Global Summary News: 17 to 22 Feb 2025
United Stares (USD)
Tariffs & Trade Policy:
• Trump announced new 25% tariffs on steel and aluminium imports, adding pressure on global trade.
• Automobile tariffs expected by April 2, increasing uncertainty in the auto sector.
• The US is considering 25% tariffs on pharmaceuticals, semiconductors, and chips.
• Trump claimed Apple CEO Tim Cook was considering moving manufacturing from Mexico to the US.
Economic Growth & Inflation:
• Inflation rose to 3.0% in January (expected: 2.9%) due to rising egg prices and avian flu impacts.
• Consumer sentiment and housing data missed expectations, raising concerns over economic slowdown.
• Long-term inflation expectations hit their highest since 1995, leading to market volatility.
• Retail sales dropped 0.9% in January, the biggest decline in nearly two years.
Federal Reserve & Debt Securities:
• Fed policymakers remain divided on the impact of Trump’s tariffs on inflation.
• Fed Governor Michelle Bowman called for more transparency in banking supervision.
• The 10-year Treasury yield fell to 4.43%, marking its sixth consecutive weekly decline as investors anticipate a rate cut by September.
Stock Market:
• The S&P 500 fell 1.7%, its worst trading session of 2025, while Nasdaq dropped 2.1%.
• Tech stocks declined, especially after concerns about the impact of tariffs on semiconductors.
• Meta extended its rally for 20 sessions, and Intel had its best week since 2000.
Cryptocurrency & Commodities:
• Bitcoin fell 3.2% to $95,032, while Ethereum dropped 4%.
• WTI crude fell 3.1% to $70.25 per barrel, indicating weaker energy demand.
United Kingdom (GBP)
Economic Growth & Employment:
• The UK economy grew 0.1% in Q4 2024, outperforming expectations of a 0.1% contraction, providing a modest boost to Labour’s economic policies.
• Bank of England Governor Andrew Bailey warned that underlying economic growth remains weak, despite the positive GDP figures.
• A CIPD survey found that 25% of UK employers plan to make redundancies before tax hikes in April, with 40% expecting significant cost increases due to higher national insurance and minimum wage hikes.
Trade & Tariffs:
• The UK threatened retaliatory tariffs on US products such as whiskey, jeans, and motorbikes if Britain is not exempted from Trump’s 25% steel and aluminium tariffs.
Eurozone (EUR)
Economic Policy & Growth:
• The European Commission plans to limit certain US food imports to match Trump’s reciprocal trade policy, potentially targeting US soybeans grown with pesticides banned in the EU.
• ECB Governing Council member Fabio Panetta signalled that rate cuts are nearing, as inflation risks are now tilted to the downside.
Germany & France:
• German investor confidence improved the most in two years, boosted by optimism over upcoming elections and interest rate cuts.
• German GDP grew 2.8% in Q4, with business spending and net trade driving expansion.
• French unemployment fell to 7.3% in Q4 (Q3: 7.4%), showing resilience despite political instability and rising debt.
• French PM Bayrou survived another no-confidence vote, securing approval for a delayed 2025 budget.
Stock Market:
• European defence companies hit record highs as investors bet on increased military spending amid geopolitical tensions.
• European equities saw the highest inflows since the Ukraine war, driven by optimism over peace talks between Washington and Moscow.
Japan (JPY)
Economic Growth & Inflation:
• Japan’s GDP grew 2.8% in Q4, surpassing expectations (consensus: 1.1%) due to business investment and exports.
• Japanese PPI rose 4.2% YoY in January, driven by higher rice and agricultural product prices.
Monetary Policy & Bonds:
• Bank of Japan officials signalled further rate hikes to contain inflation risks, pushing 10-year JGB yields to 1.31%.
Australia & New Zealand (AUD/NZD)
Monetary Policy:
• The Reserve Bank of Australia (RBA) cut interest rates by 25bps to 4.1%.
• The Reserve Bank of New Zealand (RBNZ) cut rates by 50bps to 3.75%, marking its third consecutive rate cut.
Consumer Confidence & Business Sentiment:
• National Australia Bank’s business confidence index rose 6 points to +4 in January.
• New Zealand’s new home price decline eased for the fifth month, signalling potential stabilisation in the property market.
China (CNY)
Trade & Business Environment:
• China imposed $14 billion in retaliatory tariffs on the US, escalating the trade war.
• President Xi Jinping assured business leaders, including Alibaba’s Jack Ma, of continued private sector support.
• China resumed antitrust investigations into US tech firms, including Google and Nvidia, amid escalating tensions with Trump.
• Manufacturing activity declined for a second straight month, highlighting the need for more stimulus.
Property Market:
• China’s decline in new home prices eased for the fifth month, showing tentative signs of market recovery.
Artificial Intelligence (AI)
Investment & Industry Developments:
• Dell Technologies is finalising a $5 billion AI server deal with Elon Musk’s xAI to supply Nvidia GB200-powered systems.
• Apple’s iPhones in China will use Alibaba’s AI technology.
• OpenAI’s ex-CTO Mira Murati launched a new AI start-up called Thinking Machines Lab, aiming to make AI systems more widely customisable and understandable.
• Elon Musk’s xAI unveiled Grok-3, claiming it is ten times more powerful than its predecessor.
Environmental, Social & Governance (ESG)
• Climate & Regulation:
• EU policymakers scaled back tech regulations to encourage AI investment rather than restrict Big Tech.
• A new scientific study found that global warming may breach the Paris Agreement’s 1.5°C limit sooner than expected.
Key Takeaways
• US tariffs continue to disrupt global trade, with Trump targeting steel, aluminium, cars, semiconductors, and pharmaceuticals.
• Inflation and economic slowdown fears intensified, with US inflation rising to 3% in January, while retail sales fell 0.9%.
• The Federal Reserve remains cautious on rate cuts, while ECB signals easing is near.
• Japan’s economy exceeded growth expectations, while Germany’s outlook improved ahead of elections.
• China retaliated with $14 billion in tariffs, adding to US-China trade tensions.
• AI investments surged, with major deals involving Dell, xAI, OpenAI, and Alibaba.
• European defence stocks hit record highs, reflecting increased military spending expectations.
• Cryptocurrency markets struggled, with Bitcoin dropping 3.2% and Ethereum down 4%.
Overall, global markets are facing significant uncertainty as governments navigate trade wars, inflation, and geopolitical risks, while AI investments and monetary policy shifts shape economic forecasts.