The Davy Digest - 18th March 2025

US equities posted losses last week as uncertainty around trade policy seemed to drive much of the negative sentiment. The tech-heavy NASDAQ 100 had its worst day since 2022 on Monday. On a more positive note, inflation for February came in below expectations at 2.8%, a welcome sign for the Federal Reserve ahead of their meeting this week. In Europe, investor confidence showed the highest monthly increase since 2012. European equities outperformed for the week, as Europe remains an attractive destination for investors looking for an alternative to the US. In China, inflation fell into negative territory for the first time since January 2024. China A Shares performed strongly for the week on expectations of more policy support for consumers.

Last week's highlights

	Consumer Price Index (12/03) – Eased to 2.8% YoY, below expectations.  Producer Price Index (13/03) – Fell to 3.2% in February vs 3.3% forecast.  University of Michigan Consumer Sentiment Survey (14/03)
	Sentix European Investor Confidence (10/03) - Largest monthly increase since 2012.  Industrial Production (13/03) – Rose 0.8% MoM in the euro area.
	January Gross Domestic Product (14/03) – UK economy unexpectedly shrank by 0.1% month-on-month in January.  Industrial Production (14/03) - Fell by 0.9% month-on-month in January 2025, worse than market expectations of 0.1% drop.
	China Consumer Price Index (09/03) -  Fell into negative territory for the first time since January 2024. Japan wage negotiations release (14/03) - Average pay hike for 2025 was 5.4%, below last year's 5.9%.

Looking ahead to this week, the Federal Reserve is due to meet on Wednesday with markets expecting interest rates to remain unchanged. Retail sales and industrial production data will also be released in the US. In Europe, consumer confidence is due out on Friday. In the UK, the Bank of England will meet on Thursday with markets expecting rates to be held steady. Finally, the Bank of Japan will meet on Wednesday and are also expected to keep rates unchanged.

What's on the radar

	Retail Sales (17/03) Industrial Production (18/03) Federal Reserve Meeting (19/03)
	Eurozone Consumer Confidence (21/03)
	Bank of England Meeting (20/03)
	China Industrial Production (17/03) China Retail Sales (17/03) Bank of Japan Meeting (19/03)

Chart of the moment

Buy the dip?

Source: Davy, DataStream as of 10/03/2025. The chart shows S&P 500 forward returns when buying on the first day the market closes 10% below its peak, using data back to 1970. Returns shown are median. Source for 10% sell-off dates: Yardeni Research.

• The chart shows median returns for an investor who buys when the S&P 500 has declined by 10% from its previous peak. 
• Returns following 10% sell-offs (in blue) are considerably higher than median returns over all periods (in grey).
• 12-month returns have been positive 78% of the time when buying after a 10% sell-off.