United States
A higher-than-expected inflation reading, via the Personal Consumption Expenditures (PCE) Index, along with an upward revision to inflation expectations from the University of Michigan, added to existing concerns about slowing growth amid rising trade tensions. The widely discussed “retaliatory tariffs” are set to begin on Tuesday, with the European Union currently evaluating its response, while Canada has already announced further tariff increases on U.S. goods.
All major U.S. equity indices fell sharply on Friday, with technology stocks leading the declines. The Nasdaq Composite dropped 2.70%, or 481 points, to close at 17,322. The Dow Jones Industrial Average fell 715 points, or 1.69%, to 41,583. Meanwhile, the S&P 500 declined 112 points, or 1.97%, to 5,580. Real estate was the only sector to finish in positive territory, benefiting from its sensitivity to interest rate expectations. On the day, declining stocks outnumbered gainers by a ratio of 4.5 to 1. Despite the sell-off, the S&P 500 closed the week with a relatively modest 1.8% loss.
Technology giants bore the brunt of the selling. Alphabet (Google) tumbled 4.89% to $156, while Microsoft dropped 3.02% following its announcement to cancel two data centre projects in the U.S. and Europe—potentially a signal of oversupply in AI infrastructure. Meta Platforms also declined 4.29% to $576.74, closing right on its 200-day moving average—an important technical indicator closely watched by long-term investors—for the first time since February 2023.
In IPO news, CoreWeave—an AI-focused cloud services provider—completed the largest U.S. tech IPO in four years. Priced at $40, the stock opened at $39 before closing at its issue price. The company raised $1.5 billion and is known for leasing hundreds of thousands of Nvidia GPUs to clients such as IBM and Meta. Its main competitors in the cloud space include Amazon, Google, and Oracle. Amazon shares closed 4.29% lower at $192.74.
The PCE Index reported a monthly rise of 0.4%, pushing the annual rate to 2.8%, up from a revised 2.7% in February. This aligned with the final University of Michigan survey, which showed that respondents now expect 1-year inflation to reach 5%. Analysts continue to highlight that a lack of policy clarity—frequent changes to regulatory or fiscal guidance—has contributed to business uncertainty and poor investor sentiment. As a result, investors remain hesitant to “buy the dip.”
The sell-off in equities triggered a sharp rally in bonds. The U.S. 10-year Treasury yield fell 11 basis points to 4.25%, while the 2-year yield dropped 8 basis points to 3.91%. Futures markets are now pricing in a 75% probability of a 25-basis point rate cut by the Federal Reserve in June. Meanwhile, the U.S. dollar edged lower by 0.10% on the Bloomberg Dollar Index.
In addition to the introduction of further tariffs and any changes from both within the US and the rest of the world, this week will see the release of various job data culminating with non-farm payrolls to be released on Friday.
Europe
European shares fell on Friday as investor sentiment soured following higher-than-expected U.S. inflation data and early declines on Wall Street. The Euro Stoxx 600 index dropped 0.77% to close at 542.1, ending the week down 1.4%. Six of the eleven sectors finished lower, with technology once again leading the declines as investors re-evaluated the sector’s lofty valuations. Conversely, real estate and utilities were the best performers, both gaining more than 1.8%.
In the UK, the sell-off was more subdued. The FTSE 100 dipped just 0.08% to finish at 8,658.
The rally in European real estate stocks was supported by economic data that strengthened expectations of further interest rate cuts by the European Central Bank (ECB). Inflation came in below expectations in both Spain and France, while German unemployment rose in March at its fastest pace in six months.
These developments pushed bond yields lower across the continent. German 10-year yields declined 5 basis points to 2.72%, with 2-year yields also falling 5 points to 2.01%. In the UK, 10-year yields dropped 9 basis points to 4.69%, as weaker equities led to renewed interest in fixed income.
Among individual stocks, Deutsche Bank fell 2.89% after its board reappointed CEO Christian Sewing for a third term, while reshuffling other senior executives in a bid to accelerate the bank’s turnaround.
Mining giants Anglo American and Antofagasta lost 2.95% and 2.56% respectively, pressured by broader declines in commodity prices. Defence stocks were also under pressure—Rolls-Royce dropped 3.24% and Germany’s Rheinmetall declined 2.96% after a report from Fitch Ratings suggested that EU countries may only be able to allocate €500 billion annually to defence spending—far less than the ambitious targets governments have announced.
