Market navigator: week of 24 March 2025
Financial markets find footing as central banks hold rates steady while assessing tariff impacts, with key US economic data in focus for the week ahead.
Written by
Fabien Yip
Market Analyst
Summary
- What Happened Last Week: Financial markets experienced a period of stabilisation as tariff-related headlines subsided, major central banks maintained interest rates, and Chinese economic indicators showed encouraging improvement.
- Markets in Focus: US equities stabilised but face headwinds from elevated valuations, while the Hang Seng Index struggled to maintain momentum above key resistance. AUD/USD established a trading range amid tariff concerns and weak employment.
- The Week Ahead: Key economic releases include US Q4 GDP and PCE inflation data, with market participants increasingly vigilant about stagflation signals amid softening labour conditions and rising price pressures.
What happened last week
- Markets catch a breath: Global equities found firmer footing last week amid reduced tariff-related headlines, providing a welcome reprieve after the sharp declines experienced in early March.
- Central banks stay put: The Bank of Japan (BoJ), the Federal Reserve (Fed) and the Bank of England (BoE) all maintained their benchmark interest rates unchanged at 0.5%, 4.25-4.50% and 4.5% respectively. A consistent message emerged across these institutions -- additional time is needed to evaluate the implications of Trump's tariff policies on both economic activity and inflationary pressures.
- Optimism emerges in China: Economic data on last Monday revealed stronger-than-anticipated industrial production and consumer spending growth. Beijing also unveiled a 30-point action plan to stabilise property markets, improve social services, and accelerate artificial intelligence (AI) development, aiming to boost domestic consumption amid trade tensions.
- Gold continues to make new highs: The precious metal surpassed the psychologically significant $3000 level on 14 March and briefly reached $3050, buoyed by the Fed's anticipated rate reduction trajectory and heightened demand for safe-haven assets amid tariff uncertainties and ongoing geopolitical tensions in the Middle East.
Markets in Focus
US stabilises but is it really out of the woods?
Despite the Fed maintaining current interest rates, policymakers reaffirmed their projection for two additional rate reductions in 2025. Market sentiment displayed notable volatility – initial optimism regarding the rate cut outlook quickly gave way to concerns about whether such monetary easing would sufficiently support economic momentum. We maintain our view that near-term rallies will likely prove unsustainable given the premium valuations in US equities relative to other developed markets, particularly as economic indicators signal decelerating growth.
A technical analysis on the US Tech 100 Index reveals continued challenges after breaching the uptrend support established from the October 2023 and August 2024 lows. The index now faces resistance at approximately 19,800 and may retest its recent low of 19,104, with potential for further decline toward 18,400 should this support level fail to hold.
Figure 1: IG US Tech 100 index (daily) chart
Earnings and forward guidance to drive Hang Seng Index
The Hang Seng Index demonstrated resilience by recovering over 1600 points from the previous week's trough before surrendering all of these gains during Thursday and Friday sessions. Overall, the index recorded 1.1% loss for the week.
Notably, the benchmark struggled to sustain momentum above the critical psychological threshold of 24,000, which we highlighted in last week's Market Navigator, and retreated to 23,690. We maintain our assessment that a decisive breakthrough is necessary to catalyse the next upward movement toward the January 2022 high of 25,050. Support levels remain intact at 22,500, with the 50-day moving average at 21,391 providing an additional safety net.
Figure 2: Hang Seng Index (daily) price chart
The corporate earnings season is now underway with several significant reports already released. Tencent delivered robust Q4 2024 results with revenue expanding 11% year-on-year to 172.4 billion yuan while profits surged 90%, propelled by substantial growth in gaming and advertising services. Strategic priorities include accelerating AI service adoption going forward. Numerous equity analysts have revised their target prices upward, including Goldman Sachs (from $534 to $590) and JPMorgan (from $520 to $600).
