Inflation Test: PCE 28/03/2025

HOT stories for today

 

US market wrap:
 

• U.S. equities declined Thursday as investors reacted to fresh tariff announcements from President Donald Trump, specifically a new 25% levy on foreign-made vehicles. The Dow Jones Industrial Average fell 0.37%, the S&P 500 eased 0.33%, and the Nasdaq Composite lost 0.53%.
• Auto stocks were hit hard following Trump’s Wednesday evening remarks that tariffs on all cars not manufactured in the U.S. would take effect April 2. General Motors (GM) dropped over 7%, while Ford (F) retreated nearly 4%. Tesla (TSLA) edged up 0.4%, with analysts suggesting it may benefit from the new trade policy due to its U.S.-based production. In contrast, metals rallied. Gold surged to a fresh record high, while silver prices climbed to levels not seen since 2011, as safe-haven demand intensified.

Options Uptick: Hedge or Dip buy?

• As President Trump’s “Tariff Liberation Day” on April 2 draws near, investors are positioning themselves for potential market swings by increasing options activity and targeting stocks likely to benefit from the trade shift. Options trading volumes have jumped, particularly in sectors sensitive to tariff changes—such as autos, defense, and heavy industry. Traders are zeroing in on names like Tesla (TSLA), Caterpillar (CAT), and Lockheed Martin (LMT), which may gain from domestic manufacturing advantages or higher defense spending.
• While uncertainty around the full scope of the tariffs remains, the market is clearly bracing for heightened volatility. With geopolitical tension rising and sector-specific duties still possible, investors are hedging risk and hunting for relative winners in the evolving trade landscape.

 
Stocks on the move: 
      

• Alibaba (BABA) — U.S.-listed shares of the Chinese e-commerce giant rose nearly 3% after the company unveiled its newest open-source AI model, Qwen2.5-Omni-7B, a multimodal system designed for use on edge devices like smartphones
• Advanced Micro Devices (AMD) — The chipmaker declined 3% after Jefferies downgraded the stock from buy to hold, citing growing competitive pressures as a potential risk to future performance
• Liberty Energy (LBRT) — Shares jumped 5% after Morgan Stanley upgraded the stock to overweight from equal weight, pointing to a more favorable outlook in the energy sector
• Cava (CAVA) — The restaurant chain gained 2% ahead of its upcoming inclusion in the S&P MidCap 400 index, where it will replace Altair Engineering, effective March 31
• Jefferies Financial Group (JEF) — Shares dropped 10% after the firm posted fiscal Q1 earnings of $0.57 per share on revenue of $1.59 billion, missing analyst expectations
   

Today’s action

• Asia-Pacific markets mostly declined on Friday, weighed down by renewed trade tension as President Trump’s tariff threats kept investors cautious. Japan led regional losses, with the Nikkei 225 falling 2.09% to a two-week low. Hong Kong’s Hang Seng Index dipped 0.41%, while China’s CSI 300 edged 0.25% lower. U.S. stock futures were mixed early Friday. Dow Jones Industrial Average futures (DJIA) rose 44 points, or 0.10%, while S&P 500 and Nasdaq 100 futures traded near flat, as investors awaited the release of February’s Personal Consumption Expenditures (PCE) price index—an inflation gauge closely watched by the Federal Reserve.
• In extended trading, Lululemon (LULU) dropped 10% after issuing a weaker-than-expected outlook for Q1 and full-year 2025, raising fresh concerns about consumer demand and retail sector resilience. On the data front, markets are eyeing Thursday’s weekly jobless claims and Friday’s PCE inflation report—seen as the Federal Reserve’s key inflation barometer.

Watchlist: LULU, CAVA, GME, NVDA, TSLA, AMD, SBC, COIN

Bitcoin

• Bitcoin stayed steady above the $87,000 mark on Thursday as crypto investors monitored developments around the expected confirmation of Paul Atkins as the new U.S. Securities and Exchange Commission (SEC) chairman. Known for his pro-business outlook, Atkins is seen as likely to usher in a more favorable regulatory climate for digital assets.
• The broader crypto market found support as USDC, Circle’s leading stablecoin, surpassed a $60 billion market cap for the first time—an encouraging signal for liquidity and institutional interest in the space. Traders remain focused on how the SEC's leadership change could shape the regulatory path ahead for Bitcoin and the wider crypto ecosystem.
  Watchlist: Bitcoin: 78 000-100 000, Ethereum:1900-2600, Solana: 100-176
   

Forex

• EUR/USD edged slightly lower in Friday’s Asian session, slipping back below the 1.0800 level after failing to build on Thursday’s rebound from a three-week low near 1.0730. The pullback comes as the U.S. dollar steadies near recent highs, though the move lacks strong downside momentum with traders awaiting the release of the PCE Price Index, the Fed’s preferred inflation gauge, for fresh direction.
• Meanwhile, the Japanese Yen (JPY) found some support after Tokyo’s consumer inflation data came in hot, reinforcing the Bank of Japan’s hawkish tilt. The BoJ’s latest summary of opinions left the door open for further rate hikes if economic conditions align with projections. However, the JPY’s gains remain limited, as investors remain cautious over the potential impact of U.S. auto tariffs on Japan’s export-heavy economy.
  Watchlist: EUR/USD: 1.0700-1.0950, USD/JPY: 148-151
   

Basic Materials

• Gold (XAU/USD) extended its rally on Friday, climbing to a fresh all-time high near $3,078 during the Asian session. Rising trade tensions—particularly uncertainty surrounding President Trump’s proposed reciprocal tariffs—continue to drive safe-haven demand. A softer U.S. dollar, under pressure from growing Fed rate cut expectations, is also helping to support gold ahead of the PCE Price Index release later today.
• Meanwhile, West Texas Intermediate (WTI) crude edged higher to around $69.70, reaching a one-month high. Prices remain supported by lingering concerns over global supply, after President Trump threatened to impose tariffs on nations purchasing oil from Venezuela. Adding to the bullish momentum, U.S. crude stockpiles dropped by 3.341 million barrels last week, according to the EIA.
  Watchlist: GOLD 2600-3080, US Oil: 65.00-79.00

Key Economic Events Today:

EST time

08:30 am: USD Core PCE Price Index
08:30 am: USD Personal Income
08:30 am: USD Personal Spending
10:00 am: USD Consumer Sentiment
10:00 am: USD Inflation Expectations
12:15 pm: USD FOMC Member Barr Speaks

Earnings

BMO (Before the US Market opens)
SBC           TS Synnex CorSBC Medical Group
HUMA        Humacyte Inc.
AMC (After the US Market closes): Enjoy your weekend!


The TEFS Analyst team wishes you a successful day!