USA

The U.S. equity markets faced volatility during the week as investors digested key economic data and corporate earnings. The S&P 500 and Nasdaq Composite declined due to weaker-than-expected earnings from major technology firms, while the Dow Jones Industrial Average remained relatively stable, supported by industrial stocks. The labor market showed signs of cooling, with January’s job gains of 143,000 falling below expectations and initial jobless claims increasing to 220,000. The PMI for manufacturing remained in expansion territory at 52.4, signaling resilience in the sector. However, uncertainty around new U.S. tariffs on Chinese imports, which took effect on February 4, added to market concerns. The Federal Reserve’s stance on interest rates remained a key focus, with markets speculating on potential rate cuts later in the year.  

Europe

European equity markets posted gains as corporate earnings generally outperformed expectations and economic data pointed to stability. The STOXX Europe 600, FTSE 100, DAX 40, and CAC 40 all rose, supported by strong performances in the energy, financial, and luxury goods sectors. Eurozone inflation remained stable at 2.4% year-over-year, while Q4 2024 GDP growth came in at a modest 0.3%. The European labor market remained firm, with the unemployment rate steady at 6.5%. The Bank of England surprised markets by cutting interest rates by 25 basis points, citing growth concerns and persistent inflationary pressures. This move supported the FTSE 100, with investors betting on further monetary easing from the European Central Bank in the coming months.

Japan



Japanese equity markets struggled during the week as the Nikkei 225 and TOPIX indices posted declines, weighed down by a strengthening yen and concerns over global trade tensions. The yen appreciated to a two-month high as speculation increased that the Bank of Japan might shift towards a tighter monetary policy in response to positive wage growth data. The country's economic data was mixed, with Q4 2024 GDP growing at a modest 0.2% quarter-over-quarter and inflation holding at 2.1% year-over-year. The Manufacturing PMI stood at 50.3, signaling slight expansion in the sector. Export-oriented stocks faced headwinds due to the strengthening yen, while domestic consumption remained stable.  

China

Chinese markets faced downward pressure as the Shanghai Composite and Hang Seng Index reacted to escalating trade tensions with the U.S. The implementation of new U.S. tariffs on Chinese imports, coupled with China's retaliatory measures on American coal, LNG, and automobiles, created market uncertainty. Inflation picked up, with CPI rising by 0.5% year-over-year in January, partly driven by pre-Lunar New Year spending. However, economic growth concerns persisted, with projections indicating a slowdown to 4.5% in 2025 due to the impact of tariffs. The official Manufacturing PMI slipped to 49.8, signaling a contraction in factory activity. Investor sentiment remained cautious as policymakers weighed additional stimulus measures to support growth amid rising geopolitical tensions.