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AMC Weekly

  • Writer: Andrea Zito
    Andrea Zito
  • Mar 24
  • 9 min read

Updated: Mar 31

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


Global Economy



U.S.


On March 19th, the Federal Reserve maintained its interest rates within the 4.25-4.50% range despite trade tensions and signs of economic deceleration. Should economic conditions deteriorate further, rate cuts will follow; however, no immediate rate cuts are expected. 


All this economic pressure led policymakers to revise their 2025 GDP growth projections downward to 1.7% and their inflation projections upward to 2.7%. 


Jerome Powell (Chairman of the Federal Reserve) recently acknowledged to reporters that their change of outlook concerning inflation and economic growth is mainly due to tariffs.

 

Powell said that the president’s tariffs measures “tend to bring growth down and push inflation up”. He also added that for the Fed there is "no need to be in a hurry" to shift rates given the “unusually elevated” level of uncertainty. 


Meanwhile, the labour market remains resilient, with the unemployment rate holding steady at 3.8% and this stability is still providing support to consumers' confidence which could otherwise be dangerously low. Market sentiment has also been hit by lacklustre corporate earnings with major firms such as FedEx and Nike revising their revenue expectations downward in response to shifting economic conditions. 


Looking at deal flow, on March 18, Alphabet (Google's parent company) announced their $32bn acquisition of Wiz, an Israeli-founded cloud security company specialized in identifying security risks in cloud-stored data. The deal, expected to close in 2026, underscores the escalating importance of cybersecurity in an increasingly digital economy. A big player such as Google improving the security of its cloud services may stand as an incentive for many businesses to adopt such technologies and potentially lead to higher productivity and growth in the tech sector. 


Canada


Newly appointed Prime Minister Mark Carney has indicated that U.S. President Donald Trump will eventually seek comprehensive trade talks due to the adverse effects of the trade war on the U.S. economy. 


Despite previous derogatory remarks, Carney emphasized Canada’s willingness to engage in discussions if treated with appropriate respect. 


Specifically, on March 4th, Trump enacted 25% tariffs on Canadian goods and 10% on energy exports from Canada imported into the US in response to national security concerns regarding illegal immigration and the flow of fentanyl into the US. 

 

In response to the trade war's uncertainties, the Bank of Montreal (BMO) has adjusted its mortgage processing terms for steel and aluminium business owners. The total debt service ratio for borrowers in these sectors has been lowered to 42% from 44%, aiming to better manage housing budgets amid trade-related financial uncertainties.  


In early 2025 the Canadian dollar experienced a slight decline against its U.S. counterpart, influenced by reduced retail sales and ongoing tariff uncertainties. Despite this, the Canadian dollar achieved a modest 0.2% gain for the week, marking its third consecutive weekly increase. 


EMEA


A weak industrial output combined with a high inflation rate keeps Europe’s economy in a precarious state.  As inflation is at a relatively high 2%, the ECB has chosen a cautious approach keeping the benchmark index at 3.75%. The benchmark index is the key interest rate set by the ECB, influencing borrowing costs across the economy. Raising the benchmark index further could slow economic growth too much; therefore, keeping this index rate cautious prevents inflation from rising again. 


While there has been a slight economic expansion in areas such as manufacturing, key countries such as Italy, Germany, France, and the UK keep struggling. This high uncertainty in the European economy has led the ECB to revise its growth expectations down to 0.9% compared to last year's 1.3%. 


Looking towards the UK, soaring political uncertainty and a very precarious labour market have resulted in insufficient capabilities for manufacturing. The Bank of England has raised its rates to a rather high 4.5% to slow price rises and aren’t expected to be cut soon according to policymakers.  


While the overall labour market has shown resilience, high energy costs, inflation, and political uncertainty make the European economy appear very weak to outside observers. 


APAC


The economic situation in the APAC region is highly volatile, with China struggling to maintain its status as an Asian contender of the US and India and nations such as Indonesia and Vietnam continuing to expand at a rapid pace. 


