The three major U.S. indices ended the week in the green, as sentiment improved after investors got more certainty around President Donald Trump’s tariff plans, while new inflation data wound up being more constructive than first thought.
For the week, the S&P 500 gained approximately 1.5%, the Dow advanced around 0.6%, and the Nasdaq surged 2.6%.
The consumer price index (CPI), which measures the cost of goods and services across the U.S. economy, increased by a seasonally adjusted 0.5% in January, pushing the annual inflation rate to 3%, up from 2.9% in the previous month, according to the Bureau of Labor Statistics (BLS). Shelter costs, which rose 0.4%, accounted for nearly 30% of the total increase. Excluding volatile food and energy prices, the core CPI rose 0.4% for the month, bringing the 12-month inflation rate to 3.3%, exceeding estimates of 0.3% and 3.1%, respectively.
On Thursday, the BLS reported that the producer price index (PPI) also rose more than expected, advancing 0.4% in January compared with consensus expectations of a 0.3% increase. However, some key components, such as healthcare items and airfares, showed signs of cooling, helping to ease inflation concerns. Bond yields saw sharp gains on Wednesday following the CPI release but later reversed course on Thursday to end the week firmer.
Also on Thursday, President Trump directed the US Trade Representative and the Department of Commerce to study on a country-by-country basis how to adjust US tariff rates on trade partners to match their existing duties and non-tariff barriers. The study is expected to be completed by 1 April, with US levies expected to follow shortly thereafter.
Market Moves of the Week
Tensions between Washington and Pretoria remained elevated this week as South African President Cyril Ramaphosa called for national unity after the country’s new land-expropriation laws and foreign policy came under attack from US President Donald Trump. Trump recently froze most aid to South Africa, citing concerns over race-based discrimination policies and relations with Hamas and Iran.
The law signed by President Ramaphosa in December grants the government the authority to expropriate land for public purposes, such as infrastructure development, with compensation determined as "just and equitable." — though some cases may involve no compensation.
South Africa is set to host a G20 foreign ministers’ meeting next week, with U.S. Secretary of State Marco Rubio boycotting the event in protest of South Africa’s land policies and "anti-Americanism."
For the week, the JSE All-Share Index gained 1.42%, driven by a 3.5% rise in industrial stocks. The rand strengthened against the U.S. dollar, closing the week at R18.34/$. Concerns over a trade war lifted gold prices, providing additional support for the local currency.
Chart of the Week:
The U.S. Consumer Price index (CPI) accelerated a seasonally adjusted 0.5% for the month of January, putting the annual inflation rate at 3%, while core CPI (excluding food and fuel) ran at 0.4% and 3.3% respectively, both above forecasts.
Credits: Strategic IQ
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