Market Updates

This week features a light economic data calendar alongside a Fed blackout period, with key events including Japan’s GDP, US CPI, and eurozone inflation, while US lawmakers face a critical deadline to avert a government shutdown. Last week, weaker-than-expected US data fueled stagflation concerns, leading to market volatility, a decline in the dollar, and a drop in equities, while China’s policymakers signaled targeted stimulus amid ongoing disinflationary pressures.

Market volatility is being driven by macro and foreign policy shifts alongside structural forces like AI, making tactical positioning crucial as AI’s impact on corporate earnings becomes more uncertain, with private markets playing a key role.

Markets focus on global PMIs, central bank decisions, and trade tensions this week, with key events including the ECB rate decision, US employment data, and China’s National People’s Congress, while last week saw US Treasury yields fall, equities rebound, and China adopt a more accommodative monetary stance amid tariff concerns.

European stocks have outperformed U.S. equities in early 2025, leading BlackRock to close their underweight stance on Europe amid potential catalysts for valuation gains, yet they remain overweight U.S. stocks, expecting strong corporate earnings and AI-driven growth to sustain U.S. market leadership while increasing their underweight on long-term U.S. Treasuries.

This week’s focus includes key data releases like eurozone CPI, US consumer confidence, and GDP, while corporate earnings, notably Nvidia’s, and central bank commentary from the ECB and Fed will steer market sentiment, following a risk-off week spurred by disappointing retail sales and rising inflation expectations.

AI-driven economic shifts are boosting energy demand, evident in the 2024 rally in utility stocks, and despite innovations like DeepSeek’s AI model, BlackRock see continued growth opportunities in utilities and infrastructure.

Global markets face a volatile week amid US tariff threats, inflation surprises, and shifting rate cut expectations, with key economic data releases including UK labour market figures, US retail sales, and Fed minutes. Meanwhile, China’s economy shows mixed signals, as strong credit expansion raises sustainability concerns ahead of the National People’s Congress.

U.S. policy shifts and AI advances are fueling market volatility, reinforcing a new macro environment; BlackRock remain risk-on, staying overweight U.S. equities for AI-driven growth while favoring eurozone government bonds amid expected rate cuts.

This week, key market events include Fed Chair Powell’s testimony, US CPI and PPI data, and earnings from major companies, while markets also monitor US-China trade tensions and further tariff announcements. Last week, uncertainty persisted amid trade war rhetoric, with softer US labor data, rising eurozone CPI, a BoE rate cut, and China’s inflation ticking up due to Lunar New Year spending, though deflationary pressures remain in its manufacturing sector.

Last week’s AI stock volatility highlights the market’s real-time learning curve, reinforcing the need for a structured framework to track mega forces like AI’s buildout, adoption, and transformation, as we see a widening range of beneficiaries and remain overweight U.S. stocks.