Stock markets have clawed back some of their recent losses at the start of a week in which the agenda will again be driven by geopolitics and the latest from the White House.
Investors were looking for a change in mood at the start of March after a disappointing February for the US market, in particular. Last Friday saw more American falls, taking the S&P 500 2% lower and the Nasdaq 5% lower for the month.
The futures market suggests some of that could be recovered when markets open later.
UK – in a sweet spot?
Back in Europe and the news has been better. The FTSE 100 broke new ground on Monday, rising 0.4% to 8,849 by mid-morning – a new record level. The good mood this morning extended to other European markets, with the Eurostoxx 50 index ahead by 0.7%.
The UK market has quietly been having a good 2025 so far – the blue chip index here up 7% year to date.
The latest leg up has been led by the defence sector, which has been helped by expected increases in UK and European defence spending. The Ukraine defence summit hosted by Keir Starmer over the weekend only added to the evidence that European states are ready to significantly up their security spending.
BAE Systems was up 15% in morning trading on Monday, with jet engine maker Rolls-Royce up 5% and Melrose Industries up 1%. Further down the index, QinetiQ was up 9.5%, Babcock International rose 7.6% and Chemring jumped 6%.
The gains will add to the sense that the UK has found itself in a sweet spot amid the current geopolitical uncertainty. It is not – yet – a target of Donald Trump’s trade tariffs as the EU nations are, and it is not exposed to the highly-valued tech stocks that pose a risk to the US market.
Markets on Trump-watch
The agenda this week is likely to be set, once again, by The White House. On Tuesday evening President Trump will address the joint session of Congress, laying out his priorities for the next year.
Tariffs are likely to get a mention, while Trump is also sure to push ahead with his top-down restructuring of federal spending, known as the Department of Government Efficiency (DOGE), which Trump has turned to billionaire Elon Musk to lead.
We may also hear more about Trump’s planned cryptocurrency reserve which was announced at the weekend. The plan has gone further in boosting the status of crypto than previous promises from the President had suggested, and will see the US Government buy and hold a range of cryptocurrencies. This exceeds a previous plan to simply ‘stockpile’ bitcoin.
The news saw a massive bounce in cryptocurrency prices, with bitcoin surging around 10% and recovering all of the ground it had lost this year.
China update
This week will see two governmental set-piece events in in Beijing – the annual meeting of the Chinese People’s Political Consultative Conference on Tuesday and the opening of the National People’s Congress on Wednesday.
Investors will be watching out for the accompanying economic data and forecasts. Economists believe the growth target and official fiscal deficit are unlikely to surprise, with consensus forecasts of 5% and 4% respectively.