As China's exports continue to fall, experts have revised the growth expectations to a still-high 4.5%. As an export-reliant economy, China’s national bank aims to boost domestic spending and the money supply through actions like cutting the reserve ratio; however, high government debt keeps the economy from thriving. 


India has proven to be a valid contender against China, with GDP expected to grow by an impressive 6.8% because of strong domestic consumption, a fast-growing tech sector, and high foreign direct investment. The Reserve Bank of India has maintained a rather stable monetary policy aimed at battling inflation, encouraging investment, and pushing off overheating allegations.  


As trade tensions rise between China and the US, Western investors and businesses face the necessity of diversifying their supply chain, nations in Southeast Asia such as Indonesia, Thailand, Malaysia or Vietnam have emerged as the new biggest receptors of Western FDI. 

This rising competition from Southeast Asian countries has led to a slowdown in exports from Japan and South Korea However, sectors such as AI, Tech and Innovation remain under Japanese and Korean domination. 


 

Equity Highlights



U.S.


In the week ending March 14, the main US indices showed signs of recovery after a prolonged period of weakness. The S&P 500 opened on Monday at 5,635.60 points and closed Friday at 5,667.56, marking a 0.5% gain. This performance broke a four-week negative streak and was supported by President Donald Trump's comments that the trade tariffs scheduled for early April may be less severe than initially anticipated, helping to calm investor sentiment.  


Additionally, the Federal Reserve kept interest rates unchanged and indicated the possibility of two cuts in 2025, fuelling a strong rally on Wednesday, when the index gained over 1%. 

The Nasdaq Composite gained 0.35%, breaking its four-week losing streak. Although the increase was modest, it was enough to indicate a potential shift in sentiment for the technology sector, which had faced pressure in recent weeks. 


The Dow Jones Industrial Average recorded the best weekly performance among the major indices, rising from 41,460.22 to 41,985.35 points, an increase of 1.26%. The gain was the largest in about two months for the blue-chip index, indicating renewed investor confidence in large, established companies. However, not all components performed equally well. Nike was the worst performer in the index, falling 5.46% after releasing weaker-than-expected revenue forecasts for the fourth quarter. 


Among sector-specific indices, the Dow Jones Transportation Average is worth noting. It experienced early weakness, falling as much as 2.7% during the week, but later recovered partially to close down 0.2%. The decline was driven primarily by FedEx, which dropped 6.45% after revising down its full-year profit and revenue outlook, citing persistent challenges in the industrial sector. UPS also declined by 1.61%, reflecting a broader risk-off sentiment toward logistics companies, often viewed as a barometer for global economic activity. 


EMEA


Stock markets posted mixed performances in a context still dominated by geopolitical tensions and uncertainty over global trade. The STOXX Europe 600 ended the week with a gain of 0.44%, despite clear signs of volatility. The index reached a weekly high of 555.37 points on Wednesday before falling to 549.67 at Friday’s close, with profit-taking contributing to the late-week decline. 


A similar story unfolded with the FTSE 100, which posted a weekly gain of 0.17%. The index topped out on Wednesday at 8,706.66 but slid back slightly to end the week at 8,646.79. The London market benefited from strong corporate earnings and stable commodity prices, though lingering uncertainty dampened overall sentiment. 


The FTSE MIB emerged as one of the top performers in the region, climbing 0.89% throughout the week. It opened at 38,691.12 on Monday and hit a high of 39,712.66 on Wednesday, even seeing a midweek surge of 2.64% before settling down a bit. The final close at 39,035.71 showed a positive trend, bolstered by strength in the banking sector and resilient industrial stocks. 


The situation is different for the German DAX, which was the only one of the main European indices to close in the negative. After opening at 22,998.53 points and hitting a weekly high on Tuesday at 23,380.70 (+1.66%), the index progressively lost ground until closing on Friday at 22,891.68, marking a weekly loss of 0.47%. This occurred despite the approval by both chambers of the German parliament of a major economic package, which includes an increase in public spending and a €500 billion stimulus fund aimed at supporting growth.  


