US Tariff Concerns Continue to Shake Global Markets

President Donald Trump recently signed an executive order that opens the possibility of reciprocal tariffs on U.S. trading partners, although the implementation of these measures has been delayed, easing fears that they would be enacted immediately. In this blog, we’ll know in detail what happened last week (February 10, 2025 to February 14, 2025) all across the globe.

Inflation Worsens in the US

In the week gone by, global stock markets experienced significant volatility following reports indicating that inflation is unexpectedly worsening for American consumers.

On the economic front, U.S. producer prices rose at a faster-than-expected rate in January, with the Producer Price Index (PPI) for final demand increasing by 0.4% month-over-month, according to data from the Labor Department.

The continued signs of stubborn inflation, particularly from consumer price data released earlier this week, have dampened expectations that the U.S. central bank will resume its series of interest rate cuts, which had been paused last month.

Federal Reserve officials have emphasized the need for a cautious, wait-and-see approach to future policy decisions, pointing to the persistent inflationary pressures and the overall resilience of the U.S. economy.

European Market Up Amidst Easing Tensions

Meanwhile, European stock markets closed higher, driven by a combination of corporate earnings reports, economic data, and growing optimism about the potential end of the Russia-Ukraine conflict.

The possibility of a peace agreement between Russia and Ukraine appears more likely after U.S. President Donald Trump engaged in diplomatic discussions with the leaders of both nations.

UK Economic Growth

In the U.K., economic data released by the Office for National Statistics showed that the economy grew by 0.1% in the fourth quarter of 2024, outperforming expectations that had predicted a contraction of the same amount.

The services and construction sectors contributed positively to this growth, with respective gains of 0.2% and 0.5%, although production fell by 0.8%.

China DeepSeek Effect

In China, there has been renewed interest in technology companies, especially following the launch of an artificial intelligence model by the Chinese firm DeepSeek, which rivals those developed by OpenAl but is trained on more affordable hardware.

Other Chinese tech giants, including Alibaba, have also introduced new iterations of their Al models, and Baidu announced that its Emie Bot Al chatbot would be made freely available to the public.

India – US Ties

Back at home, Sensex and Nifty experienced a volatile session, with concerns over US President Donald Trump’s reciprocal tariff policy and ongoing foreign investor outflows weighing on market sentiment. Weak corporate earnings further added pressure.

In Washington DC, Prime Minister Narendra Modi met with Trump, calling the discussions “productive.” PM Modi offered to discuss easing tariffs and focused on defense and trade agreements.

Early signs from the talks appear positive for markets, as the reciprocal tariff threat was postponed, allowing for further negotiations. India’s potential purchase of more oil and gas from the US could help reduce its trade deficit.

Although Trump may remain firm on reciprocal tariffs, India’s strong ties with the US and the cordial relationship between the two leaders are beneficial.

Conclusion

Foreign institutional investors (FIls) continued to sell off Indian equities, withdrawing ₹24,888.74 crores this month, following a substantial ₹87,374.66 crores sell-off in January. The weak rupee and global economic uncertainties have contributed to these outflows.

Looking ahead, market trends will be shaped by both global and domestic factors. So, open 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.