Global Markets Weekly Wrap KW 8 : Supreme Court Ends Tariffs as Global Stocks Rally

Global Markets Weekly Wrap KW 8 : Supreme Court Ends Tariffs as Global Stocks Rally 

The highest court in the United States delivered a landmark decision that reshaped the trade landscape by striking down the expansive global tariffs introduced during the Trump administration. The ruling removed a broad set of duties that had touched supply chains across continents and affected industries ranging from manufacturing to agriculture and technology. Market participants interpreted the judgment as a potential turning point in the evolution of American trade policy and as a signal that institutional checks and balances remain a defining feature of the economic system.

Equity markets in the United States responded with measured optimism over the course of a holiday shortened week that concluded with renewed momentum. Trading began quietly after markets were closed in observance of the Presidents Day holiday and investors spent the early sessions assessing developments in geopolitics and monetary policy. By the end of the week sentiment improved markedly following confirmation of the Supreme Court decision on tariffs and major indexes registered gains. The technology heavy Nasdaq Composite led advances and notched its first weekly rise since the opening days of January while the S and P MidCap Four Hundred and the S and P Five Hundred also moved higher. The Dow Jones Industrial Average trailed its peers but still finished modestly in positive territory.

Throughout the week investors also monitored rising tensions between Washington and Tehran. Concerns about the trajectory of relations between the United States and Iran contributed to fluctuations in energy markets and pushed crude prices upward. Higher oil prices in turn fed into conversations about inflation and corporate margins, reinforcing the sense that global macroeconomic crosscurrents remain powerful forces shaping asset prices.

Attention midweek turned to the latest minutes released by the Federal Reserve from its January policy meeting. The record of discussion revealed a central bank still navigating a delicate balancing act. Some policymakers expressed openness to lowering interest rates should inflation continue to cool in line with expectations while others underscored the possibility that further tightening might be warranted if price pressures prove more persistent. The minutes conveyed that most participants believed risks to employment had diminished compared with earlier in the cycle yet lingering concern about entrenched inflation remained evident. The document highlighted an institution carefully weighing dual mandates of price stability and maximum employment in an environment that has shifted repeatedly over recent years.

Fresh data on inflation added complexity to that debate. The Bureau of Economic Analysis reported that the core measure of personal consumption expenditures prices which excludes food and energy climbed on both a monthly and annual basis in December at a faster pace than seen in November. The headline reading also edged higher and marked its strongest annual pace since early spring of the previous year. Because the Federal Reserve relies heavily on the PCE index when calibrating policy these figures reinforced the sense that the journey back to the two percent objective may be uneven.

Economic growth data provided another layer of nuance. Output in the fourth quarter expanded at a considerably slower annualized rate compared with the robust pace recorded in the third quarter. The deceleration reflected softer government spending reduced exports and moderation in consumer expenditures. The cooling growth rate prompted questions about the durability of the expansion even as leading indicators suggested that certain pockets of resilience remain.

Business surveys echoed that mixed picture. A preliminary reading of the composite purchasing managers index compiled by S and P Global pointed to the slowest pace of activity growth in ten months during February. Respondents cited subdued demand elevated prices and disruptive weather conditions as factors behind the slowdown. At the same time expectations for output over the coming year improved to their strongest level in more than a year suggesting that firms see potential for a rebound once temporary headwinds pass.

Housing related indicators delivered a varied set of signals. Confidence among homebuilders as measured by the index from the National Association of Home Builders slipped slightly in February. Builders reported that affordability challenges continue to weigh on prospective buyers leading to tempered expectations for future sales. Data on pending home transactions from the National Association of Realtors also pointed to a modest pullback. Yet figures from the Census Bureau revealed that housing starts rose more than anticipated in late autumn and early winter indicating that construction activity retained underlying strength despite financing costs and price pressures.

