February 2025
February 2025 was marked by heightened tensions, policy shifts, and economic uncertainty that shaped global geopolitics and financial markets.
Ukraine and Russia dominated discussions, particularly as US President Donald Trump criticised Ukrainian President Volodymyr Zelenskyy. Talks in Riyadh and the Munich Security Conference revealed growing friction between the US and Europe, leading to the formation of the “Weimar+” alliance - a coalition of key European nations advocating for strategic autonomy in peace negotiations. The exclusion of Ukraine and Europe from US-Russia peace talks prompted criticism from European leaders, who demanded a more significant role in resolving the conflict.
Meanwhile, Trump announced new tariffs on imports from Mexico, Canada, Europe, and China, raising concerns over trade wars and market volatility.
Central bank policies played a pivotal role in shaping economic sentiment. The European Central Bank signalled further interest rate cuts to counter weak inflation and sluggish economic growth. In contrast, the Fed maintained its policy stance. The Bank of England lowered its base interest rate from 4.75% to 4.5%, citing economic uncertainties and revising its UK growth forecast downwards.
Financial markets reacted to geopolitical tensions with mixed performances across regions. The US stock market faced significant losses, with the S&P 500 dropping 1.4%. The Nasdaq fell 4.0%, driven by falling tech stock valuations and trade concerns.
In contrast, European markets demonstrated resilience, with the FTSE 100 rising 0.5% and Germany’s DAX gaining 3.8%. Meanwhile, investor sentiment remained weak in Japan, where the Nikkei 225 fell 6.1%, weighed down by concerns over “mini stagflation”—a combination of sluggish economic growth, persistent inflation, weaker-than-expected corporate earnings, and global trade tensions. In China, the Shanghai Composite Index climbed 2.2%, supported by solid economic data, easing regulatory concerns, and pro-growth government policies.
Currency markets reflected shifting economic dynamics. The US dollar weakened against both the euro and the pound, falling 0.7% against the latter due to stronger UK economic data and global trade concerns. The pound’s strength was further supported by better-than-expected retail sales and an improving economic outlook, despite the Bank of England’s downward revision of growth forecasts.
While the euro strengthened against the US dollar in late February, concerns over economic stagnation in major Eurozone economies, particularly Germany and France, kept it under pressure. Meanwhile, demand for the Japanese yen rose as investors sought safe-haven assets amid uncertainty over US trade policies.
Commodity markets responded to geopolitical turmoil, with gold reaching a record high of $2,954 per ounce as investors sought safe-haven assets, although pared back into month end to close up 0.5%. Oil prices fluctuated due to supply disruptions and fears of declining demand linked to trade policies, and by month end WTI and Brent had fallen 3.8%.
Agricultural commodities also experienced sharp price movements. Cocoa prices hit record highs due to drought conditions in West Africa, impacting global chocolate production. Coffee futures surged amid concerns over Brazil’s 2025/26 harvest, which was affected by extreme weather and reduced output expectations.
The cryptocurrency sector faced turbulence. Bitcoin fell below $80,000 for the first time since November 2024, at one point losing 27% of its value from its January peak, and by the end of the month was down 16.2%. Ethereum followed a similar downward trajectory. The decline was exacerbated by economic uncertainty, Trump’s trade policies, and a $1.5 billion hack on the Bybit exchange, which heightened investor concerns over the security of digital assets.
In a significant regulatory move, the US Securities and Exchange Commission (SEC) classified meme coins as collectibles rather than securities. While this reduced some regulatory pressures, it also led to speculation and volatility in the crypto market.