A Friday full of surprises: Macron wants to go give Trump a few lessons, U.S. consumer confidence somewhat shaken, and anticipation for the elections in Germany.
Consumer Confidence, Macron, and Trump Are on a Boat… Guess Who’s Drowning?
The economic and political news has been surprising. The University of Michigan’s Consumer Confidence Index fell to 64.7 from 71.7 in January, marking a 10% drop in a month and nearly 16% over the year. The index is now even lower than the preliminary estimate (67.8), which, when published on February 7, had already depressed the markets as it was well below expectations.
Regarding his meeting with Donald Trump in Washington, Emmanuel Macron, the self-proclaimed Sun King, is set to offer some advice to Emperor Trump: “I’m going to tell him: you can’t be weak in front of President Putin—that’s not you, that’s not your brand. How can you then be credible in front of China if you’re weak against Putin?” He added, “If you let Ukraine fall to Putin, Russia will become unstoppable for the Europeans.” Meanwhile, European leaders are acting like Switzerland’s president, who has read Trump’s book (an important detail), meaning they are “waiting to see.” A small piece of advice… read Machiavelli.
One last thing before we go: maintaining Ukraine’s access to Starlink, owned by SpaceX, was reportedly discussed between U.S. and Ukrainian officials after Ukrainian President Volodymyr Zelensky rejected an initial proposal from U.S. Treasury Secretary Scott Bessent, sources said.
Financial markets remain more sensitive to economic data, and the latest U.S. figures had a visible impact: the Dow Jones dropped 1.69%, the Nasdaq plunged 2.20%, and the broader S&P 500 index fell 1.71%. Semiconductor giant Nvidia lost 4.05%, while Microsoft fell 1.90%, Amazon declined 2.83%, Tesla dropped 4.68%, and Alphabet lost 2.71%. Meanwhile, in the crypto world, while the U.S. financial watchdog decided to drop charges against Coinbase, Bybit, one of the world’s largest cryptocurrency exchanges, announced that a hacker had taken control of an Ethereum wallet and transferred $1.4 billion to an unidentified address.
In Europe, markets were in another world. The CAC 40 closed up 0.39%, the British FTSE ended nearly flat with a 0.04% decline, while Germany’s DAX finished down 0.23%. The EuroStoxx 50 closed 0.19% higher, the FTSEurofirst 300 gained 0.47%, and the Stoxx 600 added 0.49%. In Switzerland, the SMI rose 1.10%, boosted by heavyweights like Nestlé (+3.4%), Roche (+1.1%), and Novartis (+1.5%).
Bond yields also fluctuated, with Germany’s 10-year Bund yield dropping 6.9 basis points to 2.4640%, while the two-year yield fell 5.0 basis points to 2.1010%. U.S. Treasury yields also declined, with the 10-year yield down 4.3 basis points to 4.4565% and the two-year falling 2.1 basis points to 4.2448%.
By late morning, the dollar remained stable against the yen at 149.58 yen. It has fallen in five of the last six weeks, losing 1.8% this week. The yen has gained about 3.2% so far in February. A quarter-point rate hike is not fully priced in until September, though interest rate markets have factored in a slight possibility of an increase as early as May. Meanwhile, the euro fell after a series of economic activity surveys showed a sharp contraction in early February in France and a slight improvement in Germany—historically the two key drivers of eurozone growth.
Gold and Commodities Decline, Except for Wheat
Spot gold lost 0.3% to $2,930.85. The bullion gained about 1.7% last week after reaching a record high of $2,954.69 on Thursday. Spot silver was down 0.6%, palladium fell 0.9%, and platinum lost 1%.
Oil prices declined on Friday but were still heading toward a positive weekly close amid supply chain disruptions in Russia and a potential rebound in demand from China and the United States. Brent crude dropped 1.96% to $74.98 per barrel, while U.S. crude fell 2.06% to $70.99 per barrel.
Soybeans closed down 5-3/4 cents after hitting their highest level since February 11. Over the week, the contract advanced by 0.4%. Chicago Board of Trade wheat futures ended higher on Friday due to short covering and buying by commodity funds, traders said.
German Elections…
The Christian Democrats secured the largest share of votes (29%) in the German legislative elections, but the sharp rise of the far-right party Alternative für Deutschland (21%) is likely to complicate the formation of a government tasked with providing a European response to growing global threats. DAX futures rose 1.1%, while the euro gained 0.5% to $1.0516 and appears poised to test its January high of $1.0535.
This Morning in Asia
Liquidity was reduced due to a public holiday in Tokyo, and the MSCI index of Asia-Pacific stocks outside Japan declined by 0.2%. Chinese blue-chip stocks fell by 0.1%, but Hong Kong stocks strengthened by 0.2%, extending their recent bullish run driven by the technology sector.
