By Jamie Mcgeever
Orlando, Florida (Reuters) – Handelsdag
Nasdaq has this year at the third largest increase
The last full trade week of the quarter came on Monday at a roaring start on most major stock markets, with investors who were encouraged by reports that the Tariefblitz of the Trump administration that is planned for 2 April may not be as heavy as feared.
A solid pick-up in American business activity helped to cement the positive tone in Wall Street, and investors bought some of the shares they recently sold aggressively, such as Big Tech.
Europe ended largely flat, but Benchmark Asian, US and global stock indices all rose sharply. Bond yields explored higher, while ‘safe harbor’ was gold for a third day to clock the longest losing streak since November.
All 10 sectors in the S&P 500 rose, led by an increase of 4% in consumer cyclicals on the hope that a more targeted approach to rates means that goods prices will not rise like that. That was the largest rise in the sector since November 2022.
Some of the greatest individual profit on Wall Street were in technology, led by an increase of 12% in Tesla.
If trade tensions cool down, can investors look at American assets in a more positive light? I will dig trends below in broader American capital flows, but first a summary of Monday’s markets.
The most important market movements of today.
* Wall Street’s most important three indices and the MSCI World Hittwo week highs. The tech-heavy Nasdaq places the biggest profit, with 2.3%. * Shares in Tesla rise almost 12%, their biggest increases in November 6, the day after US President Donald Trump’s selection victory. * Gold continues to progress from its record high, a decrease of 0.5%but crucial above $ 3,000/oz marking. * The Yen is the largest decliner among large currencies. Dollar/yen rises almost 1% to convincingly push back above 150.00 to a highest point in three weeks of 150.75 yen. * Brings up in the American treasury curve, almost 10 -based points at the short end to make the curve somewhat flat. Thetwo year returns registers its largest increase since January 10.
The fears of the trade war have not completely disappeared and the situation remains extremely fluent. Although Trump said on Monday that he might break a “lot of land” for rates, he is still planning to announce more on cars in the coming days, and then on wood and chips further down in the line.
And any hope for inflation lighting of less general approach to rates from Washington can be tempered by another rise in oil prices after Trump said that he will impose a rate of 25% on countries buying oil and gas from Venezuela.
The price of Brent and WTI Raw Futures rose by more than 1% on Monday to the highest in three weeks. That was the fourth daily increase in a row.
If Monday was a slightly optimistic day for investors with regard to the tensions of global trade, it was less encouraging for the interest rate front.
President of Atlanta Federal Reserve, Raphael Bostic, said on Monday that he now only sees the central bank that reduces a quarterly percentage this year because he expects inflation to fall as quickly as hoped.
Bostic had previously expected the FED to lower twice this year. That remains the median position on the 19 policy officials of the FED, as the revised projections of last week demonstrated, but the underlying weight of views is shifting.
In the meantime, the details came to the fore in Asia from Beijing’s latest attempts to maintain strong relationships with many of the world’s largest companies. The Chinese economy Tsar, Deputy Prime Minister He Lifeng, met the heads of Apple, Pfizer, Mastercard, Cargill and others on Sunday.
There is no doubt about the enormous improvement of the investor sentiment against China after the tax and monetary measures that have been announced by Beijing since September, and the Chinese markets seem to end the quarter in a high tone.
Foreign demand for American assets may not be dead yet
As the first quarter ends, the financial markets are at a crossroads. We could see the early stages of a tectonic shift in global investment flows, with a dramatic decrease in demand for American assets from abroad. But it is also possible that this is just a break and that the story ‘us exceptionalism’ has more chapters.
The net turnover of US shares by foreign central banks reached $ 28 billion in January, and the net turnover of all US assets by the private sector was $ 74.8 billion, according to official data from Treasury International Capital Flows.
These were respectively the fastest pace ever of the US shares that sell through the official sector in one month, and the largest monthly outflow of American assets by investors in the private sector in a year.
This abrupt reversal in flows is going a long way to explain the eye-open underperformance of American stocks against the rest of the world to date this year. This gap has approached 15 percentage points in recent weeks.
Of course a month of no trend was made, and it takes many months of similar flows to turn the tide – or rather, the tsunami – of foreign capital that has flooded in the American markets in recent years.
Tic data show that the net capital inflow of the private sector in the US shares and bonds last year amounted to $ 980 billion, after a net influx of $ 668 billion the year before and $ 1.6 trillion in 2022. These are net purchases of foreign investors and Netto sale of sale of foreign investors.
The total figure is worth repeating. In the last three calendar years, investors of the private sector have cast a net $ 3.25 trillion in American assets. No wonder that foreign investors had 18% of US shares at the end of last year, according to Goldman Sachs. That is a record high share that goes back to 1945.
With an average of more than $ 1 trillion a year, it was unlikely that the pace of the net intake would be maintained. But does that mean that the pace of January will continue to exist? Not necessary.
Paradigm shift?
The most important US stock strategist of Goldman Sachs, David Kostin, estimates that foreign investors will remain buyers of US shares this year, lured by the weaker dollar, attractive prices due to the recent correction and the unparalleled liquidity of the US markets.
They think that overseas investors are just as committed this year as last year, buy a net $ 300 billion compared to $ 304 billion in 2024. However, they note that “increased political and economic uncertainty also create increased uncertainty about that prediction.”
The hunger for American assets will remain strong, as long as the US maintains an innovation-friendly tax system, flexible financial system, dedication to ownership rights and a relatively low regulatory burden, the head of G10 FX strategy Steven Englander enters.
“Cyclical ups and downs in equity and other asset prices would not delete this attractiveness in the long term, even if the correction in US shares continues, provided that the underlying positives remain in place,” he says.
It is important to note that TIC Flows reports are released with a delay, which means that the outflows of January do not take into account the remarkable market shifts that have been seen in recent weeks. The reports of February and March can also show enormous outflows.
There are good reasons why foreign investors have withdrawn from American assets in recent weeks – stretched ratings, market concentration, the rise of the deep artificial intelligence model of China, the tax U – of Germany and concern about the Trump government’s trade and foreign policy agendas.
This is all to say that it remains unclear whether the recent shift in investment flows is temporary or represents a real paradigm shift. In the coming months will be crucial.
What could move markets tomorrow?
* South Korea Consumer sentiment (March) * Hong Kong Trade (February) * Taiwan Industrial Production (February) * Bank of Japan minutes from January 23-24 January Policy meeting * UK inflation (February) * Germany Ifo Business sentiment Index (March) * US Consumer Confupion * Usa TRASURE TRAASURE TRAASURE Fed outstanding
If you have more time to read today, here are a few articles that I recommend to help you understand what happened in markets today.
1. Some European officials weigh when they can rely on Fedfor Dollars under Trump 2. Do not count Trump Trade Détentente: Stephen Jen 3. Transatlantic Rift can encourage the Euro Reserve Holdings 4. First quarter Outlook looks less rosy.
I would like to hear from you, so please contact me with comments. You can also follow me on [@ReutersJamie and @reutersjamie.bsky.social.]
The expression of opinions are that of the author. They do not reflect the views of Reuters News, who, under the trust principles, are committed to integrity, independence and freedom of bias.
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(By Jamie McGever, editing by Nia Williams)
