Market Highlights ๐ก - 24 February 2025
U.S. tech stocks led the decline as cautious sentiment prevailed, driven by concerns over tariff risks and anticipation of NVIDIA's $NVIDIA Corp(NVDA)$
๐บ๐ธ S&P 500 Index: -1.70% ๐
๐บ๐ธ Nasdaq Composite Index: -2.19% ๐
๐ช๐บ Stoxx 600 Index: 0.52% ๐
๐ฏ๐ต Nikkei 225 Index: 0.26% ๐
๐ญ๐ฐ Hang Seng Index: 3.99% ๐
๐จ๐ณ CSI 300 Index: 1.26% ๐
๐ธ๐ฌ Straits Times Index: 0.06% ๐
U.S. Stock Market Decline
The S&P 500 and Nasdaq Composite fell by -1.7% and -2.2%, respectively, as markets continued to struggle with renewed tariff threats. Forward-looking economic data painted a mixed picture, showing a slowdown in U.S. business activity and worsening consumer sentiment due to rising short-term inflation expectations.
The revised University of Michigan Consumer Sentiment Index was lowered from 67.8 to 64.7, significantly below last month's 71.1. Inflation expectations for the next 12 months rose to 4.3%, with long-term expectations (5-10 years) increasing to 3.5%, the highest level in decades.
Asian Markets Rally
In contrast, Asian markets surged, with the Hang Seng Index and CSI 300 jumping 4.0% and 1.3%, respectively. Strong policy signals boosted risk appetite. The Hang Seng Tech Index underwent a reshuffle, adding Tencent Music $TENCENT(00700)$
Key Upcoming Events:
Monday: Eurozone final inflation rate (YoY) provides insight into price stability and ECB policy outlook.
Tuesday: U.S. CB Consumer Confidence Index and S&P/Case-Shiller Home Price Index (YoY), key indicators of consumer confidence and housing market trends.
Wednesday: U.S. New Home Sales (MoM and total sales) and Crude Oil Inventories, influencing economic growth and energy demand outlook.
Thursday: U.S. Durable Goods Orders (MoM), Preliminary GDP Growth Rate (QoQ), and Jobless Claims; Eurozone updates Economic Sentiment Index.
Friday: Japan releases Retail Sales (YoY) and Industrial Production (Preliminary MoM), while the U.S. reports the Core PCE Price Index (MoM), a key inflation metric closely watched by the Federal Reserve.
Key Developments Today:
1. UnitedHealth Group $UnitedHealth(UNH)$
UnitedHealth Group
2. Alibaba $Alibaba(09988)$
Alibaba
3. Tencent is restructuring its AI portfolio, shifting several applicationsโincluding QQ Browser, Sogou Pinyin, and Imaโto its Cloud & Smart Industries Group (CSIG) as competition intensifies. The move follows the earlier transfer of its AI chatbot Yuanbao.
Tencent
4. New World Development warned of a potential HK$6.8 billion loss for the first half of the year, citing declining property valuations and weak real estate markets in Hong Kong and mainland China alongside rising interest costs. This marks a significant reversal from the HK$5.02 billion profit reported a year ago.
New World Development
5. China's recent policy allowing insurers to invest in gold has introduced a new wave of buyers, complementing central bank purchases and potentially driving gold prices higher. Gold has surged over 10% this year, hitting a record $2,954 per ounce, up 26% in 2024.
Key Takeaways:
The S&P 500 suffered its worst week since December 2018, heavily impacted by tariff threats. Earlier optimism over reciprocal tariffs faded, leading to a sell-off in consumer and tech stocks, sending the CBOE Volatility Index soaring. Investors are now bracing for a 25% tariff on lumber and wood products, set to take effect around April 2, with auto tariffs expected to follow suit.
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The recent decline in U.S. tech stocks, including the S&P 500 and Nasdaq Composite, can be attributed to several factors.
First, there were concerns over tariff risks, which created a cautious sentiment in the market. The ongoing trade tensions and potential impact of tariffs on various sectors, including the technology industry, weighed on investor sentiment.
Second, anticipation of NVIDIA's earnings report, scheduled for Wednesday, also influenced market sentiment. The market was likely cautious and uncertain about the company's performance, which contributed to the decline in tech stocks.
On the other hand, the rebound in Chinese equities helped restore market confidence. The Hang Seng Index and the CSI 300 Index experienced gains, providing a positive outlook for global markets.
It's important to note that market movements can be influenced by various factors, including economic data, geopolitical events, and investor sentiment. It's always recommended to consider a diverse range of information and conduct thorough analysis before making any investment decisions.
Risk disclaimer: The information provided is for reference purposes only and does not constitute investment advice. Investing in the stock market involves risks, including the potential loss of principal. Always do your own research and consider your investment objectives and risk tolerance before making any investment decisions.