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AMC Weekly

  • Writer: Andrea Zito
    Andrea Zito
  • Mar 16
  • 8 min read

Updated: Mar 24

Welcome to the new issue of the Bocconi Student Asset Management Club newsletter!


Global Economy



U.S.


Just two months after President Donald Trump’s inauguration, consumer sentiment is weakening to the point of reversing its trajectory, contrary to the initial spike post-election. According to research by the University of Michigan, this drop is concentrated among Democrat-leaning consumers while Republicans’ sentiment has considerably improved. 

 

Trade policy remains a central theme of Trump’s presidency and the current economic landscape. Recent taxes imposed on Canadian imports, particularly aluminium and specific agricultural products, aim to correct trade imbalances while protecting domestic industries. Economists expect this sustained tariff pressure to further increase production costs and potentially limit the Fed’s ability to manage inflation effectively.  


Currently, inflation remains above the target of 2%; however, with the Personal Consumption Expenditures price index slowing down in January to the smallest year-over-year increase since March 2021, inflation seems to be trending in the right direction. 

 

Despite the trade tensions and economic deceleration, the Federal Reserve is expected to keep its interest rate in the 4.25-4.5% range at the upcoming meeting. However, there remains the possibility of a rate cut later this year, especially if economic data continues to decelerate.  


While inflation expectations have risen input costs and supply chain constraints, the unemployment rate has held steady at 3.8%, increasing consumer confidence in the American economy.  


Canada


Declines in business investment have led to a 0.3% drop in Canada’s GDP per capita despite support from consumer spending and government expenditures, showcasing challenges in sustaining living standards. This domestic economic slowdown combined with external trade pressures has led the Bank of Canada to reduce its overnight rate from 3% to 2.75% (March 2025). 


The external trade pressures on Canada stem primarily from the recent U.S. tariff measures, impacting key Canadian sectors like manufacturing and agriculture. Analysts estimate that if these trade restrictions persist in 2025, Canadian GDP growth may reduce by an additional 0.2-0.3% in 2025. 


EMEA


With a struggling labour market post-COVID, Europe is stabilizing with February showing historically low unemployment rates of 6.3%. Furthermore, consumption has grown by 1.51% leading to a slight GDP growth of 0.11%. These positive indicators pushed the European Commission to forecast GDP growth at an increasing rate in 2025 with an overall 0.11% increase.   


Recent higher inflation data can be attributed to higher living costs, but German inflation fell to 2.5% in 2025, supporting the argument that the European economy is in a stabilization process. As inflation seems to stabilize, the ECB may adjust interest rates to support growth-oriented policies given a reduced risk for economic overheating.  


Growth in the EU has been hampered by the rising global trade tensions caused by the Trump presidency. While the services sector drives European economic performance, it is key to notice the industries of contraction like manufacturing, which fell by 2.6%. Overall, the European economy is showing signs of resilience like with unemployment data but there are still major uncertainties due to Trump’s tariffs, highlighting the need for a careful approach by Europe’s financial institutions


APAC


With expected economic growth of 3.6% across the region, APAC showcases a positive outlook primarily due to its emerging countries like India, Vietnam, Malaysia, Indonesia, and the Philippines. As these countries transition to a more industrialized economy, their growth rate is at 5% or higher, counteracting the contraction of other countries like China. Inflationary pressures have been stabilizing in APAC, but Japan remains the only country where inflation has not gone down, leading the central bank to consider rate hikes. Chinese markets have been struggling due to the ongoing trade tariff exchange with the United States. As a result, domestic consumer demand has become more cautious, resulting in a 2.2% drop in producer prices and 0.7% drop in consumer prices.  


While the region remains stable with overall sound economic growth and robust consumer demand, mixed feelings have emerged with financial markets. While equities in Japan and Taiwan have performed well, a stronger US dollar has resulted in weakened APAC currencies. Furthermore, inflationary concerns and deflationary risks in some countries have led financial institutions to be more careful in choosing the right policies to maximize growth.


 

Equity Highlights



U.S.


In the week ending March 14, 2025, major U.S. stock indices showed a uniform trend, declining to semi-annual lows on Thursday before rebounding sharply on Friday. 

The S&P 500 ended the week -1.16%, surging +2.64% in Friday's session. Despite this recovery, the index marked the fourth consecutive week of losses. 


The Russell 2000, representative of small-caps, had a less linear trend: it hit its semi-annual low on March 13, with a weekly loss that had reached -1.3% by Thursday. However, Friday's rally allowed the index to close +1.24% weekly at 2,044.10, recovering 3% between Thursday and Friday. 


The VIX volatility index spiked to levels last seen in mid-December. Unlike then, however, volatility has been rising consistently for a month, reflecting growing market uncertainty. 


Markets were subdued for most of the week by concerns over a possible US government shutdown, as well as renewed trade tariff tensions, which put downward pressures on investor sentiment. Uncertainty over global economic reports kept volatility in check, pushing indices into negative territories for the majority of the week. 


On Friday, the S&P 500 and the Nasdaq posted their best daily gains since Nov. 6, the day after the U.S. presidential election.  The rebound may be attributed to: 

  1. Technical support: The SPX has reached historically significant levels that have favored a trend reversal.  

  2. Short position hedging: High volatility and the recent sell-off have prompted many investors to close bearish positions. 

  3. Possible easing of political tensions: The prospects of a shutdown agreement and less rigidity on tariffs have incentivized purchases. 

