Market update: 28 January 2025
It’s been a dynamic week in global markets, dominated by U.S. President Trump’s inauguration and his first-day executive orders. Most major equity indices finished in the green, buoyed by a tech-led rally in the U.S. and a strong week for Japanese and Australian markets. Here’s what moved the markets:
In Australia, the ASX 200 rose 1.2% for the week, supported by a strong performance in Technology (+3.5%) and a rebound in Materials and Energy stocks. Local markets benefited from Trump’s announcement of a major AI infrastructure joint venture, which drove gains in tech. The Australian dollar hit a five-week high, climbing to US63.14c, as Trump signaled a more conciliatory approach toward China after a “friendly” discussion with President Xi Jinping. However, profit-taking in bank stocks on Friday capped some of the week’s momentum.
U.S. markets had a strong week, with the Dow Jones gaining 2.2% and the S&P 500 and Nasdaq both up 1.7%. Trump’s executive orders created policy uncertainty but reassured markets by taking a softer stance on China, suggesting a 10% tariff on imports instead of harsher measures. Oil prices fell for the first time this year after Trump urged OPEC to reduce prices, while a tech rally pushed the S&P 500 to a new all-time high of 6,101. However, consumer sentiment softened, with inflation concerns tied to potential tariffs keeping long-term expectations elevated.
In Europe, equity markets continued their upward trend, with the Euro Stoxx 50 gaining 1.4% and the Euro Stoxx 600 up 1.2%. UK inflation unexpectedly slowed to 2.5%, increasing the likelihood of a February rate cut by the Bank of England. European markets were also supported by Trump’s lack of immediate tariff announcements and his proposal for increased NATO defense spending. The Eurozone Composite PMI edged into expansion at 50.2, though manufacturing remained weak.
In Asia, Greater China markets ended the week higher, with the Hang Seng and Shanghai Composite up 2.5% and 0.3%, respectively. Sentiment was boosted by Trump’s softer rhetoric on trade tariffs, though concerns remain over deflationary risks and sluggish CPI growth, which hit a 15-year low of 0.2% YoY in 2024. Japanese markets led the region, with the Nikkei surging 3.9%. The Bank of Japan raised rates by 0.25%, its first hike in 17 years, while markets expect another increase in July.
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