Weekly Market Insights - 24 Mar
Get updated on the key happenings last week in 3 minutes.
This week brought a mix of market turbulence, policy updates, and geopolitical uncertainties, leaving investors grappling with heightened volatility. From the quarterly "triple witching" event to the Federal Reserve's latest economic projections, we break down the key factors influencing financial markets.
Summary
Market Volatility Peaks with Triple Witching: The expiration of $4.7 trillion in derivatives contracts added to stock market turbulence.
Fed Holds Rates Steady: The Federal Reserve maintained interest rates but downgraded growth forecasts, signaling two potential rate cuts this year.
Geopolitical Tensions and Sector Shifts: Ongoing conflicts and trade disputes drove notable movements in energy and defensive sectors while tech lagged.
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22 out of 37 picks outperforming S&P 500Triple Witching Event Shakes Markets
The quarterly “triple witching” event—the simultaneous expiration of stock options, stock index futures, and stock index options—added a layer of volatility to already uneasy markets. With $4.7 trillion in contracts expiring, trading volumes surged as investors adjusted their portfolios, exacerbating market fluctuations.
Despite the increased activity, major indices showed mixed results as market participants weighed the Federal Reserve's revised projections and the long-term implications of ongoing tariff policies.
Federal Reserve Maintains Rates but Signals a Slower Economy
The Federal Reserve opted to hold interest rates steady at 4.25%-4.50% this week, but its updated economic outlook revealed a challenging road ahead. The central bank’s revised projections included:
Inflation Outlook: Core PCE inflation for 2025 was adjusted upward to 2.7%, reflecting the lingering impact of tariffs on prices.
GDP Downgrade: Growth expectations for 2025 were reduced to 1.7%, down from the previous estimate of 2.1%.
Unemployment Forecast: The Fed now projects an unemployment rate of 4.4% for 2025, slightly higher than its prior forecast.
Federal Reserve Chair Jerome Powell also announced a slowdown in balance sheet reduction, lowering the pace of quantitative tightening (QT) from $60 billion to $40 billion per month starting in April. This dovish move signals an effort to maintain liquidity in the system as economic growth slows, which markets interpreted as a potential silver lining.
Geopolitical Uncertainty and Trade Tensions Weigh on Markets
Geopolitical conflicts and trade disputes remain significant headwinds. Renewed violence between Israel and Hamas, with rocket attacks and ground strikes in Gaza, sent ripples across global markets. Meanwhile, the European Union delayed its response to U.S. tariffs until mid-April, further complicating the global trade landscape.
The OECD has warned that prolonged trade tensions could shave 0.3% off global GDP in 2025. Safe-haven assets like gold surged past $3,000, while energy stocks outperformed this week as investors navigated fluctuating oil prices and supply risks tied to Middle Eastern conflicts.
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Disclaimer: This article constitutes the author’s personal views and is for entertainment and educational purposes only. It is not to be construed as financial advice in any form. Please do your own research and seek advice from a qualified financial advisor. From time to time, I have positions in all or some of the mentioned stocks when publishing this article. This is a disclosure - not a recommendation to buy or sell stocks.