*Market Recap (17 February 2025 – 24 February 2025)* A. Overview Global markets navigated a week filled with mixed economic data, ongoing corporate earnings, and a swirl of central bank commentary. Overall sentiment leaned cautiously positive, underpinned by moderating inflation in key regions and signs that consumer demand remains resilient despite elevated interest rates. Nevertheless, pockets of volatility persisted around forex pairs and equities, particularly when new data releases surprised or diverged from consensus forecasts. B. Key Drivers and Developments US Retail Sales & Housing Data Retail Sales: The latest figures showed consumer spending continuing at a steady pace, surprising some analysts who anticipated a pullback. Spending on essentials stayed robust, while discretionary categories posted modest gains. Housing Market: Housing starts and existing home sales reported slight increases, reversing a short-term trend of sluggishness. Lower-than-peak mortgage rates and an uptick in buyer interest helped stabilize the sector, supporting homebuilder stocks late in the week. UK Inflation & Retail Inflation Report: The UK’s latest Consumer Price Index reading was marginally below expectations, signaling that cost pressures might be abating. This cooled prospects for additional aggressive rate hikes by the Bank of England. Retail Data: Retailers reported mixed results, with necessities continuing to perform better than discretionary goods. The mild inflation surprise, however, provided a small lift to consumer sentiment, offering a glimmer of hope for a turnaround. ECB Meeting Minutes Minutes from the European Central Bank’s recent meeting revealed a split among policymakers—some expressing concern about lingering inflation in the Eurozone, others pointing to slowing growth and cautioning against over-tightening. The market reaction was muted, as traders largely anticipated the balanced tone. Japan GDP & Inflation GDP: Preliminary Q4 2024 GDP numbers in Japan slightly exceeded consensus, driven by export resilience and an uptick in domestic consumption. Inflation: Core inflation moved higher, prompting renewed speculation that the Bank of Japan might gradually shift away from its ultra-accommodative stance. This lent support to the yen toward the end of the week. Corporate Earnings Season Wrap-Up The final wave of Q4 2024 earnings offered a mixed bag. Tech and select consumer staples continued to deliver solid numbers, whereas certain industrial and commodity-linked sectors warned of potential slowdowns if global demand falters. C. Asset Class Performance Forex USD Majors: The US Dollar Index (DXY) edged slightly lower. Better-than-expected US retail data initially offered support, but dovish-leaning commentary from some Fed officials weighed on the greenback later in the week. EUR/USD: Traded in a narrow range, finishing slightly higher as European inflation concerns kept the ECB hawkish camp engaged, balancing out mixed industrial data. GBP/USD: The pound posted modest gains following softer UK inflation readings. However, concerns about the UK’s growth path prevented a more significant rally. JPY Crosses (USD/JPY, EUR/JPY): The yen strengthened marginally, buoyed by better Japanese GDP and speculation around shifting Bank of Japan policy. Indices S&P 500: Ended the week with modest gains, supported by stable retail numbers and encouraging earnings in consumer-related sectors. NASDAQ 100: Outperformed other US benchmarks thanks to ongoing resilience in tech. Investors also viewed the Fed’s tempered commentary favorably for growth-oriented stocks. DAX (Germany): Closed slightly lower, weighed by cautious industrial data and the ECB’s somewhat divided stance on future rate moves. FTSE 100 (UK): Finished the week near flat, as gains in defensive sectors offset weakness in energy and some discretionary segments. Stocks Consumer Staples vs. Discretionary: Staples remained stable amid cost-of-living concerns, while discretionary stocks saw modest gains in the US but lagged in Europe. Financials: Largely unchanged. Market participants kept an eye on yield curves, which remained relatively flat, making it more challenging for banks to expand interest margins. Energy & Materials: Reacted to updates about global demand; incremental gains toward week’s end were driven by hints of improved industrial activity in China and stable US consumer demand. Commodities Gold: Rallied mid-week when Fed officials hinted at caution over further rate hikes. A minor pullback occurred on Friday as risk-on sentiment improved in equity markets. Crude Oil (WTI): Hovered in a tight range. Support came from improved US housing and consumer data, while concerns about uneven global demand growth limited significant upside. *Forecast (24 February 2025 – 2 March 2025)* A. Key Events and Potential Market Impact Fed Chair Speech & Economic Data The Federal Reserve Chair is scheduled to speak at a major economic conference. Any commentary suggesting a shift in policy stance, either more hawkish or dovish, could trigger volatility in the dollar and US