Crypto News: Markets Daily: Powell's message to investors

Treasury Secretary Scott Bessent said he's not worried about the decline that's wiped trillions of dollars from the stock market. The former hedge fund manager says Donald Trump's policies will help equities over the long term.
US stock futures dropped as Bessent's comments reinforced the view that the Trump administration is unlikely to step in to boost markets. RBC Capital Markets joined a series of brokers lowering their expectations for the S&P 500.
Trump said he'll speak with Russian President Vladimir Putin tomorrow as the US presses for an end to fighting in Ukraine and European nations rush to bolster their support for Kyiv.
Oil rose for a second day after top importer China said it would take steps to revive consumption by boosting incomes, and the US ordered fresh attacks on the Houthis in Yemen.
Trump's aggressive trade policies have abruptly set the world onto a path of slower growth and higher inflation that could worsen notably if tensions escalate, the OECD said.

The Fed's turn

Federal Reserve Chair Jerome Powell must perform yet another juggling act this week with the US central bank set to leave interest rates unchanged.

On the one hand, he must assure investors that the economy remains on a solid footing, meaning cheaper borrowing costs aren't required, especially amid sticky inflation.

On the other, he must imply that policymakers are willing to step in if the economy takes a turn for the worse.

While Powell suggested the economy was resilient two weeks ago, the Fed meets on Tuesday and Wednesday as markets express unease with President Donald Trump's escalating trade war.

The yield on the two-year note, the most sensitive to the Fed's monetary policy, has declined almost 60 basis points from a mid-January peak to a trough this month of 3.83%, the lowest level in over five months
While stocks advanced on Friday, the move came after a selloff that culminated in a 10% plunge of the S&P 500 from its peak.
Wall Street's so-called fear gauge — the VIX — at one point last week climbed to the highest levels since August

"Powell needs to give some sort of a signal that they're watching it," said Dominic Konstam, head of macro strategy at Mizuho Securities. While the Fed chief will likely make it clear that officials don't target the stock market, they can't ignore the recent slide, he warned.

Traders now see a high probability of three rate cuts this year, most likely beginning in June. Economists generally forecast two reductions, similar to what they expect policymakers' updated projections to show this week.

Officials are expected to also slightly downgrade their forecasts for growth this year and bump up their outlook for core inflation, which excludes food and energy.

Powell will likely avoid guarantees that the Fed will spring into action at the first signs of a faltering economy without a key caveat: inflation sustainably moving toward the Fed's 2% goal.

Wall Street strategists will also be keen for any hints on the Fed's plans to pause or further slow the speed at which the central bank is reducing its balance sheet — a process known as quantitative tightening, or QT.

"The argument for March is that the Fed has already talked about it," said Blake Gwinn, head of US rates strategy at RBC Capital Markets. "So why not just do it — as they can pause QT and then just restart it later." —Jonnelle Marte and Liz Capo McCormick

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The week ahead

There's much of interest aside from Wednesday's Fed decision with the Swiss, UK and Japanese also deciding on interest rates this week, among others.

FedEx, Nike, and General Mills are all likely to scale back profit expectations for the year when they present quarterly results.

Monday: US retail sales.

Tuesday: German ZEW report, Canadian CPI, US industrial production and Germany's Bundestag votes on its debt brake.

Wednesday: The Bank of Japan sets interest rates (and is predicted to keep them unchanged) before the Fed's decision and press conference. General Mills earnings.

Thursday: The Swiss National Bank and Bank of England set interest rates (with the Swiss projected to cut and the UK do nothing). Nike, FedEx and and Micron Technology earnings. EU leaders meet in Brussels.

Friday: Japanese consumer price index and Canadian retail sales. Russia's central bank meets.

On the move

Nvidia is the only member of the Magnificent Seven group rising in premarket trading. The chip giant's shareholders hope a keynote speech from CEO Jensen Huang at its much-anticipated AI conference on Tuesday will give the stock some momentum.

Zealand Pharma rises 4.5% in Copenhagen. The Danish company said it completed enrollment for its trial of petrelintide with the overweight or obese.
British defense company QinetiQ drops 20% in London, the most on record, after analysts warned of sharp cuts to consensus after the company downgraded growth expectations for this year and next.
Norwegian Cruise Line climbs 3.2% after JPMorgan upgrades the stock to overweight from neutral, noting that the company isn't seeing the same slowdown that's hit demand at airlines.
Sprouts Farmers Market rises 0.9% after Deutsche Bank raises the stock to buy from hold. Analysts say the recent stock pullback makes for a good entry point.
Quantum-computing shares are set to extend gains on Monday. Quantum Computing climbs 17%, while D-Wave Quantum rises 7.5%. — Subrat Patnaik

A 'Xi Put'?

There's much debate around the existence of the "Fed put" or "Trump put" — whereby US authorities step in with market-friendly policies when stocks slump.

Now speculation is swirling around a "Xi put" as Chinese investors turn optimistic President Xi Jinping's push for economic expansion and tech innovation will help extend this year's advance in equities.

The idea marks a notable shift in investor perception about the Chinese leader, whose grip on power has deterred foreign flows over the past few years.

The MSCI China Index has soared 20% in 2025. By contrast, the S&P 500 has dropped 4%.

Figures today showed that Chinese consumption, investment and industrial production exceeded estimates to start the year, pointing to signs of resilience for the economy.

Still, more stimulus is needed as Trump's tariffs threaten growth. China's central bank said today it's studying the possibility of new monetary policy tools to spur consumption, though the briefing failed to enthuse investors.

With fresh measures anticipated to revive the economy and signs of an earnings recovery emerging, JPMorgan Chase and Templeton are among those forecasting the rally will widen beyond the tech sector in the coming months. — Sangmi Cha and Abhishek Vishnoi

Defense buildup

Investors are chasing this year's hottest trade in European stocks: defense contractors.

Exchange-traded funds focused on defense and arms companies have attracted more than $1.4 billion in inflows as US President Donald Trump pushes for European countries to increase military spending.

The Select Stoxx Europe Aerospace & Defense ETF in the US has taken in $280 million this year after barely any cash inflow between its October launch and the end of 2024, data compiled by Bloomberg show. Global X's Defense Tech ETF has drawn $230 million.

In Europe, the Future of Defence UCITS ETF, which trades under the NATO ticker, has added roughly $910 million. A new competitor entered the European market last week too: WisdomTree launched the WisdomTree Europe Defence UCITS ETF.

"Most investors in defense are long term," said Hector McNeil, co-founder and co-CEO of HANetf, which helped launch the NATO fund. "They see that all countries, especially NATO countries, will have to up their spending for at least the next decade." —Vildana Hajric

Word from Wall Street

"Trump has really blown things apart. We're probably going to see Trump's reelection as a sort of cyclical, secular top to asset markets, at least in the US."

Russell Clark

Hedge fund manager, Brumby Capital

Click here to read more on Clark's views about Trump's effect on financial markets.

What else we're reading

Big Tech Stocks at Cheapest in Months Fail to Entice Wary Buyers

Darker Than a Dark Pool? Welcome to Wall Street's 'Private Rooms'

Ireland's Profits From Weight-Loss Drugs Draw Trump's Attention

Asset Managers Boost Bullish Euro Bets as Hedge Funds Cut Shorts

Berkshire Raises Stakes in Japan's Largest Trading Houses

Options Market Signals Stability After Brisk S&P 500 Selloff

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