From green to gold cards
César Pérez Ruiz, Chief Investment Officer, Pictet Wealth Management.
A drop in US consumer confidence and a rise in jobless claims weighed on US equities and Treasury yields in a jittery week that ended with some very frayed nerves in the Oval Office. The S&P 500[i] fell 1% (in USD) on the week, with semiconductor stocks losing 7% as results from the leading AI chipmaker failed to deliver a positive surprise. US 10-year Treasury yields declined to 4.2% on the disappointing macro data. The House of Representatives passed – by 217 to 215 votes – a budget resolution calling for trillions of dollars in tax and spending cuts. President Trump, who faces challenges to cut spending and the deficit, also unveiled plans to sell “gold card” visas for USD5 mn, arguing that people who pay for them will create jobs. Trump also said his proposed 25% tariffs on Mexican and Canadian goods will go into effect on March 4 and that he would impose an additional 10% duty on Chinese goods on that day. Chinese equities declined on the news that US authorities will review the status of VIE structures, which allow foreign investors to buy into Chinese companies. China tech lost 5% on the week. Trump trades all retreated on economic data, with several hundred billion USD wiped off global cryptocurrency markets in recent weeks. The Stoxx Europe 600[ii] rose 0.6% (in euros).
Geopolitics
Friday’s tense White House meeting ended with Ukrainian President Zelenskyy leaving without signing a mining accord and the prospect of peace uncertain. A sticking point is security guarantees, which Ukraine wants but the US does not want to give. Britain and France are trying to broker a deal.
Key data
In the US, the Conference Board’s consumer confidence index hit a 9-month low in February on inflation concerns. Core PCE inflation rose 0.285% month-on-month in January, indicating a downward trend in annual inflation to 2.6% from 2.9%. In the euro area, wage growth decreased to 4.1% from 5.4% year-over-year in Q4-2024. Switzerland’s GDP adjusted for sporting events grew by 0.5% quarter-on-quarter in Q4, up from 0.2% in the prior quarter.
[i] Source: Pictet WM AA&MR, Thomson Reuters. Past performance, S&P 500 Composite (net 12-month return in USD): 2020, 18.4%; 2021, 28.7%; 2022, -18.1%; 2023, 26.3%; 2024, 25%.
[ii] Source: Pictet WM AA&MR, Thomson Reuters. Past performance, STOXX Europe 600 (net 12-month return in EUR): 2020, -1.5%; 2021, 25.5%; 2022, -10.1%; 2023, 16.5%; 2024, 9.5%.
