Friday's Markets Update (February 21, 2025)

21 Feb 2025 by rate3

On Friday, equities plummeted as consumer sentiment and business activity dropped sharply to a 17-month low on tariffs, spending cuts, and hectic Trump's politics blowing up inflation expectations to a one-year high.

World's Markets:

EU manufacturing continued to contract at a slower pace while services growth slowed.
EU stocks are flat, positioning for Germany's Sunday election, where right-wing parties, headed by CDU, CSU, and far-right AfD, are leading.
The Brazilian market closed in red as retailers went down due to tariffs resetting long-term growth perspectives, despite still growing revenues.
The Indian market ticked down again, dragged by finance, auto, and pharma on tariff expectations, despite the local economy continuing to expand.
Chinese equities rallied, hitting a 7-week high on AI optimism and PBoC liquidity injections. This was joined by Japan's stocks led by tech, despite inflation hitting a 2-year high.
Mexican GDP growth is the lowest in 3 years.
Commodities and Currencies:

Gold is hanging near ATH as oil goes down on a looming global economic depression, even as supply concerns rise due to volatile geopolitics.
The dollar is depreciating on economic worries.
Crypto: BTC, ETH, and SOL dropped on stocks and the ByBit hack. The crypto market has stayed in the red for a month, unable to recover after the end-of-January risk-off Trump's tariffs crash.

The State of the World Market: Deeper Down, investors' unease on hectic Trump's politics is increasing as data shows an accelerating economic downturn. Meanwhile, Chinese market stood out supported by AI and PBoC.

Details

The S&P Global US Composite PMI fell sharply to 50.4 in February from 52.7, signaling near-stagnation in the private sector. Service sector contraction offset manufacturing gains, weakening new orders and employment. Input costs rose, while business optimism hit a near two-year low amid policy and economic concerns. 1Y trend: "Up" (PMI)
The University of Michigan consumer sentiment for the was revised down to 64.7 in February, the lowest since November 2023. Declines were seen across age, income, and wealth groups, driven by fears of tariff-induced price hikes and rising inflation expectations. 1Y trend: "Down"

Crypto

Arkham Intelligence reported that the Lazarus Group hacked Bybit for over $1.5B, citing evidence from online sleuth ZachXBT. Bybit confirmed the breach, assuring client withdrawals would be processed. This marks the largest single crypto theft in history. (source)

World Markets

The HCOB Flash Eurozone Manufacturing PMI rose to 47.3 in February 2025 from 46.6, exceeding forecasts. The sector's downturn eased to a nine-month low, with slower production declines, falling new orders, and reduced workforce numbers. Input prices rose, while selling prices and business sentiment dipped. Source: S&P Global. 1Y trend: "Up" (SP)

On Week 9, investors will focus on Fed speeches, major economic data (PCE, GDP, consumer sentiment), and housing metrics. Globally, inflation figures, GDP growth, and key indicators like Germany’s Ifo Index and retail sales will be in the spotlight.

Comment: On A Strategy of The Betrayal.

This week, crazy geopolitical developments are reminiscent of eighteenth-century war games played on European terrain, with their pawn armies driven by kings and royal courts' cliques, motivated by selfish ambitions, national pride, and military voluntarism. Machiavellian 'the ends justify the means' is a hashtag in almost every latest political tweet. Munich 2.0—an attempt to redirect resources to the Pacific front by sacrificing elementary ethical and humanitarian considerations to accounting reasoning —may or may not play out as well as Munich 1.0. One thing is clear, however, from the latest economic data: both investors and consumers do not appreciate interference with their basic necessities. Might this be the first call for multitudes to start seeing the light of day and to understand that giving so much power to one individual is the worst idea that has ever come into humanity's collective mind?