Market update: 25 February 2025
Global markets struggled this week as concerns over economic growth and inflation weighed on sentiment. The Reserve Bank of Australia (RBA) cut rates by 25bps to 4.10%, its first cut since November 2022. While expected, the RBA maintained a hawkish stance, signalling caution over further easing. The ASX 200 fell 3.0%, its worst weekly loss since September 2022, with financial stocks down 7.5% following weak earnings results. The February reporting season has been mixed, with banking and mining sectors underperforming, while market volatility remains elevated.
In the US, inflation concerns and weak economic data saw the S&P 500 drop 1.7%, while the Nasdaq and Dow Jones each lost 2.5%. Consumer inflation expectations hit their highest level since 1995, reinforcing the Fed’s reluctance to cut rates despite markets still pricing in 1.8 cuts in 2025. Meanwhile, Trump’s proposed 25% tariffs on Canada and Mexico could add cost pressures to the energy sector, while corporate earnings have been strong, with EPS on track to rise 11% for Q4. European markets were mixed, with the Euro Stoxx 600 edging up 0.3%, while the FTSE and Euro Stoxx 50 dipped slightly, as optimism over US-Russia peace talks was offset by ongoing trade tensions.
Greater China and Japan had a mixed week, with the Hang Seng up 3.8% and the Shanghai Composite gaining 1.0%, supported by the People’s Bank of China injecting liquidity into the system. The Nikkei fell 1.0% as a Bank of Japan official hinted at further monetary adjustments, while concerns over tariffs weighed on investor sentiment. With rate cuts, trade policies, and corporate earnings continuing to shape markets, we’ll keep you informed on what’s next. Stay tuned!
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