Monday's Markets Update (February 24, 2025)

25 Feb 2025 by rate3

On Monday, equities are down as manufacturing activity plummeted due to sharply rising costs and an uncertain outlook.

World's Markets:

European inflation hit a 6-month high, driven by energy costs. EU markets are mixed, with the defense and auto sectors up while energy is down.
German stocks rose as traders reacted to the conservative party leading in Sunday’s election, but they may form a coalition with Scholz's SPD.
Brazilian equities are lower due to rising inflation and an expected BCB rate hike.
Indian market indices have declined as well.
The Chinese tech index is down due to Trump's new memorandum limiting investment in domestic technologies.
Commodities and Currencies:

The dollar, gold, and oil are flat as Zelenskiy hinted at stepping down.
Crypto:

BTC, ETH, and SOL, along with the rest of the crypto market, are in deep red following the after-hours confirmation of the CaMex tariffs and the breaking of key technical supports.
The State Of Markets: Mixed, absorbing tariffs confirmation and German election results.

Details

In February, the Dallas Fed's Texas manufacturing activity index plummeted to -8.3 from 14.1 in January, marking a sharp decline. Production, new orders, and capacity utilization fell, while input costs surged and wage pressures eased slightly. 1Y trend: "Up" (DFed)
The Chicago Fed National Activity Index dropped to -0.03 in January, indicating slower economic growth. Declines in personal consumption, housing, and production offset gains in employment and sales. The three-month average rose to +0.03. 1Y trend: "Up" (CFed)

World Markets

Euro Area inflation hit 2.5% in January, the highest since July 2024, driven by rising energy costs. Core inflation held at 2.7%, while prices for services and food slowed. Monthly prices dropped 0.3%. 1Y trend: "Side" (Eurostat)

Comment: What's Up With Politics?

If you ask me how, based on objective economic data resulting from the first month of the new White House administration, to briefly characterize its economic policy, I would say that with its wide-ranging tariffs on almost all key raw materials and long-term products, its over-centralized, highly authoritarian decision-making style, and its harsh intrusion in almost all spheres, starting from energy to education, this policy is definitely and heavily 'pro-oligarchical.'

All those tariffs won't replace taxes, as they only initiate new-shoring of all key production facilities or re-export through other 'good' countries. Those tariffs will only give tremendous power over consumers to several 'domestic' moguls close to centers of political power.

As for crypto, Official Trump Coin has just given us a clue as to what the policy would be—the forceful and fast siphoning of all crypto market liquidity by several 'patriotic' coins—basically, those which will be more actively promoted by crypto figureheads close to the current administration. SOL, XRP, Doge and Base ETH are obvious candidates for that close-knit, hand-picked group of the 'America-first' winners.