U.S. Stocks Sell Off Amid Trade Policy Uncertainty

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Main Content:

1.    Major indexes weekly performance 

2.    U.S stocks weekly wrap 

3.    S&P 500 sector index weekly/month performance 

4.    China/Hong Kong stocks weekly wrap 

5.    Singapore stocks weekly wrap 

6.    Major indexes weekly chart and technical support & resistance levels

U.S.

For the week of Mar 7, U.S. stock indexes declined during what ended as the worst week for some major indexes since early September. The S&P 500 Index(SPX), Nasdaq Composite(COMP), S&P MidCap 400 Index, and Russell 2000 Index all fell by over 3%, while the Dow Jones Industrial Average(DJI) shed 2.37%, erasing most of its year-to-date gains.

Ongoing uncertainty around trade policy remained a focal point throughout the week as Tuesday marked the deadline for Donald Trump’s previously announced tariffs of 25% on Canadian and Mexican imports along with an additional 10% on Chinese imports. The continued uncertainty and changing policies appeared to take a toll on investor sentiment during the week. Refer to below major indexes performance table for the week.

Key highlights for the week and next:

1.   ISM manufacturing PMI reading reported in the week was 50.3%, down 0.6% from January. Meanwhile, the ISM’s services PMI increased 0.7% to 53.5%, the eighth consecutive month of expansion, and the services employment index increased 1.6 percentage points to 53.9%, the highest reading since December 2021. 

2.    Rate cut may be back in play. Fed Chair Powell indicated last week that the economy remains in decent shape, and even though consumer spending is moderating, and uncertainty remains elevated, he expects the Fed to remain patient on rates. However, markets have gone from pricing in no rate cuts to about three rate cuts in 2025. 

3.    Tariffs and policy uncertainty are an overhang. Trump again imposed 25% tariffs on Mexico and Canada, only to postpone them for one month until April. Nonetheless, markets continued to fall, and sentiment did not seem bolstered by this postponement, as the threat of tariffs now looms large for April, across not only Canada and Mexico, but other economies like the European Union, which may be subject to reciprocal tariffs. Many economies, including Canada and the European Union, have vowed to implement retaliatory tariffs if the U.S. raises its tariff rates, which could lead to higher prices across goods and services for consumers and corporations. 

4.    The closely watched nonfarm payroll employment report on Friday showed U.S. economy added 151k jobs in February, slightly below expectation but ahead of January’s reading of 125k. The unemployment rate increased a tick to 4.1% from 4.0% in January. 

5.   Some investors move from U.S. equities to international equities, especially European and Chinese technology stocks. This comes as the economic growth in the U.S. cools, tariff and policy uncertainty rises, and investors seek better valuations and access to growth and value stocks abroad.

 

SPX sectors in play

Only one out of the 11 SPX sectors recorded weekly gain. Defensive sectors, like health care and consumer staples, are leading, while the lagging sectors are those that have had the strongest momentum and rise in valuations, including technology (whose highest weights are in Apple, Microsoft, and NVIDIA) and consumer discretionary (whose highest weights are in Amazon and Tesla).  Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Both SPX and COMP indexes have recorded three weeks losing streak in a row. The S&P 50(SPX) is now down about 2% for the year, while the technology-heavy Nasdaq(COMP) is down about 6%. After two years of 20%+ returns in the SPX, though, some period of consolidation and pullback was probably warranted, and thus far markets are acting orderly. Click below three indexes for their weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stock markets advanced for the week after Beijing unveiled economic growth targets in line with forecasts and signaled more stimulus later this year amid an escalating U.S. trade war. The Shanghai Composite Index(SSE) gained 1.56% while the blue chip CSI 300 added 1.39%. In Hong Kong, the benchmark Hang Seng Index rose 5.94%. (refer to the above weekly performance table).

Key highlights for the week and outlook for China/HK:

1.    China unveiled several key targets at the recent National People’s Congress (NPC) meeting, an annual event in which the central government announces its economic priorities for the coming year. For 2025, China set a growth target of 5% for the third straight year. Officials also set a fiscal deficit goal of about 4% of gross domestic product—the highest level since 1994, according to Bloomberg—and reduced its annual inflation target to about 2%, the lowest level since 2003, reflecting deflationary pressures in the economy. 

2.    Most of China’s economic targets were telegraphed in advance of the NPC meeting and broadly in line with market expectations. However, many analysts think that China will have a harder time repeating its 5% growth pace this year given U.S. tariff uncertainty and a yearslong housing slump that has yet to hit bottom. 

3.    Increasing the fiscal deficit target to 4% this year was seen as a major change for China, which has long sought to cap the official deficit at no more than 3% of GDP. But the onset of the U.S.-sparked trade war has spurred expectations that the government will substantially ramp up borrowing and spending to meet its annual growth target. Boosting consumption is the government’s top priority for 2025, China’s Premier Li Qiang told delegates at the NPC. Even so, Beijing offered few details about how it plans to increase consumption in its annual work report, which serves as China’s economic blueprint for the year. 

Refer to below .HSI stocks top 40 performance of the week.

Click below SSE and .HSI indexes for their weekly charts. 

SSE weekly chart

.HSI weekly chart

Singapore

The Straits Times Index (STI) added 0.48% to close at 3914.48 for the week, it has been trading within its three-week rangebound. Its uptrend remains intact.

This week’s top index gainer- ST engineering extended its weekly gain with 13.31% up and biggest loser was DFI with 4.07% decline.

Refer to below STI stocks weekly performance table.

Click below for STI weekly chart.

STI weekly chart

Source: Some contents and data excerpted from various public market reports. Please comment to claim copyright ownership of any material, and I will remove it if necessary.