In fixed income markets US Treasury securities posted negative returns heading into the final trading day as participants digested the firmer inflation numbers and the tone of the Federal Reserve minutes which some described as more hawkish than in prior gatherings. Investment grade corporate bonds held steadier and primary market issuance attracted solid demand. High yield bonds advanced in tandem with equities reflecting a willingness among investors to assume additional credit risk as the week progressed particularly within segments of the technology sector that had previously experienced weakness.

Across the Atlantic European equities continued their upward trajectory. The pan regional STOXX Europe Six Hundred index reached another record high and posted a robust weekly gain in local currency terms. Investors cited improving earnings expectations supportive macroeconomic signals and an appetite to diversify beyond the technology dominated landscape of the United States as catalysts. Germany's DAX Italy's FTSE MIB France's CAC Forty and the United Kingdom's FTSE One Hundred all delivered notable advances with London's benchmark touching a fresh peak during the week.

Economic releases in the euro area presented contrasts similar to those in the United States. Industrial production declined more than anticipated in December according to Eurostat data underscoring ongoing challenges in the manufacturing sector. However an early estimate of February purchasing managers surveys surprised to the upside with new orders accelerating at the quickest pace in nearly four years offering hope that momentum could rebuild.

In Germany an influential measure of investor sentiment known as the ZEW indicator eased slightly from a five year high though it remained elevated by historical standards. Meanwhile speculation swirled around the future leadership of the European Central Bank after reports suggested that President Christine Lagarde might depart before completing her term. Although Lagarde indicated that her baseline intention is to serve out her mandate the discussion fueled debate about succession and highlighted the importance of continuity at a time when monetary authorities remain vigilant about inflation dynamics.

The United Kingdom provided additional data points shaping expectations for policy. Consumer price inflation moderated to its lowest level in nearly a year aided in part by lower fuel costs. Labor market figures showed unemployment rising to the highest level in almost five years and wage growth easing. Together these developments strengthened the case among market participants that the Bank of England could consider reducing interest rates in the months ahead even though inflation remains above target.

In Japan equity benchmarks edged lower over the week as geopolitical uncertainty dampened risk appetite. The economy returned to growth in the fourth quarter after a contraction yet expanded at a slower rate than economists had forecast. Private consumption cooled and although exports were relatively resilient overall momentum appeared restrained. Inflation data showed that nationwide core consumer prices rose at the slowest annual pace in two years reflecting softer food and energy costs as government measures aimed at easing living expenses took effect. The yen weakened against the dollar and yields on Japanese government bonds declined as concerns about aggressive fiscal expansion eased following assurances from Prime Minister Sanae Takaichi that policy would balance investment priorities with fiscal discipline.

Mainland Chinese markets were closed for Lunar New Year celebrations for much of the period while trading in Hong Kong resumed with modest declines by week's end. The International Monetary Fund projected that Chinese growth would moderate in the coming year and emphasized the need to pivot more decisively toward consumption driven expansion complemented by structural reforms. Authorities in Beijing released details of adjustments to the value added tax regime including a higher rate on telecommunications services a move that major providers cautioned could affect profitability. In the United States the Department of Defense briefly updated then withdrew a list of Chinese companies alleged to have military links an episode that illustrated the fluid and sometimes unpredictable nature of relations between the two powers.

Elsewhere in emerging markets Romania's central bank left its benchmark rate unchanged as inflation though easing remained elevated. A judicial pension reform survived constitutional scrutiny bolstering perceptions of fiscal credibility. In Peru Congress removed President José Jeri amid controversy and appointed José Balcázar as interim leader pending national elections. Markets reacted calmly viewing the transition as another chapter in a prolonged period of political turnover rather than a fundamental shift in economic policy direction.

Taken together the week's developments underscored the interconnectedness of legal decisions monetary deliberations economic data and geopolitical events in shaping global financial conditions. The Supreme Court ruling on tariffs served as a catalyst for renewed optimism in American equities yet it unfolded within a broader tapestry defined by inflation uncertainties slowing but still positive growth and evolving policy landscapes across regions. Investors will continue to weigh these crosscurrents as they assess prospects for the remainder of the year mindful that shifts in trade policy central bank strategy or political leadership can quickly reverberate through markets worldwide.