Blue Chip Portfolio USD Monthly Commentary – March 1st, 2025

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Financial Market Review Summary

February saw heightened volatility across global financial markets, driven by shifting investor sentiment, macroeconomic uncertainties, and geopolitical developments. While an initial rally followed the US government’s decision to delay tariffs on Canada and Mexico, broader trade tensions and weaker economic indicators weighed on markets later in the month. Technology stocks experienced their sharpest decline over the last 5 years, reflecting investor concerns over valuation and earnings expectations.

Meanwhile, European equities exhibited resilience, buoyed by anticipated fiscal spending and defence sector growth. Safe-haven assets, such as gold and sovereign bonds, attracted investors amid risk aversion, with gold prices reaching a record high.

Geopolitical factors played a significant role in shaping market trends. US-Russia diplomatic negotiations contributed to declining oil prices, while disruptions in Red Sea shipping routes and escalating China-Taiwan tensions fuelled supply chain concerns, particularly in the semiconductor industry. European markets benefited from rising defence spending expectations, with German companies among the top gainers.

Central banks, including the Federal Reserve and the European Central Bank, maintained cautious policy stances, reinforcing expectations of prolonged monetary tightening. Looking ahead, market participants remain focused on inflation trends, interest rate adjustments, and fiscal policy shifts, with particular attention on corporate earnings and sector-specific growth drivers such as artificial intelligence and industrial demand.

 

Macroeconomic Developments and Market Drivers

  • The announcement of proposed US tariffs on imports from Canada, Mexico, and China contributed to early market
  • The US Consumer Price Index (CPI) rose 0.47% in January, bringing annual inflation to 2.5%, while the Federal Reserve’s preferred measure, the Personal Consumption Expenditures (PCE) index, signalled continued price pressures.
  • The US labour market demonstrated resilience, adding 275,000 new jobs in February, surpassing market
  • Wage growth slowed to 0.2% month-over-month, suggesting that labour- related inflationary pressures may be
  • Sectoral disparities were evident, as hiring in technology and financial services decelerated, whereas demand for workers in healthcare and hospitality remained robust.

Geopolitical and Sector-Specific Considerations

  • The US initiated diplomatic negotiations with Russia concerning the war in Ukraine, contributing to a 4.7% decline in Brent crude prices, which closed the month at $73.18 per
  • European equities advanced, driven by expectations of increased defence expenditures.
  • Elsewhere, disruptions in Red Sea shipping lanes and escalating tensions between China and Taiwan amplified concerns over global supply chain vulnerabilities, particularly in semiconductor
  • In the technology sector, Nvidia’s earnings report fell short of elevated investor expectations, triggering a sell-off in high-growth
  • Bitcoin and other cryptocurrencies experienced substantial losses, with Bitcoin plummeting 17.5% as digital assets remained highly sensitive to shifts in risk appetite and macroeconomic
  • Although European political developments introduced further complexity, in Germany the DAX index advanced 3.8%, while the MDAX recorded its strongest performance in two years.

Market Performance: Winners and Losers

Winners

  • Sovereign Bonds: US 10-year Treasury yields fell by 33 basis points, while German bunds experienced a 5-basis-point
  • European Equities: The STOXX 600 index gained 3.4%, with Italian and Spanish equities outperforming, rising by 6.0% and 7.9%,
  • Precious and Industrial Metals: Gold prices surged to an all-time high of $2,952 per ounce, underscoring its role as a hedge against inflation and geopolitical risk.

Losers

  • US Equities: The S&P 500 retreated by 1.4%, while the Magnificent 7 declined by over 8% as investors reassessed valuations and earnings expectations within the high-growth
  • Energy Markets: Brent crude declined 7.
  • Cryptocurrencies: Bitcoin recorded its worst monthly performance since June 2022, tumbling 17.5%, while broader digital asset markets exhibited heightened volatility and risk

US Bluechip Stock Performance Highlights

Winners

  • T-Mobile US, +16.5%: In a press release, T-Mobile confirmed that beta service with Starlink DTC satellite cell phone service has already begun thus considerably extending their service.
  • The Coca-Cola Company +12.2%: Limited edition flavours of its sodas and price hikes gave rise to a positive surprise in quarterly revenues amid slow demand in the foods
  • Berkshire Hathaway +9.6%: February say the annual meaning held along with the news that they had sold off a very large amount stock and moved the capital into cash.
  • Costco Wholesale Corporation +7,1%: Costco raised hourly pay for most US store workers to over $30.
  • McDonald’s Corporation +6.8%: The Financial Times reported that McDonald’s sales growth improved in the fourth quarter and that the Gaza boycott of the franchise had eased.

Losers

  • Alphabet Inc. -16.2%: Alphabet’s revenues disappointed Wall Street as the competition in AI continues
  • Advanced Micro Devices, -13.9%: Mixed signals from AMD as their data centre revenues hit record highs but still misses expectations.
  • com, Inc. -10.7%: There’s no clear reason for the negative performance of this stock but Amazon’s share price continues to slip as macro concerns continue to drive investor cautiousness.
  • Broadcom Inc. -9.9%: According to several articles published during the month, Broadcom could be a big loser in the race for chip, and therefore AI, dominance if Arm Holdings were itself to move into making its own microchips.

Outlook and Strategic Considerations

  • Looking ahead, financial markets will remain highly responsive to macroeconomic data releases, central bank policy decisions, and geopolitical developments. The Federal Reserve’s upcoming meetings will be scrutinized for indications of potential shifts in monetary policy, while corporate earnings reports will provide further insights into sector-specific resilience and growth
  • Additionally, fiscal policy adjustments, including potential US tax reforms and economic stimulus measures in China, could introduce further volatility. Investors will also monitor technological advancements, particularly in artificial intelligence and semiconductor industries, as key drivers of long- term market performance. Given these evolving dynamics, market participants are likely to adopt a selective and data-driven approach to asset allocation in the months ahead.