APAC


Hong Kong’s Hang Seng index declined by 2.21% this week, continuing its downward trend as investors' attitudes remained fragile. While Chinese policymakers have expressed their desire to support economic growth, actual policy moves remain underwhelming. In addition, ongoing U.S.-China trade tensions continue to haunt Hong Kong-listed tech stocks, weighing down market sentiment. 


Japan’s Nikkei 225 index rose 2.92%, driven by renewed optimism in the tech sector and robust export figures. Despite a strengthening yen earlier in the week, a supportive policy tone from the Bank of Japan and investor confidence in Japan's manufacturing pushed the index higher. Notably, technology and industrial stocks led the rally, indicating improving macro sentiment and expectations for a continued earnings recovery. 


India’s BSE Sensex surged by 3.59%, marking one of the strongest performances globally. The rally was led by banking and infrastructure-related stocks, reflecting optimism following robust loan growth figures across major banks. Additionally, expectations of increased pre-election government spending on capital projects, including transport and infrastructure sparked investors' interest. While some analysts continue to voice concerns over elevated valuations in Indian equities, the market’s momentum this week reflects bullish investor sentiment ahead of the earnings season. 


 

Fixed Income Focus


U.S. Treasuries


This week, the benchmark ten-year yield fell 6 basis points to 4.25%, while the two-year yield dropped 8 basis points to 3.94%. Jerome Powell, Chair of the Federal Reserve, emphasized a cautious approach during Wednesday’s meeting, stating the Fed is "well positioned to wait for greater clarity" before making further policy adjustments. Since long-term bonds are more sensitive to rate changes, high inflation reduces the value of future bond payments, explaining the stark one-week difference in mid-to-long term yields. 


Relative to last week, treasury yields, specifically mid-to-long term, decreased. The latest weekly curve shows no increases, while only short-term yields remained mostly unchanged. 



The market’s overwhelming confidence last week proved right as no rate cuts were announced at Wednesday’s Fed meeting. Still, experts anticipate that the Fed will eventually ease interest rates after more clarity on the economic impacts of Trump’s new policies is shed. 


Eurozone Government Bonds 


Yannis Stournaras, a member of the ECB’s Governing Council, indicated that current indicators point towards a potential rate cut in April, driven by slowing inflation and moderate wage growth. Market analysts now anticipate a 25-basis points reduction in April, with a further cut in June, potentially bringing the deposit facility rate down to 1.75% by the third quarter of 2025. This dovish outlook is reflected in the Eurobonds chart. Yields across nearly all maturities have edged lower over the week, reinforcing expectations of a looser monetary policy stance amid a cooling economic environment. 


Emerging Trends in European Bond Trading 


Portfolio trading, which is common in the US bond market, is catching on in Europe. These types of trades are becoming more frequent, with annual volumes exceeding €250 billion in 2024. Furthermore, portfolio trading from euro-denominated corporate bonds is taking up 11% of all trading volume. These moves highlight the landscape of European fixed income, where central bank policies and fiscal strategies are ushering in a new phase. 


UK Gilt Market Dynamics 


The 10-year gilt yields in the UK advanced for a third week in a row, underperforming French and German debt to the greatest extent this year. This performance can be attributed to underwhelming public finance figures, posing headaches for the Chancellor before the next budget update. 


 

Wrap up for the AM Division


Tariffs are raising tensions across North America, Europe, and Asia, leading economies to maintain interest rates in an effort to manage slowing GDP growth. However, the tariff-driven trade war is pushing Western economies to diversify supply chains, boosting Southeast Asian countries’ economies. Meanwhile, the S&P, NASDAQ, and Dow Jones have all broken their negative streaks in a recent recovery, while the Hang Seng index declined due to ongoing US-China trade tensions. Lastly, both the US Fed and ECB are aiming for rate cuts later in 2025 to address economic challenges. 


 

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) 


 

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