**London**: Analysts adopt a watchful stance amid potential US economic slowdown, ongoing Ukraine tensions, looming tariffs, and inflation data. As the National People’s Congress prepares to announce stimulus plans in China, scrutiny intensifies over France’s credit rating and digital asset strategies under President Trump.
Market analysts are approaching this week with caution, as several significant events unfold that could impact economic conditions. A key focus is the potential slowdown of the US economy. Recent indicators have raised alarm, particularly following a series of policy decisions by US President Donald Trump. The Atlanta Federal Reserve’s latest GDPNow forecast now predicts an annualised decline of 1.5% in GDP for the first quarter of the year. This development is compounded by a widening trade deficit and decreased projections for consumer spending, as reported on Friday. This week’s forthcoming data releases, including US ISM surveys, ADP employment change, and payroll figures, will be closely monitored. Last week’s increase in weekly unemployment claims may indicate an impending decline in public sector hiring, adding to the sense of unease among market participants.
Moreover, negotiations regarding a potential truce in Ukraine have come under scrutiny. Following a summit on Friday where President Trump met with Ukrainian President Volodymyr Zelensky in Washington, tensions flared rather than leading to consensus on a new mineral resources deal. This reaction has prompted several EU leaders to call for an emergency summit. Notably, the UK and France are reportedly assembling a “coalition of the willing” to facilitate a ceasefire, suggesting a one-month truce that would encompass air, sea, and energy infrastructure as a confidence-building measure. The EU Council is scheduled to convene on Thursday to discuss a €20 billion military support package for Ukraine and explore rapid measures to enhance defence spending, even if it necessitates relaxing fiscal regulations.
In another area of concern, a deadline looms for the imposition of tariffs on neighbouring countries as proposed by Trump. The President suggested a 25% tariff rate, although Commerce Secretary Lutnick noted that the final level is still to be confirmed. He remarked that while these countries have made significant strides in border security, concerns regarding “fentanyl deaths in America” remain. Speculation suggests that a postponement or adjustment of the tariff level could still be viable. Meanwhile, a 10% increase in tariffs on Chinese goods appears to be proceeding as planned. Several additional deadlines for tariffs are set for March and April, including on steel, aluminium, and key sectors such as automotive and pharmaceutical industries.
On the European front, market attention is drawn to inflation data with the release of the eurozone’s February figures expected. Both headline and core inflation rates are anticipated to decrease, reflecting a moderation from previous figures. The European Central Bank (ECB) meeting on Thursday is also on the radar, with analysts predicting a 25 basis points rate cut to 2.5%. Recent discussions among ECB members suggest consideration of pausing this cutting cycle in April, which currently holds a 33% probability in financial markets.
Additionally, the National People’s Congress in China is set to commence on Wednesday, where President Xi Jinping is expected to announce a new stimulus plan alongside goals for growth and deficitis.
In a related economic development, the credit rating agency S&P has issued a negative outlook for France’s AA- credit rating, aligning with a similar stance taken by Fitch. While Moody’s maintains a stable outlook, S&P cited rising government debt and a lack of political consensus to address France’s substantial budget deficits amid a backdrop of uncertain economic growth. The agency revised its growth forecast for France down to 0.8% for the current year and cautioned that if the French government fails to manage deficits efficiently, a downgrade could occur. S&P has forecasted an increase in the country’s debt ratio to 119% of GDP by 2028.
In the digital asset space, President Trump has outlined plans to establish a US crypto strategic reserve, highlighting bitcoin and ethereum as central components. Discussions surrounding digital assets have been reignited, especially with the upcoming White House Crypto Summit slated for Friday. Following his inauguration, Trump signed an executive order aimed at promoting digital assets, with legislative efforts already in the pipeline, including a Republican-backed Senate bill advocating for the US Treasury to acquire one million bitcoins.
Source: Noah Wire Services
Subscribe to Industry Updates
