EU stocks on the rise, Crypto tumbling down
Decline in Wall Street stocks as economic uncertainty grows. Tech stocks enter correction, consumer confidence drops, Fed rate cuts loom.
United States stocks decline
Wall Street has entered 2025 in decline, with major indexes struggling amid economic uncertainty surrounding President Trump’s policies. The S&P 500 has fallen, with the Nasdaq down over 2% year-to-date. The “Magnificent Seven” tech giants have officially entered correction territory, dropping more than 10% from December highs. Tesla saw an 8% drop, bringing its market value below $1 trillion, following a 45% sales decline in Europe amid political backlash.
Consumer confidence fell sharply in February, the largest drop in 3.5 years, as 12-month inflation expectations surged due to fears that new import tariffs will raise household costs. This marks the third consecutive month of declining sentiment, bringing the index to its lowest since 2022. The U.S. Economic Policy Uncertainty Index is at its highest since the COVID-19 pandemic, with global uncertainty hitting a record. Treasury yields reflect investor unease, with 10-year yields falling below 4.3% and 2-year yields dropping to pre-election lows. Futures markets now expect 55 basis points of Federal Reserve rate cuts in 2025, with an 80% probability of the first cut occurring in June.
Fiscal and Trade Policies
On the fiscal front, the Republican-led House passed a budget bill including $4.5 trillion in tax breaks and $2 trillion in spending cuts by a narrow 217-215 vote. Meanwhile, President Trump has ordered an investigation into potential new tariffs on copper imports, aiming to bolster domestic supply for electric vehicles and military use.
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Europe and Tesla’s decline around the continent
European stock markets have performed strongly in 2025, with Germany’s DAX up 14%, the CAC 40 in Paris up 1.3%, and the FTSE 100 gaining 0.6%. The broader STOXX 600 index reached record highs, driven by defense and security spending concerns following Trump’s diplomatic overtures to Russia regarding Ukraine.
Tesla’s sales decline of 45% in Europe contrasted with a 37% surge in overall EV sales. Germany’s new government is prioritizing fiscal expansion, particularly in defense. Meanwhile, the European Central Bank continues to monitor inflation and interest rates amid mixed economic signals.
Asia
China’s stock markets have rebounded, fueled by strong tech-sector performance. The Hang Seng Index jumped 3.4%, while the Shanghai Composite gained 0.8%. AI-driven optimism contributed, with Hong Kong-based DeepSeek emerging as a potential competitor to U.S. AI giants.
Japanese markets struggled, with the Nikkei 225 down 0.3%, impacted by yen appreciation and speculation about an upcoming rate hike. South Korea’s Kospi gained 0.4%, while Australia’s ASX 200 dipped 0.1%.
Commodities and a large Crypto decline
Copper prices surged following Trump’s tariff threats, while oil prices hovered near yearly lows. Bitcoin fell 1.1% to $87,759 after a five-day 8% decline, reflecting broader risk-off sentiment.
Key Market Events
Nvidia’s earnings report is highly anticipated after its 2.8% decline on Tuesday.
U.S. new home sales data will provide further economic insights.
The Federal Reserve’s Bostic and Richmond Fed’s Barkin are set to speak, influencing rate expectations.
U.S. Treasury auctions include $44 billion in 7-year notes and $28 billion in floating-rate 2-year notes.
U.S. GDP, durable goods, and inflation reports are expected later this week.
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