Market News 4 MAR
Stagflation Risks and Trade Tariffs
On Monday, major U.S. stock indices showed significant declines. The S&P 500 lost -1.76%, the Dow Jones Industrial Average fell by -1.48%, and the tech-heavy Nasdaq 100 dropped by -2.20%.
Stock losses were driven by multiple factors, including stagflation concerns, a sell-off in tech giants, and escalating trade barriers. Futures on March contracts also indicate a continuation of the negative trend: E-mini S&P 500 fell by -1.49%, while E-mini Nasdaq 100 lost -1.87%.
Market Pressure Factors
Stagflation Fears in the U.S.
Manufacturing activity in February barely increased, while the ISM Price Index reached a 2.5-year high, signaling rising inflationary pressure amid sluggish economic growth.U.S. Trade Policy
President Trump announced 25% tariffs on imports from Canada and Mexico, while tariffs on Chinese goods will rise from 10% to 20%. These measures could drive up prices and hurt corporate profits.Tech Sector Sell-Off
The "Magnificent Seven" stocks faced heavy pressure: Nvidia fell by more than -8%, Amazon and Tesla lost over -3%, while Microsoft, Apple, and Alphabet dropped by more than -2%.Oil Price Decline
The energy sector came under pressure after Bloomberg reported that OPEC+ will increase oil production by 138,000 barrels per day. As a result, WTI crude oil prices fell to a 2-3/4-month low, causing energy stocks like APA Corp, Diamondback Energy, and ConocoPhillips to drop between -6% and -8%.
International Stock Markets
Markets in Europe and Asia showed mixed results. Euro Stoxx 50 hit an all-time high, rising by +1.41%, while the Shanghai Composite fell by -0.12%. Japan’s Nikkei 225 showed strong growth of +1.70%.
Bond Market and Inflation Expectations
U.S. 10-year Treasury bonds rose, with yields falling by -3.8 bps to 4.166%. However, further bond gains are limited by inflationary concerns, especially after the ISM Price Index hit a 2.5-year high of 62.4. In Europe, German and UK bond yields also increased.
Cryptocurrency Market
Bitcoin reached a weekly high after Trump’s announcement of a strategic cryptocurrency reserve, including BTC, ETH, SOL, XRP, and ADA. However, the lack of concrete details on the plan limited further growth.
Key Events This Week
Trump’s speech in Congress (Tuesday)
ISM Services Index release (Wednesday)
U.S. jobs data: employment and unemployment rate (Friday)
Fed Chair Powell’s economic outlook speech (Friday)
Probability of a Fed Rate Cut
Futures indicate a 7% probability of a 25-basis-point rate cut at the FOMC meeting on March 18–19. In Europe, the likelihood of an ECB rate cut in March is estimated at 99%.
Stock Performance Highlights
Biggest Decliners: Nvidia (-8%), Amazon (-3%), Tesla (-3%), Microsoft (-2%), Apple (-2%), Alphabet (-2%).
Losses in the Energy Sector: APA Corp (-8%), Diamondback Energy (-6%), ConocoPhillips (-6%).
Defensive Stocks Gain: Hershey (+3%), Campbell’s (+3%), General Mills (+2%).
Weyerhaeuser (+4%) benefited from expected tariffs on Canadian lumber imports.
Allegro MicroSystems (+14%) surged on rumors of a potential takeover by ON Semiconductor.
Capri Holdings (+3%) rose on reports of a possible deal with Prada SpA.
The stock market remains under significant pressure due to inflationary risks, trade barriers, and tech sector weakness. Key drivers this week will be macroeconomic data and Fed statements. Investors should monitor upcoming reports and be prepared for high volatility.