Despite the weekly losses, investor preference still leans toward European equities. European equity funds recorded a seventh consecutive week of inflows, while U.S. stock funds experienced their largest weekly outflow of 2025 so far.
Australia
The Australian equity market is poised to start the week on a weak note, following sharp declines in global markets on Friday night. ASX200 futures dropped 91 points, or 1.135%, during the evening session. Despite the prevailing risk-off sentiment among investors, the Australian dollar (AUD/USD) remained relatively stable, beginning the week at 0.6287—down 0.29%. Typically, the Australian dollar weakens further in such an environment.
In Friday’s day session, the ASX200 posted a modest gain, rising 13 points (+0.16%) to close at 7,982.00. This performance diverged from other major Asian indices, most of which closed lower. The Japanese Nikkei index was the worst performer, falling 1.8%. In Australia, 7 out of 11 sectors finished in positive territory, led by consumer staples and energy. The technology and real estate sectors were again the biggest laggards.
The technology sector declined 2.16%, weighed down by negative sentiment from the U.S. overnight. Xero shares dropped 2.06% to $155.86, while WiseTech fell 4.32% to $80.05 after an article in the Australian Financial Review reignited concerns around the company’s corporate governance. The article highlighted the need for WiseTech to appoint independent directors in the coming weeks, in line with ASX listing rules, and suggested that ASIC has launched a formal investigation into the company.
In the real estate sector, individual stock movements were mixed, with most trading within a +/-1% range. The sector’s overall decline was driven by Goodman Group, which fell 3.52% to $29.29. Data centre operator Digico declined 4.88% to $3.12, bringing its losses to 37% since its December 2024 listing.
Gold stocks rallied as the metal reached record highs, with the gold sub-sector rising 3.17%. Northern Star Resources surged 3.85%, while Evolution Mining climbed 3.30% to $7.20. Bulk miners delivered a mixed performance—Rio Tinto rose 0.97%, while Fortescue Metals dropped 1.23% to $16.01.
Consumer staples attracted buying interest as investors sought defensive positions. Woolworths added 1.15%, and A2 Milk rose 1.14% to $7.98.
In fixed income markets, bond yields edged lower. The 10-year yield declined by 2 basis points to 4.45%, while the 2-year yield fell 4 basis points to 3.73%.
Looking ahead, the Reserve Bank of Australia (RBA) will announce its interest rate decision on Tuesday. Most economists expect the central bank to hold rates steady at 4.10%, following a 25-basis point cut in February. However, Goldman Sachs has flagged the possibility of a surprise rate cut as an outlier scenario.
Commodities
Gold extended its rally, rising another 0.91% or US$27.83 to close at US$3,085.12 per ounce. The metal ended the session at its daily high, supported by continued safe-haven demand amid growing concerns over retaliatory tariffs. The U.S. and Canada are both set to introduce new tariff measures this week in response to earlier actions. A hotter-than-expected inflation reading also contributed to increased buying interest.
Silver, however, moved in the opposite direction, falling 0.83% to US$34.13.
Bitcoin declined sharply, shedding US$2,974 or 3.5% to close at US$84,335, as broader risk-off sentiment weighed on investor appetite.
Copper also edged lower, down 0.53% to US$9,794 per tonne. For the week, the red metal slipped 0.60% after briefly breaching the US$10,000 level on Tuesday. Ongoing concerns about global economic growth continued to pressure prices.
Iron ore dropped US$0.75 to US$102.20 per tonne, a 0.72% decline, also reflecting investor caution around the global growth outlook.
Oil prices dipped on Friday, though they still managed to notch a third consecutive weekly gain. West Texas Intermediate (WTI) crude fell 0.8% or 56 cents to US$69.36 per barrel, while Brent slipped 0.40% to US$73.63. No new themes emerged in Friday’s trade. Looking ahead, the anticipated increase in OPEC+ monthly production is set to begin in April, with market participants expecting another boost to be announced for May.
Economic Calendar
AU:
- Melbourne Institute Inflation Guage – 11:00am
- Private Sector Credit (Feb) – 11:30am
China:
- Manufacturing PMI (Mar) – 12:30am
US:
- Dallas Fed Manufacturing Index (Mar) – 1:30am
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
