Uncertainty Prevails in US Trade Policies and the Indian Market

In the past week, global stock markets experienced heightened volatility due to uncertainty surrounding the U.S. trade policy. The Indian market also witnessed fluctuations driven by global economic trends, U.S. trade policy concerns, and domestic sectoral movements. In this blog, we’ll know in detail what happened last week (March 3, 2025 to March 7, 2025) all across the globe.

US Tariff and Trade Data

President Donald Trump announced a temporary exemption for Canadian and Mexican goods under the US-Mexico-Canada Agreement (USMCA) free trade treaty from the recently imposed 25% tariffs. Initially, only Mexico was exempted, but Trump later amended the order to include Canada as well.

Meanwhile, U.S. trade data revealed a record-high trade deficit in January, surging 34.0% to $131.4 billion from a revised $98.1 billion in December – the largest percentage increase since March 2015. Imports jumped 10.0% to $401.2 billion, while exports rose modestly by 1.2% to $269.8 billion.

Economists had projected a trade deficit of $127.4 billion. The U.S. economy also showed signs of a slowdown, with the Composite PMI declining for the second consecutive month. The index dropped to 51.6 in February from 52.7 in January, marking its lowest level since April 2025.

ECB Cuts Interest Rates

In Europe, the European Central Bank (ECB) cut interest rates by 25 basis points to 2.5%, marking its sixth rate reduction since June, aimed to counter weak economic growth.

Eurozone Composite PMI remained unchanged at 50.2 in February, below its long-term average of 52.4. In the UK, the Composite PMI edged down slightly to 50.5 from 50.6 in January, as increased service sector activity offset declining manufacturing output.

Germany and China’s Policies and Growth

Germany’s incoming government announced the country’s most significant fiscal policy overhaul since reunification. China ramped up stimulus efforts to mitigate the impact of escalating trade tensions with the U.S. The country set an economic growth target of “around 5%” for 2025 and pledged substantial financial support for its struggling economy.

On the data front, China’s Composite PMI rose to 51.5 in February from 51.1 in January, reaching a three-month high, with both manufacturing and service sectors seeing moderate expansion driven by stronger new orders.

India’s Growth and Cautious Outlook

The Indian market experienced some positive global cues, strong PMI data, and a broad-based sectoral rally, particularly in metals, PSU banks, and IT, fueled the recovery in the mid of the week.

However, in the later part of the week, mid-week gains were erased due to selling pressure in financial stocks as concerns over U.S. tariffs resurfaced. Despite external pressures, the Indian market demonstrated resilience, with investors closely watching global trade developments and domestic economic indicators. The week reflected a tug-of-war between optimism over economic growth and caution amid global headwinds.

Conclusion

Investors will closely monitor domestic economic data releases, such as industrial production and inflation figures, to gauge the economy’s health and potential policy responses. Developments in international markets, including geopolitical events and trade negotiations, may affect investor confidence and capital flows.

Given the recent market correction, investors are advised to exercise caution and focus on fundamentally strong companies with robust earnings prospects. So, open free Demat account with SMC Global Securities and invest as per your investment objective and risk profile.

Reference:
SMC Global Securities’ Research Team

Author: All Content is verified by SMC Global Securities.