Late push lifts Nasdaq to its first gain in five weeks.
This week, a strong message emerged indicating that uncertainty is weighing on growth, stoking inflation, and significantly reducing visibility on the interest rate outlook.
The unpredictable and anxious environment for investors is evident in the lack of clear direction across global markets.
The MSCI World equity index ended a four-week losing streak with a rise of 0.7%. The S&P 500 increased by 0.5%, while the Nasdaq gained 0.17%, narrowly avoiding its worst performance since the 2022 bear market. European stocks rose more than 1%, marking their best week in five weeks.
U.S. high-yield credit spreads tightened from the previous week's six-month highs, but gold prices increased, and Treasury yields edged lower.
Investors seeking clarity on political, policy, or data fronts next week may be disappointed, as trading is likely to remain messy and directionless, especially with the end of the quarter approaching. This uncertainty is compounded by the anticipated announcement of new tariffs by President Trump, including reciprocal levies on several countries.
Policymakers have made it clear that this environment affects consumers and may freeze investment, hiring, and spending. Investors might also choose to delay their plans.
One of the strongest investment trends this year has been the shift of capital from Wall Street to international markets, with U.S. stocks underperforming the rest of the world by approximately 13 percentage points. Europe has benefited particularly from these flows, thanks to Germany's historic fiscal policy shift that could substantially boost growth in Germany and the euro zone. However, questions remain about the sustainability of this trend and the reversal of the 'U.S. exceptionalism' trade in the near term.
European Central Bank President has warned that the immediate outlook appears gloomy due to existing conditions. In the U.S., Federal Reserve officials, including Austan Goolsbee, have emphasized concerns regarding potential stagflation.
Next week is poised to be just as uncertain and unclear.
This week’s key market moves include notable underperformance from Wall Street, which highlights the fading 'U.S. exceptionalism' narrative. Big Tech, which previously powered the rally, is trailing even further behind.
Additionally, it has been a remarkable quarter for gold, which is up 15%, marking its best quarter since 2016. Should it exceed 16% by March 31, it would represent its best quarter since 1986.
As for potential market movers on Monday, insights from the week suggest a cautiously optimistic approach.