Xiaomi reported exceptional Q4 performance with revenue increasing 49% to 109.0 billion yuan and profits climbing 90% year-on-year, fuelled by strong performance across its smartphone, Internet of Things (IoT) products, and electric vehicle divisions. Analyst perspectives on the stock are divided – Citi elevated their target price from $51.7 to $73.5 citing improved gross margin profile, while JPMorgan downgraded its recommendation from 'buy' to 'neutral' on the basis that current growth expectations appear fully reflected in the share price. The upcoming week brings earnings reports from major banking and energy corporations.
Figure 3: Tencent (daily) price chart
Aussie dollar trading in range
The AUD/USD pair was down 0.8% last week. The Australian dollar has faced headwinds following unsuccessful attempts to secure exemptions from US steel and aluminium tariffs, compounded by disappointing employment data showing a reduction of 52,800 positions in February. Following a 25 basis points (bp) rate cut last month, the Reserve Bank of Australia (RBA) has expressed caution regarding accelerating its monetary easing cycle. Market participants are currently pricing in expectations for two additional 25 basis points reductions by Q1 2026.
From a technical standpoint, the AUD/USD pair has been unable to reverse its downtrend after encountering resistance at 0.64080. The 20-day and 50-day simple moving averages (SMA) are positioned to provide support at current levels near 0.63, suggesting a significant decline is improbable. Our analysis indicates the pair will likely remain confined within a trading range in the near term – oscillating between 0.613 and 0.641. A sustained move above 0.641 could potentially trigger a recovery toward the 0.648-0.650 zone.
Figure 4: AUD/USD (daily) price chart
The Week Ahead
The economic calendar this week emphasises manufacturing, services, and inflation indicators. The US Q4 2024 GDP growth rate and personal consumption expenditures price index (PCE) represent the primary data points warranting close attention. Market participants are increasingly wary of stagflation risks as recent statistics indicate softening labour market conditions alongside accelerating inflation. Moreover, the Fed's communication that it remains in no rush to implement further rate cuts has heightened concerns that a more pronounced economic slowdown or higher-than-anticipated PCE reading, or a combination of both, could trigger additional selling pressure in US equities, particularly among growth stocks with elevated valuations.
Key macro events this week
Monday 24 March 2025
- 5:30pm (HK time) – UK S&P global manufacturing purchasing managers' index (PMI) flash (March): projected to edge lower to 46.7 from 46.9 in February
- 5:30pm (HK time) – UK S&P global services PMI flash (March): expected to marginally decrease to 50.9 from 51 in February
- 9:45pm (HK time) – US S&P global manufacturing PMI flash (March): forecast to decline to 51 from 52.7 in February
- 9:45pm (HK time) – US S&P global services PMI flash (March): anticipated to fall to 49.5 from 51 in February
Tuesday 25 March 2025
- 7:45am (HK time) – Japan BoJ monetary policy meeting minutes
- 10:00pm (HK time) – US new home sales (February): expected to maintain approximately 0.66 million units
Wednesday 26 March 2025
- 8:30am (HK time) – Australia CPI indicator (February): projected at 2.6%, up from previous 2.5%
- 3:00pm (HK time) – UK inflation rate (February): headline figure expected to remain steady at 3.0%
- 8:30pm (HK time) – US durable goods orders (February): previous month-on-month expansion was 3.1%
Thursday 27 March 2025
- 8:30pm (HK time) – US GDP final growth rate (Q4 2024): anticipated to moderate to 2.3% from 3.1% in Q3
- 8:30pm (HK time) – US initial jobless claims (22 March): previously registered at 223,000
Friday 28 March 2025
- 3:00pm (HK time) – UK retail sales growth (February): forecast to decline to 1.7% month-on-month from 0.2% in January
- 8:30pm (HK time) – US PCE price index (February): core measure expected to increase 0.4% month-on-month, accelerating from previous 0.3%
- 8:30pm (HK time) – US personal income (February): projected at 0.3% month-on-month, down from previous 0.9%
- 8:30pm (HK time) – US personal spending (February): anticipated at 0.1% month-on-month, improving from previous -0.2%
Key corporate earnings
Monday 24 March 2025
Tuesday 25 March 2025
Wednesday 26 March 2025
Thursday 27 March 2025
Friday 28 March 2025
Source: Trading Economics, AASTOCKS (as of 22 March 2025, based on HK time zone)
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