Tuesday's Market Update (February 18, 2025)

19 Feb 2025 by rate3

On Tuesday, equities were mixed as the holiday-shortened week started, with the S&P and Nasdaq near flat and the Dow down. Meanwhile, manufacturing activity grew above expectations as traders weighed delayed levies, Ukraine peace prospects, and bearish comments from the Fed. European stock indices hit ATH amid optimism over peace talks. Markets in Brazil are rising, boosted by Lula's plan for infrastructure investments and delayed tariffs. The Indian market is stalling while capital outflow continues as the RBI eases policies and investors expect Trump's tariffs on chemicals, metals, and autos to be enacted in April. Hong Kong stocks surged after Xi met with tech leaders and promised support to rival American competitors. The resource-driven and China-dependent market in Australia is down as the RBA cuts its rate for the first time since 2020. Its counterparts—markets in South Africa and Nigeria—fluctuated as, correspondingly in those countries, unemployment and inflation pressure eased slightly. Oil, gold, and silver are up marginally, remaining in a weekly side trend amid uncertain outcomes of geopolitical developments. BTC, SOL, and ETH continued to decline amid technical factors and growing bearish sentiment.

Details

The NY Empire State Manufacturing Index rose to +5.7 in February, beating forecasts and indicating a slight rebound. New orders and shipments grew, but employment fell. Input costs surged, while business optimism declined despite expectations of future improvement. 1Y trend: "Side" (NYFed)
The NAHB Housing Market Index dropped to 42 in February, a five-month low, due to tariff concerns, high mortgage rates, and housing costs. Current sales, future expectations, and buyer traffic all declined, reflecting weakened builder optimism. 1Y trend: "Down" (Nahb)

World Markets

Germany's ZEW Economic Sentiment Index jumped to +26 in February, its highest since July 2024, exceeding forecasts of +20. Optimism grew over the new government's potential and improved private consumption and construction sector outlooks, though current economic conditions stayed weak. 1Y trend: "Down" (ZEW)
South Africa's unemployment rate dropped to 31.9% in Q4 2024, the lowest since Q3 2023, as employment rose to 17.078M. Finance and manufacturing sectors saw job gains, while youth unemployment fell to 59.6%, a one-year low. 1Y trend: "Down" (Statssa)

Currencies

The euro fell to $1.45 amid concerns over rising defense spending's impact on inflation and rates. European leaders discussed Ukraine support but took no concrete steps, while the ECB is expected to cut rates three times, potentially below 2% by 2026. FYI: Additional military expenditure for the next 10 years is estimated at USD 3.1T. Combined EU yearly GDP is about USD 25-30T. Top five EU economies' GDP is about USD 15T (Germany: $4.5T; UK: $3.5T; France: $3.3T; Italy: $2.2T; Spain: $1.6T). So defense expenditures is expected to stay at 2-3% of combined EU yearly GDP or twice of that for leading economies. 1Y trend: "Down, Depreciated"

Commodities

Silver prices edged higher to near $32.5 per ounce , continuing their recent range-bound trading. Global trade uncertainties and safe-haven demand supported silver. Trump's tariff threats and the ongoing Ukraine war added to the uncertainty. Strong industrial demand, especially from the solar and wind power sectors, also boosted silver prices. 1Y trend: "Up"