Market Update – 20 March 2025

Last week was a turbulent week for global markets as investors navigated the complexities of U.S.-China trade tensions, potential central bank rate cuts, and evolving geopolitical developments.

Despite the volatility, U.S. stocks ended the week on a positive note. The Nasdaq and S&P 500 both surged by over 2% on Friday, bringing them level for the week. However, the Nasdaq remains down nearly 10% year-to-date.

The U.S. dollar index experienced a slight decline of 0.1% for the week, contributing to a year-to-date drop of 4.4%. Meanwhile, the Australian dollar edged up by 0.06% on Friday, closing at 63.2 U.S. cents.

Bond yields saw a modest increase, with the 10-year U.S. Treasury yield finishing the week at 4.31%. In the commodities market, oil prices rebounded as Brent crude rose by 1% on Friday to $70.60 per barrel. Gold reached a record high, surpassing $3,000 per troy ounce.

Economic indicators presented a mixed picture. U.S. CPI inflation eased in February, but elevated producer prices and inflation expectations complicated the Federal Reserve's rate decision. Retail sales fell short of expectations, rising only 0.2% compared to the anticipated 0.7%. The OECD also modestly reduced its global growth forecasts due to the impact of tariffs.

In China, officials announced measures to boost household consumption and reduce reliance on exports amid ongoing trade tensions with the U.S. This announcement helped China's stock market outperform its global counterparts.

Closer to home, The Australian share market experienced significant fluctuations last week. The S&P/ASX 200 Index closed at a six-month low on Friday, marking its second-largest weekly fall of 2025. The index lost 2.74% for the week, with energy stocks being the worst affected, tanking 7.45%. The ASX 200 fell below the psychological threshold of 8,000 points, finishing at 7,948.2 points on Friday

As markets continue to await further developments on the trade front, signals from central banks, and the outcome of ceasefire talks between the U.S. and Russia over Ukraine, uncertainty remains high. The absence of major negative news allowed stocks to recover late in the week, but the overall market sentiment remains cautious.