiation tactics with policy—has made it challenging for markets to find clear direction. With Trump instructing his team to explore "reciprocal" tariffs for each country, volatility is expected to persist, prompting investors to adopt a "wait and see" approach. While short-term fluctuations may continue, pullbacks could present buying opportunities for long-term investors.
In the U.S., Friday’s release of January’s core PCE inflation report aligned with expectations, providing reassurance on inflation’s trajectory. Annual personal consumption growth eased to 2.5% from 2.6% in December, while core inflation slowed to 2.6% from 2.9%. Personal income saw a notable 0.9% month-over-month increase, the largest in a year. However, personal spending declined by 0.2%, marking its first drop in nearly two years. The combination of softer consumer spending and slower income growth is likely to capture the Federal Reserve’s attention. While inflation is moderating, the monthly rate remains above the Fed’s preferred level, keeping the possibility of future rate hikes on the table.
The UK’s FTSE 100 outperformed other major indices, supported by UK Prime Minister Keir Starmer’s visit to the White House, which maintained positive sentiment. Although discussions on a U.S.-UK trade deal were amicable, no firm commitments were made, and tariffs were notably absent from the conversation, which was viewed positively. However, Starmer left without securing U.S. security guarantees for Ukraine.
On Friday, tensions escalated in the Oval Office during a meeting between President Trump, Vice President JD Vance, and Ukrainian President Zelensky. The discussion centered on a potential agreement where the U.S. would gain access to Ukrainian mineral resources in exchange for supporting ceasefire negotiations with Russia. What began as a diplomatic conversation quickly turned contentious, with Trump and Vance criticizing Zelensky for not showing sufficient gratitude for U.S. support and "gambling with World War Three."
With no agreement reached, uncertainty surrounding a potential peace deal with Russia deepened. Despite the geopolitical drama, U.S. markets, which had already closed after European trading, responded cautiously. The S&P 500 initially dipped following the confrontation but recovered to close higher. Investors speculate that Trump may revisit the proposal in the future.
Over the weekend, British Prime Minister Keir Starmer hosted Zelensky and other European leaders for discussions. During the meeting, Starmer stressed the importance of Ukraine’s allies maintaining and reinforcing their support.
As always, investors should closely monitor geopolitical developments. However, markets have demonstrated resilience despite the ongoing uncertainties.