CNBC Daily Open: The impact of Trump policies will affect Fed’s interest rate moves

The U.S. nonfarm payrolls report for February was weaker than expected, but the silver lining is that the number of jobs added for the month was higher than in January. That said, the layoff of federal workers by Elon Musk's Department of Government Efficiency happened after the survey was conducted, CNBC's Jeff Cox noted, which means the downward drag on data would likely appear only in March's jobs report.

One immediate apparent effect of DOGE, on the other hand, is the seven-week slide in Tesla shares ever since Musk stationed himself in Washington, D.C. The actions of DOGE, along with other policies that U.S. President Donald Trump is deploying to reshape the U.S., are so drastic that the Federal Reserve is taking note and getting into a wait-and-see stance. But investors aren't waiting — they're seeing the confusion and dumping stocks already.

Signs of deflation in China
China's national consumer price index fell by 0.7% in February from a year earlier, according to data published Sunday by China's National Bureau of Statistics. The inflation reading was in negative territory for the first time since January last year, reversing a year-on-year gain of 0.5% in January. It's also worse than the 0.5% contracted expected in a Reuters poll of economists.

Jobs grow but less than expected
The U.S. economy added a seasonally adjusted 151,000 jobs in February, better than the downwardly revised 125,000 in January, the U.S. Bureau of Labor Statistics reported Friday. However, the figure is less than the 170,000 consensus forecast from Dow Jones. The unemployment rate edged higher to 4.1% from 4% in January.

Weak markets
On Friday, the S&P 500 added 0.55%, the Dow Jones Industrial Average rose 0.7% and the Nasdaq Composite climbed 0.52%. However, all three indexes fell on the week, with the S&P having its worst week since September. Asia-Pacific markets traded mixed Monday. Japan's Nikkei 225 added around 0.2% on data showing that cash earnings rose 2.8% year on year in January. Hong Kong's Hang Seng Index, however, roughly fell 2.3% after inflation data on China was released Sunday. Bitcoin prices dipped during early Asia trading.

Tesla shares reverse gains
Tesla share prices have dropped for seven straight weeks, closing Friday 0.3% down at $262.67. It's the longest such losing streak for Tesla in its 15 years as a public company — and coincides with CEO Elon Musk's time in Washington, D.C. Tesla shares finished the week down more than 10% and at their lowest level since Nov. 5, Election Day, when they closed at $251.44.

Wait and see
Federal Reserve Chair Jerome Powell said Friday in a speech at a policy forum that the central bank is "focused on separating the signal from the noise," referring to U.S. President Donald Trump's policies on the economy. Regarding interest rates, Fed officials "do not need to be in a hurry, and are well positioned to wait for greater clarity," Powell added. Meanwhile, U.S. Treasury Secretary Scott Bessent acknowledged on Friday that the economy is "starting to roll a bit."

[PRO] Inflation readings to watch
The stock market was battered last week because of the uncertainties caused by Trump's policies. This week, investors will keep an eye on the U.S. consumer and produce price indexes, out Wednesday and Thursday respectively, for a clearer picture of the economy. The Consumer Sentiment Index by the University of Michigan for March, out Friday, will also provide a barometer of the prevailing mood.

European leaders push defense spend amid uncertainty over Trump aid to Ukraine

A week since Ukrainian President Volodymyr Zelenskyy's heated expulsion from the White House, European leaders have upped the ante on defense spending plans. This week, the European Commission proposed measures for fiscal flexibility on defense spending and a plan to borrow 150 billion euros ($163 billions) to lend to EU governments for Europe-wide defense capabilities.

With more equipment, the EU stressed it could "massively step up" its support to Ukraine, which has depended on both Europe and the U.S. for military and humanitarian aid throughout its three-year resistance to Russia's invasion. Altogether, the so-called ReArm Europe plan could mobilize nearly 800 billion euros.