Trading results for 7 February 2025
The past week began with Trump's tariffs and ended with them – things came full circle.
On Monday, the new U.S. president's administration sent shockwaves through the market with threats of imposing 25% tariffs on imports from Canada and Mexico, as well as 10% duties on Chinese products. Naturally, investors panicked and rushed to sell their stocks. However, shortly after, Trump clarified that he was "joking" – or rather, postponing the tariffs on Mexico and Canada for a month – bringing some relief.
The market managed to recover part of its losses, and throughout the week, various rumours circulated about these tariffs and potential U.S.-China negotiations. Investors tried to stay optimistic, looking for any positive signs in these speculations. By Friday, they had fully erased the week's initial losses. Things seemed promising: corporate earnings reports were solid, labour market data exceeded expectations, and indexes were approaching historical highs. The market just needed to avoid a dip on Friday to end the week on a positive note.
Indeed, trading started above zero, and for the first 30 minutes, the session showed modest growth. But then, yet another "message from Trump" arrived – plans for reciprocal tariffs on U.S. steel and aluminium imports. This destabilised the market again. Indexes slowly but steadily declined, closing at their session lows and wiping out the gains of the previous days.
Thus, the week started and ended with a sell-off. Fortunately, the losses were minimal: the Dow Jones (DJIA-30) and NASDAQ Composite each lost 0.5%, while the broader S&P 500 fared slightly better, dropping only 0.24%.
The ITS indexes, however, performed better than their American counterparts. The standout was the ITS World Index (ITSW), which showed strong performance throughout the week, even hitting multiple record highs. It set another all-time high on Friday at 1,289.24 points, but the global sell-off later in the day prevented it from holding onto that level. Still, ITSW ended the week in positive territory, gaining 0.35%.
The ITS Shariah Index (ITSS) had a tougher time. While ITSW benefitted from the strength of Asian and European stocks amid U.S. market turmoil, ITSS consists exclusively of American companies, making it more vulnerable to the U.S. market’s movements. However, its diversified portfolio helped it outperform U.S. indexes, with only a 0.21% decline for the week.
Over the weekend, as per index rules, a rebalancing of portfolio holdings was conducted for both the ITS World (ITSW) and ITS Shariah (ITSS) indexes. In ITSW, Procter & Gamble (PG), Stellantis (STLA) and Korea Electric Power (KEP) were removed, making way for Costco Wholesale (COST), Garmin (GRMN) and Wix.com (WIX). In ITSS, T-Mobile (TMUS) and Intuit (INTU) were replaced by two major players from the tech and industrial sectors: Qualcomm (QCOM) and Caterpillar (CAT). Unlike ITSW, where decisions are made by the index fund committee, changes in the ITSS portfolio require approval from specialised Shariah boards, ensuring compliance with Islamic finance principles.
Looking at the overall picture, the market has not experienced any serious shocks so far. Indexes remain in an uptrend and appear poised for new highs. However, Trump’s tariff plans are raising investor concerns about the future of the U.S. economy and inflation rates. Since inflation directly affects stock market trends, uncertainty is growing, and the pace of market growth may soon slow down. Fortunately, for now, there are no signs of a full-blown correction.