Weekly Market Pulse - Week ending March 28, 2025

Market developments

Equities: Stocks fell this week, with the S&P 500 down 1.5% and the Nasdaq dropping over 2.5%, amid signs of weakness in the U.S. economy and worries about inflation and a looming trade war. Economists have also lowered their expectations for U.S. growth this year, citing softer consumer spending and mounting uncertainty created by trade policy.

Fixed Income: Government bond yields, such as the U.S. 10-year Treasury, ticked up as high as 4.4% this week, before retracing back to ~4.25% as investors digest and react to the hotter-than-expected inflation data and lower than expected economic growth. High-yield corporate bonds also faced selling pressure as risk-off sentiment grew.

Commodities: Crude oil prices climbed this week, supported by OPEC+ production discipline and geopolitical risk, while gold continued to hit new highs as investors look to it as a hedge against economic uncertainty.  

Performance (price return)

Source: Bloomberg, as of March 28, 2025

Central Bank Interest Rates

Source: Bloomberg, as of March 28, 2025

*Expected rates are based on bond futures pricing

Macro developments

Canada – Canada's GDP Growth Outpaces Expectations

Canada’s real GDP increased by 0.4% in January, slightly exceeding forecasts. Goods-producing industries led the growth with a 1.1% rise, while services edged up by 0.1%. Industrial production saw its largest jump since 2021, driven by gains in utilities, mining, and manufacturing. However, retail trade declined. Preliminary estimates suggest GDP remained flat in February.

U.S. – Business Activity Strengthens Amid Inflation Concerns, Inflation Remains Elevated in February

Retail sales rose 0.2% in February, rebounding from a sharp January decline but missing expectations of 0.6%. Declines were seen in food services, gasoline, clothing, and electronics, while non-store retailers and health & personal care saw the strongest gains. Core sales, which factor into GDP, grew 1%, reversing the previous month’s drop.

The U.S. PCE price index rose by 0.3% in February, maintaining its pace from previous months. Core PCE inflation increased to 0.4%, the highest since January 2024. While food prices stabilized, energy prices edged up. Year-over-year inflation remained at 2.5%, but core inflation rose to 2.8%, exceeding expectations.

International – U.K. Private Sector Grows Despite Manufacturing Weakness, U.K. Retail Sales Defy Expectations with Strong Growth, Eurozone Business Activity Sees Modest Expansion, Japan's Private Sector Contracts Sharply

The U.K. Composite PMI increased to 52.0 in March, its highest level since September, driven by a strong service sector. However, manufacturing continued to contract sharply and new orders fell due to global uncertainty. Employment declined for a sixth consecutive month, while inflationary pressures remained high. Business confidence remained weak.

U.K. retail sales rose by 1% in February, beating expectations of a decline. Household goods stores led the surge, with strong gains in non-food and clothing sectors. However, food store sales fell by 2%. Year-over-year, retail sales jumped 2.2%, accelerating from the previous month’s revised growth.

The Eurozone Composite PMI edged up to 50.4 in March, marking the third consecutive month of growth. Manufacturing output expanded for the first time in two years, but service sector growth slowed. New orders continued to decline, while employment stabilized. Inflationary pressures eased, but business confidence weakened further.

Japan’s Composite PMI fell to 48.5 in March, indicating the steepest contraction since February 2022. Both the service and manufacturing sectors weakened, with new orders declining. Despite improvements in foreign sales and employment, business sentiment hit its lowest level since August 2020 due to cost pressures and economic uncertainty.

Quick look ahead

P = Preliminary

The Asset Allocation Team at NEI Investments

Judith Chan, CFA – Vice President, Head of Multi-Asset Portfolios

Mateo Marks, CFA – Senior Multi Asset Portfolio Analyst

Adam Ludwick, CFA – Senior Multi Asset Portfolio Analyst

Anthony Rago, B.A.Sc. – Senior Multi Asset Portfolio Analyst