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Last Week
Trading Floors Cheer: Germany’s Spending Ushers in a Bold New European Era
Germany’s dramatic shift from decades of austerity to a bold spending spree has set European markets ablaze, with trading floors buzzing over what could be the dawn of a transformative era. Announced in early March 2025, this pivot sent stocks soaring, the euro charging toward its best week since 2009, and the DAX smashing all-time highs. Meanwhile, bond markets took a hit, with German 10-year notes poised for their worst week since 1998.
Investors are betting big on this seismic change. Strategists have scrapped bearish euro-dollar parity predictions, with Bank of America now eyeing $1.15 by year-end and hedge funds wagering on $1.20 within six months. The move has flipped the script on “US exceptionalism,” as Europe flexes newfound unity in supporting Ukraine and fast-tracking defence capabilities.
Germany’s plans to unlock hundreds of billions for investment have sparked a rotation toward European stocks, with Citigroup forecasting 11% annual profit growth for firms through 2029. UBS strategists see “economic nationalism” keeping more money on the continent, potentially elevating the euro’s global status. Yet risks linger—parliamentary approval is pending by March 18, and Russia’s war in Ukraine looms large. Bond yield spikes could strain other governments too. For now, though, optimism reigns as investors herald a “Brave New Europe,” with strategists like Deutsche Bank’s Jim Reid calling it a shift of “epic proportions” still unfolding.
US Stocks Rocked by Tariff Turmoil: A Wild Ride Near Critical Levels
It’s been a rollercoaster week for US stocks, with tariff uncertainty sending the S&P 500 into a dizzying spin. By Thursday, the index had tumbled 1.8%, putting it on track for its worst weekly drop in six months. The benchmark briefly plunged below its 200-day moving average—a key technical threshold—marking the first breach since November 2023. While it’s since clawed back slightly, the whipsaw action has left traders reeling.
Volatility is spiking, with the VIX Index, dubbed the “fear gauge,” soaring to its highest since mid-December. Experts like Jonathan Krinsky from BTIG warn that while a bounce from this support level is possible, the market’s bottom might still be elusive. “Extreme swings are muddying the waters,” he notes, urging investors to watch options signals and reactions to trade and economic news.
The chaos reflects a broader correction, with the S&P 500 down 6.6% from its 19 February peak. Tech stocks, once the market’s darlings, are faltering, and only half of the index’s members now trade above their 200-day averages—the lowest since late 2023. Meanwhile, investors are flocking to safe havens like healthcare and consumer staples, as risk appetite wanes. “The market’s turning defensive,” says JC O’Hara of Roth Capital Partners, pointing to Washington’s unpredictable agenda as the wild card.
Broadcom Shares Soar as AI Boom Powers Bright Outlook
Broadcom Inc. shares surged after the chip giant delivered a rosy forecast, calming jittery investors with proof that the artificial intelligence (AI) spending spree is still in full swing. The company, a key supplier to tech titans like Apple, predicts sales of £11.7 billion ($14.9 billion) for the quarter ending 4 May—topping analysts’ £11.5 billion ($14.6 billion) estimate. The news sent shares rocketing up to 6.7% in New York on Friday, the biggest intraday leap in a month, after closing at £141 ($179.45) on Thursday.
The results signal that the AI gold rush, which propelled Broadcom’s market value past £790 billion ($1 trillion) last year, hasn’t lost steam. CEO Hock Tan highlighted AI as the star performer in the first quarter, ending 2 February, with £3.5 billion ($4.4 billion) in AI-related sales expected this period. Profit hit £1.26 ($1.60) per share, beating forecasts of £1.18 ($1.50), while revenue climbed 25% to £11.73 billion ($14.92 billion).
Unlike rival Marvell Technology Inc., whose lacklustre growth sparked a 20% share drop, Broadcom’s custom AI chip business is thriving. Tan revealed the firm is scaling up production for ‘hyperscalers’—think Google and Meta—adding four new clients to its roster. “Our partners are investing aggressively,” he said, hinting at even bigger opportunities ahead. Despite a 23% dip in 2025, Broadcom’s AI-driven optimism has reignited investor buzz.
Market Pulse
Coming Up
- JPY GDP Data, Monday 10th March 2025 at 11:50pm
- US CPI Data, Wednesday 12th March 2025 at 12:30pm
- UK GDP Data, Friday 14th March 2025 at 7:00am
Notice:
For professional advisers only, Copia does not provide financial advice, and the contents of this document should not be taken as such. The value of investments can increase and decrease, past performance and historical data cannot guarantee future success, and any references to individual stocks or asset classes are made purely for illustrative purposes. The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.
