US stocks fell sharply this week amid ongoing trade policy uncertainty, with major indexes like the S&P 500, Nasdaq, and Russell 2000 dropping over 3%. Concerns were fueled by confusion around new tariffs, despite the Trump administration announcing delays and exemptions. Economic data showed mixed signals: manufacturing growth slowed in February, while services activity accelerated. The ISM manufacturing index dipped to 50.3%. The Fed’s Beige Book reported modest economic growth and rising prices, with continued concerns over tariffs. Fed Chair Jerome Powell emphasized a cautious approach to future policy moves. February job growth came in at 151,000, slightly below expectations, and unemployment ticked up to 4.1%. Treasury yields fluctuated, while municipal and high yield bonds were pressured by market volatility and energy sector weakness following OPEC’s plan to increase supply in April.
European stocks fell, with the STOXX Europe 600 Index down 0.69%, ending a 10-week winning streak. US trade policy uncertainty weighed on sentiment, though plans for increased defense and infrastructure spending in Germany and the EU helped limit losses. The ECB cut interest rates to 2.5% as inflation slowed, citing “phenomenal uncertainty” around global risks. The ECB lowered its 2025 growth forecast to 0.9% but raised its inflation projection to 2.3%. Germany proposed a EUR 500bn infrastructure fund and higher defense spending. The EU plans to borrow EUR 150bn for military investments. In the UK, mortgage lending surged to GBP 4.2 billion in January as buyers rushed to secure homes before a temporary stamp duty cut expires in March.
