Global Summary News 3-8 February 2025 ( Non Farm Payroll and Trump’s tariffs)
United States (USD)
Trade & Economic Policy:
Trump imposed 25% tariffs on Canada, Mexico, and China, escalating a trade war that is set to reshape global supply chains.
Treasury Secretary Scott Bessent proposed gradual universal tariffs, starting at 2.5% and rising to 20%, giving businesses time to adjust.
The White House assured that Trump’s proposal to "take control" of Gaza would not involve US troops, amid global backlash.
US announced potential reciprocal tariffs, with Trump stating more details would be revealed next week.
Labour Market & Inflation:
Nonfarm payrolls rose by 143,000 in January, with average monthly job gains revised to 166,000 in 2024, indicating a moderating yet resilient labour market.
Unemployment held at 4.0%, but revisions to the survey make comparisons difficult.
Hourly wages increased 0.5%, raising fears of sustained inflationary pressures.
Federal Reserve Response:
Fed policymakers signalled no urgency to cut rates, pushing market expectations of the first rate cut to September.
Treasury yields rose, reflecting inflation concerns.
Financial Markets:
S&P 500 (-1%), Nasdaq 100 (-1.3%), and Dow Jones (-1%) all declined amid inflation fears.
The Magnificent Seven tech stocks dropped 2%, with Amazon tumbling 4% on AI-related concerns.
10-year Treasury yields climbed to 4.49%, reinforcing the view that interest rates will stay higher for longer.
Bitcoin fell below $96,000, while Ether dropped 4%, showing broader risk aversion.
United Kingdom (GBP)
Economic Outlook & Monetary Policy:
The Bank of England (BoE) cut interest rates by 25bps to 4.5%, citing stagnant growth and global uncertainty.
BoE halved its 2025 growth forecast, reflecting a weak domestic economy.
S&P Global services PMI showed the fastest increase in prices in 13 months, with firms warning of higher costs from wage growth and tax hikes.
Housing & Business:
Rental prices outside London fell 0.2% in Q4, the first decline since before the pandemic, marking a potential turning point for Britain’s housing market.
Labour government announced £100 million in funding for businesses tackling poverty and climate change.
Eurozone (EUR)
Trade & Economic Policy:
The EU condemned Trump’s tariffs and vowed to respond if the US extended them to Europe.
Brussels warned of countermeasures against Silicon Valley firms if the US targets European exports.
ECB urged economists to stop fixating on the neutral rate, warning it is not a good guide for future interest rate decisions.
Economic Growth & Inflation:
Eurozone GDP stagnated in Q4 (0.0%), increasing pressure on the ECB to cut rates further.
ECB cut interest rates to 2.75%, warning of continued economic "headwinds".
German factory orders surged 6.9% MoM in December, but quarterly growth remained flat, suggesting economic uncertainty persists.
Japan (JPY)
Economic & Monetary Policy:
The Bank of Japan signalled further rate hikes, stating that it has completely ended deflation and is moving towards a normalised monetary policy.
Household spending increased 2.7% YoY in December, led by housing (+15.8%) and transport, suggesting consumer resilience.
Tokyo inflation rose 3.4% YoY, with core inflation at 2.5%, reinforcing expectations of further BoJ hikes.
Currency & Markets:
The yen strengthened, defying the broader dollar rally, as investors viewed it as a haven amid trade war concerns.
China (CNY)
Trade & Market Response:
Manufacturing PMI fell to 50.1, declining for a second straight month, signalling weak factory output.
China vowed to stabilise the yuan in its first official exchange rate fix since Trump slapped tariffs on exports.
Beijing revived antitrust probes into Google, Nvidia, and Intel, seeking leverage in US trade talks.
China Vanke received state support, reinforcing views that the property giant is too big to fail.
Australia (AUD)
Consumer Spending & Employment:
Retail sales declined, ending a four-month streak of gains, suggesting a slowdown in consumer spending.
Australian business conditions improved, with job growth and stronger retail sales in December.
Artificial Intelligence (AI)
Tech Stocks Decline on AI Competition:
Nvidia shares tumbled 17%, wiping $589 billion in market value, after Chinese AI start-up DeepSeek launched a low-cost AI model that could challenge US firms.
Amazon and Microsoft warned of AI cloud capacity constraints, as demand surges beyond available data centre capacity.
SoftBank in talks to invest $25 billion into OpenAI, as the AI sector undergoes massive investment shifts.
OpenAI seeks to raise $40 billion, targeting a valuation of $300 billion, reflecting heightened competition in AI infrastructure.
Environmental, Social & Governance (ESG)
Global Climate Policies Under Pressure:
The EU, Australia, and India are expected to miss the UN climate deadline for new emission targets, as economic constraints and Trump’s policies force a rethink of sustainability efforts.
EU tax chief proposed exempting 80% of businesses from its new carbon border tax, as Brussels seeks to cut red tape.
Key Takeaways
US Trade War Intensifies: Trump imposed 25% tariffs on Mexico, Canada, and China, with Europe bracing for possible inclusion.
Global Inflation Concerns Resurface:
Stronger wage growth (0.5%) in the US, along with rising service sector costs in the UK, raised fears of prolonged inflation.
The Fed delayed rate cuts, pushing expectations to September 2025.
Market Volatility & Selloff in Tech Stocks:
AI concerns led to a $589 billion wipeout in Nvidia’s market value.
Amazon and Microsoft signalled potential cloud infrastructure constraints for AI workloads.
Europe Struggles with Growth:
Eurozone GDP flat (0.0%), raising the urgency for ECB rate cuts.
Germany’s factory orders jumped 6.9%, but quarterly growth remained flat.
China’s Economic Uncertainty Deepens:
Weak manufacturing data, coupled with Beijing's renewed regulatory actions against US tech, signals economic instability.
BoE & ECB Cut Rates:
BoE lowered rates to 4.5%, citing stagnant growth.
ECB reduced rates to 2.75%, warning of economic headwinds.
Markets Weaken Amid Uncertainty:
S&P 500 (-1%), Nasdaq (-1.3%) and Magnificent Seven (-2%) dropped.
Bitcoin fell below $96,000, and oil rose to $70.95 amid trade war fears.
Overall, escalating trade tensions, inflationary risks, and shifting monetary policies drove heightened market volatility, with AI and tech stocks facing heavy selling pressure.