  

Europe


The STOXX Europe 600 declined 1.22% for the week but remained unchanged from Monday’s close at 546.60 points. After dropping 1.70% on Tuesday, it recovered in the following days, mirroring trends in the FTSE 100 and CAC 40. 


The weekly decline was affected by escalating global trade tensions, after the US president threatened to impose a 200% tariff on EU wines and spirits in response to European tariffs on US whiskey. These statements have increased uncertainty in the markets, penalizing stocks in the exporting sector. 


In the automotive sector, BMW reported a 3.7% decline after reporting a 33% drop in profit in 2024 to 7.68 billion euros. The European automaker index fell 1.3%, with Renault down 1.4%, Volkswagen 1% and Stellantis 1.2%. 


Another source of pressure for the STOXX 600 was Universal Music Group (UMG), which ended the week down 10.5%, after Bill Ackman's Pershing Square reduced its stake in the company, causing a sell-off in the media sector. 


The DAX closed -0.1% from last Friday's close (22,986.82 points), but had lost as much as -3% by Tuesday, March 11, before starting a recovery from Wednesday, closing +1.6% from Monday, March 10. This trend was mirrored by that of the FTSE MIB, which marked a weekly increase of +1.12%, closing at 38,655.30 points. 


APAC


The Hang Seng Index fell by 0.65% this week but increased 2.12% on Friday due to a rebound in technology stocks and investor optimism regarding U.S.-China trade relations.  

Despite ongoing scrutiny on Chinese firms, the market responded positively to reports suggesting that Washington may delay some of its stricter measures on semiconductor exports. Additionally, increased expectations of policy support from Beijing to stabilize the real estate sector caused financial and property stocks to see gains. 


The Nikkei 225 rose 0.22% as the Japanese yen continued its appreciation against the dollar while reaching a seven-week high. Investors remain cautious ahead of the Bank of Japan’s monetary policy decision next week, with speculation that Bank of Japan may keep the interest rate of 0.5%. Tech giants, including Sony and Tokyo Electron saw declines as a stronger yen affected earnings expectations for export-driven firms. 


The BSE Sensex declined 0.64%, reflecting investor concerns over valuations in Indian equity markets. Profit-taking among foreign institutional investors contributed to the decline, particularly in IT and financial stocks. However, expectations of strong corporate earnings and stable macroeconomic indicators provided some support. Additionally, India’s retail inflation for February eased slightly to 6.25%, fueling speculation that the Reserve Bank of India may hold off on rate hikes in the short run. 


 

Fixed Income Focus


U.S. Treasury


Last Monday, the benchmark ten-year yield fell 9 basis points to 4.23%, while the two-year yield dropped 10 basis points to 3.91%. According to CBNC, the Fed is expected to leave interest rates steady in the upcoming meeting, despite promising signs of lower inflation. Trade tensions, however, threaten to drive consumer prices higher, and potentially delay future rate cuts. Andrzej Skiba, head of U.S. fixed income at RBC Global Asset Management, warned that these tariffs will likely reinforce concerns that higher consumer prices could persist. Presumably, monetary policy will be on hold for longer than markets anticipate. 


Relative to last week, treasury yields remained stable. The latest weekly curve shows a slight increase in short-term yields, particularly one-year and two-year, while mid-to-long-term yields remained unchanged. 






The market is overwhelmingly confident that rate cuts are unlikely to happen at next week’s meeting, with 98% probability. Still, investors will be closely monitoring for relevant information on the timing of potential rate cuts later in the year.




Eurozone Government Bonds


Regarding AAA rated government bonds in the Eurozone, there is a noticeable downward shift in short and medium-term bonds and an upward shift in long-term bonds. Bonds with residual maturity of 2 years had the biggest weekly difference, dropping by almost 0.1%. 




Germany, however, is expected to have a boost in bond issuance. Since the country is currently in the midst of a major fiscal expansion, German Chancellor Friedrich Merz struck a historic deal to increase spending on defence and infrastructure, including a €500 billion infrastructure fund. This shift is expected to boost Germany’s economic output by more than two percentage points every year, thereby driving up bond issuance, setting off a selloff in German government bonds, and producing higher long-term yields. Not only will this event have implications across Europe, but it will touch bond markets all over the world.  


 

Wrap up for the Asset Management Division


The global economy faces mixed signals, as the U.S. grapples within trade tensions as well as in the middle of inflation concerns, Europe showing signs after stabilization despite following manufacturing contractions, and APAC benefiting from strong growth from emerging markets. Equities experienced volatility, and U.S. indices rebounded sharply after mid-week declines. European markets were weighed down in trade uncertainties, and Asian markets showed cautious optimism in the middle of trade and policy developments. Fixed income markets stayed quite stable overall, with U.S. Treasury yields showing some concerns about possibly prolonged higher rates, while Eurozone bonds experienced special shifts in short and long-term yields, especially in Germany, caused by proposed fiscal expansion plans. In general, investors are navigating a particularly complex environment molded by geopolitical risks as well as inflation trends along with central bank policies. 


 

Credits:

Pablo Ruiz (Team Leader)  

Mahek Dodani (Team Leader)  

Luca Busetti (Global Economy Analyst)  

Lorenzo Pignataro (Global Economy Analyst)  

Angelo Elpidio De Matteo (Equity Analyst)  

Qasim Sultan (Equity Analyst)  

Stella Bellini (Fixed Income Analyst)  

Vladimir Pashov (Fixed Income Analyst)  

 

References

Global Economy

Fixed Income Focus



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