Global News Summary : 30 Dec 2024 – 4 Jan 2025
United States (USD):
• Economic Growth & Jobs:
• Retail sector resilience highlighted as open-air shopping centres reported record-low vacancies.
• Defaults on US credit card loans reached $46bn in the first nine months of 2024 (+50% YoY), the highest in 14 years.
• Manufacturing ISM index rose to 49.3 in December, still below the expansion threshold of 50.
• US unemployment benefit applications reached 1.91m (highest in three years), adding to job market caution.
• Debt Securities:
• Treasury yields climbed, with the 10-year yield hitting 4.6% after hawkish Federal Reserve signals.
• Congress narrowly avoided a government shutdown with a stop-gap funding bill extending spending to March.
• Markets:
• S&P 500 rose 20% for a second consecutive year, driven by strong AI-related gains.
United Kingdom (GBP):
• Economic Growth & Jobs:
• House prices rose 0.7% MoM in December (consensus +0.1%), as buyers rushed to close deals before an April stamp duty increase.
• Trades Union Congress urged PM Starmer to focus on public service reform and economic rebuilding in 2025.
• Inflation:
• Persistent concerns over public sector wage growth and economic stagnation added to fiscal challenges.
Eurozone (EUR):
• Economic Growth & Jobs:
• Eurozone bank shares surged, with the Euro Stoxx Banks index closing above 142, its highest since 2010.
• German conservative leader Friedrich Merz pushed for a new EU-US free trade deal ahead of Trump’s presidency.
• Job losses at European car parts suppliers doubled in 2024 due to the continent’s automotive slowdown.
• Inflation:
• Spanish inflation accelerated to 2.8% YoY in December, maintaining above-target levels for a second month.
China (CNY):
• Economic Growth:
• Factory activity slowed, with Caixin PMI falling to 50.5 in December (Nov 51.5), indicating weaker manufacturing momentum.
• Industrial profits fell 7.3% YoY in November, marking the steepest annual decline since records began in 2000.
• Debt Securities:
• The yuan weakened, breaching 7.3 per dollar, prompting PBOC intervention to stabilise the currency.
• Bond yields dropped below 1.6% as Beijing intensified economic stimulus efforts.
• Trade:
• Concerns mounted over potential tariff escalations under Trump’s administration.
Japan (JPY):
• Economic Growth:
• Tokyo inflation rose to 2.4% YoY in December (Nov 2.2%, cons 2.5%), driven by higher energy costs.
• The Ministry of Finance plans to increase bond issuance by ¥1 trillion in FY2025 to fund a record ¥115.5 trillion budget.
• Monetary Policy:
• BOJ hinted at a potential rate hike in 2025, though caution remains amid uncertain wage growth.
Artificial Intelligence (AI):
• Global Investments:
• Nvidia’s supplier Ibiden flagged rising demand for cutting-edge chip substrates.
• AI startup Perplexity raised its valuation to $9bn, while OpenAI prepared to launch a new model with advanced reasoning capabilities.
• AI’s impact on power demand caused concerns about grid reliability in North America.
ESG:
• Climate Action:
• Shell, BP, and Tata Steel advocated for policies to promote greener consumer products in Europe.
• UK carmakers raised concerns about zero-emission vehicle targets, citing slow EV sales growth.
Inflation & Recession Risks:
• United States:
• While inflation stabilised, concerns about rising consumer debt signalled potential pressure on growth.
• Eurozone:
• Record bank returns underscored resilience, though automotive sector weakness remained a concern.
• China:
• Slow factory growth and declining industrial profits suggested mounting economic headwinds.
Overall Market Sentiment:
Despite challenges, global markets rebounded in early January, led by strong AI-driven investments. However, high inflation, debt pressures, and political uncertainty continued to weigh on broader sentiment.