As the trading week draws to a close on Friday, March 21, 2025, United States and European markets offered a mixed picture. As central bank signals and geopolitical developments affected investor sentiment, some sectors continued to hold up well, with European industrials and defence being prime examples. Below, we break down the top five topics that drove markets this week, follow the performance of key indices, identify the top ten European stock winners, and lay out what investors need to watch for next week.
Top 5 Topics Ruling US and European Stock Markets
- Central Banks Hold Off on Rate Cuts, Keep Caution Alive
This week, the Federal Reserve and the Bank of England left interest rates steady. Although inflation continues to cool, policymakers were cautious due to geopolitical and economic uncertainty. The Fed hinted at possible rate cuts later in 2025 but not before re-examining the impact of recent fiscal policies and trade flows. The European markets responded with muted optimism, particularly in rate-sensitive sectors such as real estate and utilities.
- Geopolitical Tensions Drive Defence Rally
The European defence industry rallied after reaffirmed commitments by NATO member countries to raise military expenditure. This followed continued conflict zones and growing global instability. Stocks such as Rheinmetall, Saab AB, and BAE Systems rallied as investors wagered on long-term defence contracts. The STOXX Europe 600 Aerospace & Defence Index rose almost 5% on the week.
- U.S. Tech Sector Takes a Breather
Big Tech, especially in the U.S., experienced a correction after a rally that lasted for months. Tesla, Alphabet, and Meta retreated after mixed earnings and fears of overstretched valuations. The Nasdaq Composite fell 1.7% during the week. Alphabet also made news with its $32 billion acquisition of cybersecurity company Wiz, which was viewed as a strategic yet risky move by analysts.
- Heathrow Shutdown Throws European Travel Stocks into Disarray
A significant power failure at Heathrow Airport, one of the busiest in Europe, grounded hundreds of flights and weighed on travel stocks. International Airlines Group (IAG) and Lufthansa fell early in the week prior to bouncing back somewhat. The event spurred worry about the reliability of infrastructure, particularly in planning for peak travel seasons.
- Gold Jumps Above $3,000 as Safe-Haven Demand Increases
Gold breached the $3,000 per ounce level this week for the first time ever, mirroring wider investor nervousness. Concerns over a possible global trade war, static rate policy, and geopolitical tensions fueled demand for safe-haven assets. This also weighed on financial stocks as expectations for the yield curve flattened.
Major U.S. and European Indices – Weekly Performance
| Index | Start (Mar 18) | End (Mar 21) | % Change |
|---|---|---|---|
| S&P 500 | 5,635 | 5,654 | +0.40% |
| Dow Jones Industrial Average | 41,460 | 41,928 | +1.13% |
| Nasdaq Composite | 17,719 | 17,688 | -0.20% |
| FTSE 100 (UK) | 8,632 | 8,655 | +0.30% |
| DAX (Germany) | 22,998 | 22,893 | +0.50% |
| CAC 40 (France) | 8,034 | 8,049 | +0.20% |
Despite modest losses in the U.S., European indices closed the week mostly in positive territory, helped by strength in industrials and defence stocks.
What to Watch Next Week (Week of March 24–28, 2025)
- U.S. Durable Goods Orders (March 26)
A very crucial datapoint in gauging industrial demand, particularly transportation and manufacturing. Good numbers could wipe out recent tech anxiety.
- Flash Eurozone Inflation Data (March 28)
Investors will be watching for whether inflation continues to subside, potentially reopening the door to rate cuts in the euro area later in Q2.
- UK Retail Sales Report (March 27)
With the FTSE 100 seeing modest gains this week, UK consumer confidence will be put under the microscope. Positive data could contribute to additional rebound in British equities.
- ECB Policy Minutes Release (March 28)
A closer look at just how hawkish or dovish the European Central Bank is internally. This will give hints on timing of any monetary easing.
