S&P 500 Falls 4% as DAX Surges Over 15%

The S&P 500 has dropped 4% this year, as investors pivot toward European and Chinese markets amid US recession concerns. Germany’s DAX has surged over 15% following its fiscal reset plan, while China’s Hang Seng Index has gained nearly 20%, boosted by tech stocks and economic stimulus measures. Key upcoming events include the Fed’s policy decision and Trump’s planned discussion with Putin on the Ukraine war.

Equities

The FTSE 100 rose 1.1% on Friday, marking its strongest daily gain in over a month, though it ended the week lower due to uncertainty over US tariffs and disappointing corporate earnings. The FTSE 250 gained 1.6% but posted its fourth consecutive weekly decline. Defence and aerospace stocks led the gains, climbing 3.8% after the UK government announced an additional £2 billion in export lending to support sales of British missiles and aircraft abroad.

Melrose Industries was the top FTSE 100 performer, rising 6.4%, while Babcock International gained 4.3%, lifting the midcap index. Mining stocks also performed well, with the industrial and precious metals sector up 2.3% and 1.8% respectively, as gold prices surged above $3,000 per ounce for the first time.

Hays shares climbed 12.3% to their highest level since October 2024. Meanwhile, UK economic data disappointed, with GDP unexpectedly contracting by 0.1% in January, against expectations of a slight expansion. Economists warned that further tariff measures from the US could weigh on Britain’s economy in the coming months. A Bank of England survey showed that UK long-term inflation expectations hit a five-year high in February.

In the US, the Dow Jones rose 1.65%, the S&P 500 jumped 2.13%, and the Nasdaq gained 2.61% as investors bought into tech stocks after a difficult week. Despite Friday’s rally, both the S&P 500 and Nasdaq posted their fourth straight weekly loss, while the Dow also ended the week lower.

Semiconductor stocks were among the strongest performers, with the Philadelphia Semiconductor Index up 3.3%. Nvidia shares jumped 5.3% ahead of its highly anticipated GPU Technology Conference next week. Tesla shares rose 3.9% following reports that the company is preparing to produce a lower-cost Model Y in Shanghai to strengthen its position in China’s electric vehicle market.

Forex & Commodities

The US dollar hovered near a five-month low, pressured by weak economic data and concerns over President Trump’s trade policies. The dollar index stood at 103.71, down nearly 6% from its January peak. The euro traded at $1.0879, just below last week’s five-month high, as Germany moved closer to approving a major fiscal stimulus package. The Chinese yuan strengthened towards a four-month high, trading at 7.2400 per dollar, supported by new government measures to boost domestic consumption. Sterling held steady at $1.2927 ahead of the Bank of England’s policy decision on Thursday.

Gold remained near record levels, with spot prices at $2,988.68 per ounce after touching an all-time high of $3,004.86 on Friday. The rise was driven by concerns over US trade policies, weak consumer sentiment, and growing geopolitical tensions. Analysts expect prices to remain strong, with resistance levels at $3,016 and $3,030. Silver, platinum, and palladium also edged higher.

Oil prices rose after the US pledged to continue military action against Yemen’s Houthis, whose attacks have disrupted shipping in the Red Sea. Brent crude gained 0.7% to $71.06 a barrel, while WTI climbed 0.7% to $67.65. Goldman Sachs lowered its oil price forecast, cutting its December 2025 Brent target by $5 to $71 per barrel, citing slower US economic growth and expectations of higher supply from OPEC+. US consumer sentiment data released on Friday showed the weakest reading in nearly two and a half years, adding to concerns over rising inflation expectations.