Wall Street is off to a somber start this year due to trade tensions.A second round of 10% duties on Chinese imports went into effect on Mar. 4, taking the total blanket tariff rate to 20%. A 25% tariff on imports from Canada and Mexico was also imposed after a 30-day pause.
However, after enacting, President Donald Trump granted a one-month exemption to major U.S. automakers from 25% tariffs on imports from Canada and Mexico, following urgent requests from Ford, GM and Stellantis (read: Trump Tariffs & Retaliatory Moves Put These ETF Areas in Focus).
Mixed Economic Data Points
Meanwhile, economic data offered mixed signals. The Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, cooled to 2.6%, aligning with expectations and easing concerns about inflation. However, consumer spending fell 0.2% in January, missing forecasts of a 0.1% increase and contrasting with December’s 0.8% rise, raising concerns about slowing economic momentum.
Meanwhile, the University of Michigan consumer sentiment index fell to 64.7 in February — a nearly 10% decline — as consumers voiced inflation concerns, particularly due to possible new tariffs. The five-year inflation outlook climbed to 3.5%, the highest since 1995. U.S. existing home sales dropped more than expected to 4.08 million units in January (read: Time for Defensive Sector ETFs?).
A Sea-Change Coming in the Tech World?
The glorious days of the “Magnificent Seven” are at risk, with the coming of DeepSeek style artificial intelligence. Roundhill Magnificent Seven ETF MAGS is off about 4% over the past five days (as of Mar. 5, 2025).
DeepSeek, a Chinese startup developing AI models, revealed in late January that training the R1 model cost just $5.6 million, significantly less than the $100 million required to train OpenAI's GPT-4 model. On the other hand, Alibaba BABA introduced the QwQ-32B model, an AI system that rivals DeepSeek but requires only a fraction of the data. Such advancements triggered doubts that the huge capital investments deployed by U.S. tech majors to develop AI technologies will generate the expected returns at all, causing MAGS ETF to underperform.
Against this backdrop, below we highlight a few exchange-traded funds (ETFs) that could prove to be good picks for March.
ETFs in Focus
Europe – iShares MSCI Spain ETF (EWP)
Earnings momentum is shifting away from the United States and toward Europe and parts of Asia. Analysts have been revising their 2025 earnings growth estimates downward for the S&P 500 since mid-January, according to data from Bloomberg Intelligence. In contrast, earnings estimates for Europe have been raised.
This change follows the highest number of profit misses since Q4 2022 reported by the S&P 500 companies, while the MSCI Europe Index experienced a lower miss rate compared to the previous quarter. Plus, the ECB has been on a steady policy easing mode, which is a tailwind for Eurozone stocks.
Gold – SPDR Gold Shares (GLD)
Gold showed a strong rebound lately on cues of geopolitical tensions and the ongoing Fed rate cut move. Investors should note that if the Fed cuts rates, the U.S. dollar would normally be subdued. The subdued U.S. dollar and a decline in U.S. treasury bond yields bolster the demand for the yellow metal. Moreover, gold is viewed as a safe-haven asset. The recent rise in geopolitical tensions amid Trump tariffs also led to strength in gold prices (read: Will Gold Continue to Shine in 2025?).
China Tech – KraneShares CSI China Internet ETF (KWEB)
The DeepSeek Buzz and policy easing are likely to boost China tech stocks and ETFs. Most recently, Alibaba Group Holding BABA experienced its biggest stock surge in weeks after introducing the QwQ-32B model, an AI system that rivals DeepSeek but requires only a fraction of the data. All these developments in the Chinese tech space make them a lucrative bet (read: Alibaba's Stock Surges on AI Breakthrough: ETFs in Focus).
U.S. Value Stocks – SPDR Portfolio S&P 500 Value ETF (SPYV)
The U.S. economy is showing signs of slowing due to renewed inflation worries amid trade tensions. According to Goldman Sachs strategists, any rebound in the S&P 500 Index is expected to be short-lived due to concerns about the U.S. economy, as quoted on Yahoo Finance.
Goldman Sachs’ Kostin has revised his full-year earnings growth estimate downward from 11% to 9%. Kostin now predicts that equity returns in 2025 will be more modest, aligning with the trajectory of earnings growth. Against this edgy backdrop, investors can take a look at the value corner of the S&P 500 index, as it offers safer exposure and can stay steady if the Fed delays in cutting rates.
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