Central banks took centre stage, with the Federal Reserve holding its policy rate steady as widely expected on Wednesday. While the Fed cut its 2025 GDP expectation to 1.7%, amid tariff uncertainty, however investors appeared to welcome the more dovish than expected tone. Following the Fed meeting US Treasury yields declined and the 10-year yield ended the week down at 4.25%.
Trump’s tariffs and the potential impact on growth and inflation continued to weigh on sentiment, although stocks received a boost on Friday as the President noted that there could be flexibility on tariffs. For the week the Dow Jones Industrial Average continued to be the best performer amongst the major US indices, up 1.2%, its biggest weekly rise in two months. Meanwhile the S&P 500 was up 0.5% and the Nasdaq Composite eked out a 0.2% rise.
The pan-European STOXX 600 added 0.6% for the week, logging its first rise after two weeks of declines. Regional performance was mixed as French and UK indices saw slight gains, while the German DAX dropped 0.4%. The latter was down even after the German parliament passed a reform to lift government borrowing and create a €500bn fund. There were also a number of central bank meetings in Europe, with both the Bank of England and Sweden’s Riksbank remaining on hold. Meanwhile the Swiss National Bank cut its interest rate by a quarter percentage point to 0.25%, in what could be its last move of this cutting cycle.
Japanese equity indices were some of the best performers of the week, helped by foreign buying and a weaker yen. The Nikkei 225 advanced 1.7% while the broader Topix added 3.3%. This came as the Bank of Japan left its interest rates on hold, although with core inflation up at 3% year-on-year in February, ahead of the central bank’s target, this boosted expectations of future rate hikes. Most Asia Pacific equity indices were higher on the week, although Chinese markets were an exception. The Shanghai Composite experienced a 1.6% drop, with mixed economic data released over the week as well as investors pulling back from recent gains.
The value of your investment can fall as well as rise in value, and the income derived from it may fluctuate. You might get back less than you invest. Currency exchange rate fluctuations can also have a positive and negative affect on your investments. Please note that EFG Harris Allday does not provide tax advice. Past performance is not a reliable indicator of future performance.