Global Summary of News -10 to 15 February 2025

United States (USD)

• Economic Growth & Trade Policy:

• Trump imposed 25% tariffs on all steel and aluminium imports, escalating trade conflicts with key partners including China, Canada, and Mexico.

• The US dollar strengthened following the tariff announcements but later lost momentum as markets absorbed the news.

• Trump proposed cutting billions from the Pentagon budget, with Elon Musk playing a key role in efforts to reduce US government spending.

• Jobs & Labour Market:

• Non-Farm Payrolls (NFP) rose by 143k in January, below expectations (consensus +170k), but the unemployment rate fell to 4% (Dec 4.1%).

• Wage growth remained strong, supporting consumer spending but raising concerns about inflation.

• Debt Securities & Federal Reserve Policy:

• January retail sales fell 0.9%, the largest decline in nearly two years, following a 0.7% rise in December, reinforcing concerns about slowing consumer demand.

• The 10-year Treasury yield dropped to 4.48%, marking five consecutive weeks of gains, as expectations of a Fed rate cut by September strengthened.

• Federal Reserve Chair Jerome Powell reaffirmed a data-driven approach, resisting political pressure to cut rates prematurely.

• Stock Market & Corporate Developments:

• S&P 500 remained near record highs, with Nasdaq 100 gaining 0.4%, but Dow Jones declined 0.4%.

• Meta Platforms extended its rally to 20 consecutive sessions, while Intel had its best week since 2000.

• Dell surged on a potential $5bn server deal with Elon Musk’s xAI.

• TSMC may take control of Intel’s US factories to strengthen domestic semiconductor production.

• Inflation & Consumer Spending:

• US inflation rose to 3% in January (consensus +2.9%), driven by rising egg prices due to avian flu, reinforcing expectations of a slow Fed rate-cut process.

• Despite weak retail sales, restaurant spending remained strong, reflecting consumer confidence in discretionary spending.

United Kingdom (GBP)

• Economic Growth & Fiscal Outlook:

• UK GDP unexpectedly grew 0.1% in Q4 2024 (consensus -0.1%), a modest boost for Labour’s economic agenda.

• The Recruitment & Employment Confederation reported a decline in hiring confidence, with its vacancy index falling from 42.9 in December to 41.6 in January.

• Debt & Monetary Policy:

• Bank of England (BoE) cut rates by 25bps to 4.5% due to stagnant economic growth and global uncertainty.

• BoE policymaker Catherine Mann suggested rate cuts should have been more aggressive, as companies face difficulty in raising prices.

• Office for Budget Responsibility (OBR) warned of a weaker economic outlook, indicating Labour may need to raise taxes or cut public spending.

• Trade & Foreign Policy:

• The UK declined to join the EU in retaliating against US steel tariffs and did not sign a global AI accord, signalling a new foreign policy approach under Starmer.

Eurozone (EUR)

• Trade & Policy Response to US Tariffs:

• The EU pledged “firm and proportionate” countermeasures against US steel and aluminium tariffs.

• Germany’s election frontrunner Friedrich Merz signalled a willingness to reform borrowing rules while preparing to increase defence spending to 3% of GDP under pressure from Trump.

• Economic Growth & Inflation:

• ECB warned against rushing further rate cuts, with Governing Council member Joachim Nagel advocating a gradual approach as borrowing costs approach neutral levels.

• French unemployment fell to 7.3% in Q4 (Q3 7.4%), signalling resilience amid political instability and rising debt.

• German factory orders surged 6.9% MoM in December, but quarterly figures showed no overall change, highlighting a fragile recovery.

Japan (JPY)

• Monetary Policy & Inflation:

• 10-year JGB yields rose to 1.31% as inflation and wage growth continued to support rate hikes.

• January PPI rose 4.2% YoY (consensus +4.0%), driven by higher agricultural prices, particularly rice.

• Former BoJ Governor Kuroda declared that Japan had “completely ended deflation”, advocating for further rate hikes.

China (CNY)

• Trade & Tariff Retaliation:

• China imposed $14bn worth of retaliatory tariffs on US goods, escalating the trade war with Washington.

• Chinese manufacturing activity declined for a second straight month, with the PMI falling to 50.1 in January, prompting calls for stronger economic stimulus.

• Market Regulation:

• Beijing revived antitrust investigations into Google, Nvidia, and Intel, looking for leverage in trade negotiations with Trump.

• China stabilised the yuan’s exchange rate in its first official currency fix since the imposition of US tariffs.

Artificial Intelligence (AI)

• Investment & Regulation:

• France announced €109bn in AI investments, aiming to compete with the US and China in the sector.

• Ex-Google CEO Eric Schmidt warned that Western countries must focus on open-source AI or risk losing ground to China, following DeepSeek’s launch of R1, an advanced AI model.

• Altman confirmed OpenAI is nearing the release of GPT-4.5, the final model before adopting more powerful computing techniques.

• DeepMind scientist Simon Kohl raised $50m to launch Latent Labs, which will use AI to design synthetic proteins for new drugs.

Environmental, Social & Governance (ESG)

• Climate Change & Policy Shifts:

• A scientific study from Germany and Austria found that the world is likely within two decades of breaching the 1.5°C Paris Agreement limit, with previous forecasts underestimating climate risks.

• EU’s carbon border tax plan will now exempt over 80% of eligible companies, reflecting a shift towards reducing regulatory burdens and boosting productivity.

Key Takeaways & Market Trends

• US Tariffs & Trade War: Trump’s aggressive trade policies escalated tensions with China, Canada, Mexico, and the EU, prompting retaliatory tariffs and economic uncertainty.

• Federal Reserve & Inflation: The rise in inflation (3.0% in January) and strong wage growth reduced expectations of early rate cuts, despite weak retail sales (-0.9%).

• Stock Markets:

• S&P 500 remained near record highs, driven by tech stocks.

• Meta Platforms, Intel, and Dell posted strong gains, while Tesla and Amazon fell.

• TSMC may take over Intel’s factories, signalling US efforts to strengthen semiconductor production.

• Crypto & Commodities:

• Bitcoin gained 0.7% ($97,156), while Ethereum rose 2.2% ($2,726).

• WTI crude fell to $70.72 per barrel, while gold declined 1.5% ($2,884.89 per ounce).

Outlook for the Coming Weeks:

• Markets will closely watch Federal Reserve guidance on interest rates as inflation remains elevated.

• Trade war developments will impact US, China, and EU economies, influencing currency markets.

• AI sector remains a key investment focus, with DeepSeek, OpenAI, and major tech firms expanding their AI capabilities.

• Geopolitical shifts in Ukraine and US-Russia relations could reshape global security and trade policies.

Markets remain volatile amid economic uncertainty, with rate cut expectations, inflation risks, and corporate earnings shaping future trends.