Trading results for 28 February 2025
Stormy February has come to an end, but whether things will get any easier remains a big question. Last Friday served as a kind of final note in this whirlwind of a month. Fortunately, it was quite an optimistic one.
It all started rather uneventfully: after several days of sell-offs, a pause was due, and many market participants were mentally prepared for it. All that was missing was a small spark of optimism to push prices higher. That spark – more of a flicker than a surge – came in the form of January's PCE consumer inflation data. Since this is the key indicator for U.S. Federal Reserve members when deciding on interest rate changes, its alignment with analysts' forecasts was a welcome relief for investors. As a result, Friday's trading opened on a slightly upbeat note, with indexes starting in positive territory – a significant achievement considering the previous week’s sell-offs.
However, the gains remained modest and likely would have stayed that way until the closing bell – if not for Trump and the chaotic spectacle he staged in the Oval Office on Friday afternoon. We will leave the political show itself without comment, but market participants clearly enjoyed it, triggering a wave of buying that pushed indexes higher.
By the end of the day, instead of a minor increase, we saw a solid rise of 1.5% or more across all major U.S. indexes. However, this was not enough to fully offset the week's losses, and the broad market indexes, S&P 500 and NASDAQ Composite, still ended the week down by 0.97% and 3.47%, respectively.
The sharp contrast in weekly index performance (with the Dow Jones actually finishing in the green, up 0.95%) highlights the biggest losers of the past week – big tech and its affiliates. Despite Friday’s rebound, the three key sectors closely linked to AI suffered significant losses. The Technology sector was hit the hardest, with an average decline of 4.26%, followed by Consumer Cyclical (-2.56%) and Communication Services (-2.38%).
On the other hand, as expected, defensive assets took the lead. Stocks in real estate management (+2.44%), financials (+2.33%), and consumer staples (+1.48%) all gained. This reflects a classic pattern – investors are shifting away from riskier assets toward safer options. However, they are not exiting the stock market entirely; rather, they are looking to reduce risk.
A similar trend was observed in ITS indexes. Just like in the U.S. market, investors offloaded high-risk assets amid heavy sell-offs. Since current market risks are largely tied to the U.S., the ITS Shariah Index (ITSS), composed exclusively of American company stocks, took the biggest hit, losing 2.44% over the week.
Meanwhile, the ITS World Index (ITSW), thanks to its broad geographical diversification, suffered smaller losses – only 1.42%. This index includes not just U.S. companies but also Asian and European issuers. Throughout the week, except for Friday, the main growth drivers for ITSW were Chinese tech stocks. However, at the end of the week, the situation reversed: U.S. tech stocks rebounded, while Chinese stocks declined. This is geographic diversification at its finest.
Despite Friday’s bright and optimistic close, it would be premature to say that market conditions and investor sentiment have fundamentally changed. One thing is clear – right now, the market is dancing to Trump’s tune, ignoring economic fundamentals. However, sooner or later, investors will have to acknowledge these factors, and when that moment comes, even Trump won’t be able to help. Unfortunately, the uncertainty that emerged with his inauguration is only growing, and its consequences could be quite unpleasant. Given this backdrop, investors should reassess their portfolios for resilience against stress and unforeseen external risks, particularly geopolitical ones.