Markets Rebound as Investors Brush Off Trade War Concerns

Global markets ended a turbulent trading week with a strong rally on Friday, as investors shrugged off trade war fears and capitalized on beaten-down stock prices. Despite the rebound, uncertainty looms, with major economies still grappling with inflation pressures, policy shifts, and financial instability.

The week was marked by intensifying trade tensions, a historic gold price surge, and a sharp pullback in equities, wiping out nearly $3 trillion in global market capitalization. However, a lack of fresh tariff announcements from U.S. President Donald Trump and a major fiscal policy shift in Germany helped restore some confidence in global markets.

Global Market Developments This Week

1. Gold Hits Record High Above $3,000 Per Ounce

Gold surged past $3,000 per ounce for the first time, fueled by safe-haven demand and growing speculation of Federal Reserve rate cuts.
This marks gold’s 10th weekly gain in the last 11 weeks, signaling strong investor demand for hedging against economic uncertainty.
Inflation fears, geopolitical instability, and central bank buying contributed to the historic rally.

2. Equity Markets Witness Massive Sell-Off

MSCI All Country Index suffered a 2% drop, marking its worst week of the year despite Friday’s recovery.
The S&P 500 and Nasdaq surged over 2% on Friday, registering their best single-day gains of 2025.
However, both indexes posted their fourth consecutive weekly decline, reflecting a persistent downtrend in investor sentiment.

3. U.S. Big Tech Enters Bear Market

The Roundhill “Magnificent Seven” ETF, which tracks the largest U.S. technology stocks, fell over 20% from its December peak—officially entering bear market territory.
Despite Friday’s rebound, weekly losses were still 3%, signaling investor caution toward high-growth tech stocks.

4. U.S. Credit Markets Show Signs of Stress

High-yield credit spreads widened to 340 basis points, the highest in six months.
It was the second-largest weekly spread increase in two years, indicating rising concerns over corporate debt stability.

5. China’s Stock Market Outperforms

Chinese stocks jumped 2.4% on Friday, reaching new year-to-date highs.
The rally was fueled by hopes of additional stimulus from Beijing aimed at boosting domestic consumption and industrial growth.
Over the past two months, Chinese equities have gained 8%, while the S&P 500 has declined 8% in the last month.

Germany’s Fiscal Stimulus Lifts European Markets

A significant policy shift in Germany helped improve market sentiment. Chancellor-in-waiting Friedrich Merz secured support from the Green Party to revise Germany’s strict debt brake, clearing the way for the largest fiscal stimulus package since 1990.

The proposal aims to:

Inject billions into infrastructure, green energy, and technology sectors.
Boost overall Eurozone growth prospects, potentially helping European markets stabilize after months of economic stagnation.

U.S. Avoids Government Shutdown

Another positive market catalyst came from the U.S. Senate, which appears set to pass a stopgap spending bill, preventing a partial government shutdown.

This decision helped ease concerns over:

Federal budget uncertainty
Potential disruptions to government-funded industries
Credit rating risks for the U.S. economy

However, long-term fiscal challenges remain, as U.S. debt continues to climb at an alarming rate.

Bank of America’s “Flow Show” Highlights Historic Economic Growth

A stunning revelation from Bank of America’s latest “Flow Show” report underscored the resilience of the U.S. economy.

Since the pandemic low in 2020, the U.S. economy has grown 50% in nominal terms.
Despite concerns about high household, business, and federal debt, these liabilities have remained stable as a percentage of GDP.
This helps explain why the economy has avoided a severe financial crisis despite aggressive Federal Reserve interest rate hikes over the past two years.

Highlighting Events to Watch:

China’s Economic Data (February): Includes house prices, industrial production, investment, retail sales, and unemployment figures.
China’s Policy Announcements: Possible new stimulus measures to boost consumer spending and manufacturing.
India’s Wholesale Price Inflation (February): A key indicator for India’s monetary policy outlook.
U.S. Retail Sales (February): A critical measure of consumer spending trends.

Additionally, investors will be closely monitoring central bank meetings from: