NAB Morning Call
Ceasefires – one ends as another opens up, perhaps
Mar 18, 2025
Geopolitical tensions are causing market turmoil, with tech stocks in the U.S. declining while Europe rallies. The latest ceasefire developments have left investors jittery, especially with the Israel-Hamas situation worsening. Notably, there's a marked shift from U.S. equities to European shares. Germany's ramped-up defense budget is impacting bonds, while Canada's rising CPI raises flags for its central bank. Meanwhile, U.S. economic indicators reveal surprising industrial growth, prompting discussions on inflation's global ripple effects.
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Quick takeaways
- Recent agreements between Putin and Trump for a ceasefire have not eased investor fears, alongside concerns related to geopolitical tensions in Gaza.
- A significant shift in global investment strategy is occurring as fund managers reduce U.S. equity holdings in favor of European markets due to economic uncertainties.
Deep dives
Market Reaction to Ceasefire Developments
Recent talks between Putin and Trump resulted in a tentative 30-day ceasefire agreement, with significant conditions that prevent Ukraine from receiving military aid. Despite this development, market reactions remained muted, illustrating a broader atmosphere of uncertainty among investors. The mixed signals of geopolitical tensions continued to overshadow this potential agreement, as illustrated by the deteriorating situation in Gaza. Consequently, stocks in the U.S. saw declines led by major tech companies, contrasting with positive movements in European markets, highlighting the varying responses to global events.
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