equities. Meanwhile, the US will release new consumer confidence figures and preliminary manufacturing PMIs. Eurozone Inflation & Unemployment Flash inflation readings across the Eurozone will be in focus. A high reading may reinforce the ECB’s hawkish track, while a soft number could prompt euro weakness. Unemployment figures will also be watched for signs of labor market strain. UK GDP Revision & BoE Speakers A revision of the Q4 2024 UK GDP figure is due, along with public remarks from Bank of England members. Any upward revision or hawkish commentary could boost the pound, while a downward revision might weigh on it. China PMIs Manufacturing and Non-Manufacturing PMI releases could impact global sentiment. Strengthening Chinese economic activity typically supports risk assets and commodities, while weaker PMIs might dampen outlooks for industrial metals and commodity currencies. Corporate Guidance Updates Though earnings season is winding down, a few notable mid- and small-cap companies are set to release updated guidance. Sectors like retail, hospitality, and technology might see abrupt moves if management outlines changes in consumer or business spending trends. *Market Outlook by Asset Class* Forex USD Majors: Could face further softness if Fed commentary leans dovish. However, any hint of persistent inflation or strong US data might bolster the greenback. EUR/USD: Eurozone inflation data will be pivotal. A stronger-than-expected inflation print could push EUR/USD higher on renewed ECB tightening expectations. GBP/USD: Sensitive to the UK GDP revision and BoE speakers. Any upward surprise in growth or hawkish hints could fuel a short-term pound rally. Commodity Currencies: Watch Chinese PMIs. Positive readings could boost AUD, NZD, and CAD; weak PMIs might trigger a sell-off. Indices US Indices (S&P 500, NASDAQ 100): Likely to respond sharply to Fed Chair remarks. Tech stocks remain especially sensitive to interest rate signals, while strong US consumer or manufacturing data could further support equity markets. European Indices (DAX, FTSE 100): Eurozone inflation and unemployment data will dictate near-term sentiment. Any strong demand signals might lift cyclical sectors, but a hawkish ECB stance could weigh on rate-sensitive industries. Asian Markets: China’s PMIs will set the tone. An improving manufacturing sector could bolster regional equities and commodity-linked exporters. Stocks Tech & Growth: Could see continued inflows if bond yields remain steady or decline, especially in the US. Surprising hawkish shifts by the Fed could spark profit-taking. Financials: Watch yield curve movements. Stable or slightly rising long-term rates could support bank earnings, while further flattening might pressure net interest margins. Consumer & Retail: Upcoming guidance from retailers and hospitality companies may move these segments. Expect heightened volatility on any forward-looking statements about consumer spending health. Commodities Gold: May remain range-bound but sensitive to shifts in Fed policy expectations. A dovish turn typically boosts gold; a hawkish pivot can suppress it. Crude Oil (WTI & Brent): Chinese PMIs will be a key driver. A robust reading might fuel hopes of stronger global energy demand, while disappointments could stall prices. *Strategy Tips for Retail Day Traders* Listen Closely to Fed & BoE Communications Both the Fed Chair’s speech and BoE remarks can spark rapid moves in currencies, equity indices, and metals. Time your entries around these events, and consider using limit or stop orders to manage potential whipsaws. Monitor Technical Breakouts Many indices and currency pairs are hovering near key support/resistance levels. Breakouts or reversals around these zones can present short-term opportunities. Align FX with Commodity Momentum If China PMIs beat expectations, commodity-linked currencies (AUD, NZD, CAD) might rally alongside rising oil and metals prices. Conversely, weak PMIs could pressure them lower. Be Cautious of Small-Cap Earnings Surprises Final earnings announcements from smaller companies can spark outsized volatility in these individual stocks and, sometimes, sector-wide. Employ tighter stops and smaller position sizes if trading these names. *Final Thoughts* Markets from 17 February to 24 February 2025 navigated a blend of encouraging economic releases (especially in the US housing and retail segments) and tempered corporate guidance. Going into 24 February to 2 March 2025, traders’ focus will shift to major central bank commentary, Eurozone inflation prints, UK GDP revisions, and China’s PMI figures. Retail day traders should stay nimble, keeping close tabs on event risk and key technical levels, as new data could rapidly alter market sentiment. Stay prepared, watch the calendar, and manage your positions with disciplined risk controls. Disclaimer: This newsletter is for informational purposes only and does not constitute financial or investment advice. Always perform your own due diligence and consider consulting a licensed financial advisor before making any trading decisions.