Global Summary News : 13–18 January 2025

Compared to last week, the market improved significantly. The S&P 500 and Nasdaq 100 recorded their best performance since November’s presidential election, with the S&P 500 gaining 2.9% for the week and the Nasdaq 100 up 1.7% on Friday alone. Cooling inflation data, strong corporate earnings, and optimism surrounding US-China trade discussions contributed to the rally. Bond yields fell, with the 10-year Treasury yield down 15 basis points, further supporting equities. In contrast, last week saw heightened volatility and subdued performance due to concerns over Federal Reserve policy and geopolitical risks. This week marks a clear shift toward bullish sentiment.

United States (USD)

   •   Economic Growth & Jobs: Nonfarm payrolls increased 256k in December (consensus: +160k), highlighting economic resilience. However, consumer sentiment remained cautious, and Treasury Secretary nominee Scott Bessent emphasised using economic power strategically under Trump’s administration.

   •   Debt Securities: Treasury yields fluctuated, with the 10-year yield ending at 4.61%, reflecting mixed views on the Federal Reserve’s future rate cuts. Futures markets now anticipate the first 25bps cut in September, pushed back from June.

   •   Inflation: Core inflation slowed to 3.2% in December (November: 3.3%), but headline inflation ticked up to 2.9%, underscoring lingering pressures.

   •   AI: The US blacklisted Zhipu, a prominent Chinese AI firm, while export controls on AI chips tightened, granting unrestricted access to only 20 allied nations.

United Kingdom (GBP)

   •   Economic Growth & Jobs: November GDP rose 0.1% (consensus: +0.2%), with the economy showing stagnation at the end of 2024. Business confidence remains fragile due to higher wage and energy costs, as Reeves faces pressure to bolster fiscal credibility.

   •   AI: Starmer pledged to make the UK a global AI hub, announcing new AI growth zones, supercomputing infrastructure, and dedicated nuclear energy resources to support AI development.

Eurozone (EUR)

   •   Economic Growth: German industrial production grew 1.5% MoM in November, providing hope for the manufacturing sector.

   •   Debt Securities: ECB members reiterated the need for continued rate cuts, with the deposit rate expected to reach neutral levels by mid-2025.

   •   Inflation: Eurozone inflation rose to 2.4% YoY in December (November: 2.2%), driven by rising energy costs, supporting a gradual ECB rate reduction strategy.

Canada (CAD)

   •   Economic Growth: Former BoE Governor Mark Carney launched his campaign to succeed Trudeau as Canada’s PM, focusing on rebuilding economic confidence.

   •   Debt Securities: Canada threatened tariffs on US products if Trump enforces levies on Canadian imports, signalling potential trade tensions.

Australia (AUD)

   •   Economic Growth: GDP growth reached 5% in 2024, with a strong 5.4% YoY rise in Q4, driven by late-year stimulus and exports.

   •   Jobs: The unemployment rate edged up to 4% in December, despite a 56.3k increase in jobs, led by part-time roles.

China (CNY)

   •   Trade: China’s trade surplus hit a record $992bn in 2024, fuelled by strong exports and weak imports. However, this surplus risks heightening tensions with the US.

   •   Market Stability: Regulators pledged to stabilise financial markets, while the yuan remained under pressure, trading near 7.3 per dollar.

Artificial Intelligence (AI)

   •   US: Export controls on AI chips tightened, targeting adversaries like China. OpenAI faced competition as Shield AI raised its valuation to $5bn, focusing on defence technologies.

   •   UK: The government outlined plans for AI growth zones, infrastructure expansion, and partnerships to boost the AI sector.

Environmental, Social, and Governance (ESG)

   •   Energy: Indian and Chinese refiners scrambled to secure alternative oil supplies due to new US sanctions on Russian energy revenues.

   •   Climate Change: The world breached 1.5°C warming for the first time, sparking fears of accelerating climate change.

Inflation and Recession

   •   Global: While inflation softened in the US and UK, pressures persisted in the Eurozone and Japan due to energy costs. Central banks remained cautious about rate cuts, with mixed economic signals globally.

This week highlighted economic resilience in several major economies, ongoing trade tensions, and the rapid integration of AI technologies amid geopolitical uncertainty.