Economic Data and Market Highlights
The global economy faced heightened uncertainty during the week ending March 21, 2025, primarily due to escalating trade tensions initiated by the U.S. administration. The Organization for Economic Co-operation and Development (OECD) and Fitch Ratings downgraded global and U.S. growth forecasts, citing the adverse effects of increased tariffs. Fitch also highlighted potential recessions in Mexico and Canada as a result of these trade policies. These developments have contributed to inflationary pressures and complicated monetary policy decisions for central banks worldwide.
In the United States, major stock indices experienced modest gains, breaking a four-week losing streak. The S&P 500 and Dow Jones Industrial Average each edged up 0.53% and 1.21% respectively. Despite these gains, all major indices remain down for the year, reflecting investor caution amid ongoing economic uncertainties. Corporate earnings reports were mixed; for instance, Nike’s stock declined sharply due to tariff-related issues impacting its financial outlook while Boeing jumped due to an unexpected awarding of the F47 fighter jet contract. Lockheed Martin which was expected to receive the contract sank on the news.
The Russell 2000 index, which tracks small-cap U.S. stocks, just formed a “death cross” which is when the 50-day moving average falls below the 200-day moving average. Technically, it’s seen as a bearish signal and usually reflects underlying weakness or uncertainty in the market. Historically, a death cross in the Russell 2000 doesn’t always lead to a long-term selloff. In fact, data going back to 1980 shows that while returns are often weak or flat over the next six months, the index tends to post positive gains over the following 12 months. The last time this happened was on October 13th, 2023, and the index declined a further 5.6% over the following two weeks before bottoming. On December 29th, 2023, the 50-day moving average crossed back above the 200-day moving average indicating a recovery phase. While this technical pattern suggests we could see continued chop or downside in the near term, it doesn’t necessarily mean disaster is ahead. If anything, it might be more of a short-term caution flag than a long-term warning. If the Fed pivots later this year and starts easing up on rates, small caps could benefit disproportionately, especially since they’ve been beaten down so much.
European markets showed resilience, with stocks posting their best week in five weeks, driven by gains in defense and technology sectors. This positive performance is partly attributed to fiscal stimulus measures announced by Germany to counteract the impacts of U.S. tariffs. Conversely, Asian markets declined due to increased geopolitical tensions and concerns over U.S. trade policies affecting global growth. The MSCI Japan Index jumped 3.07%, influenced by expectations of further interest rate hikes. Overall, the week was marked by market volatility as investors navigated the complexities of evolving trade dynamics and their implications for the global economy.
The Past Week’s Notable US data points (with revisions)
The Upcoming Week’s notable US data points
Source: Morningstar
Data Source: Blackrock, Bloomberg, Charles Schwab, CNBC, Goldman Sachs, J.P. Morgan, Jim Bianco Research, Morningstar, MarketWatch, Standard & Poor’s, and the Wall Street Journal.
Authors:
Jon Chesshire, Managing Director
Michael McNamara, Analyst