Weekly market report: January 21, 2025
InsightJanuary 21, 2025

Weekly market report: January 21, 2025

USA

The U.S. economy showed robust performance during the week, supported by solid economic indicators. Inflation for December 2024 stood at 2.9%, aligning with the Federal Reserve's target, while GDP growth for Q3 2024 remained steady at 3.1%. The labor market demonstrated resilience, adding 256,000 nonfarm payrolls in December, while initial jobless claims for the week ending January 11 were reported at a low 217,000. The Manufacturing PMI of 52.4 indicated modest expansion. These positive data points buoyed investor sentiment, driving weekly gains in major indices: the S&P 500 rose by 1.00%, the NASDAQ gained 1.51%, and the Dow Jones advanced 0.78%. Optimism also stemmed from President Trump’s second-term inauguration, which raised expectations of pro-growth economic policies.

Europe

Economic conditions in Europe showed gradual improvement, with December inflation easing to 2.7%, closer to the European Central Bank's target. The Eurozone GDP grew by 0.8% in 2024, with a brighter outlook for 2025. Manufacturing PMI registered a slight expansion at 51.2, reflecting moderate recovery. Major indices saw positive movement, with the STOXX Europe 600 up 2.4% for the week, while the DAX 40 and FTSE 100 also recorded gains. Market optimism was further supported by lower energy price pressures as U.S. LNG cargoes were diverted to Europe. However, geopolitical tensions surrounding the UK’s elevated bond yields and potential financial strain served as a cautionary note for investors.

Japan

Japan's markets experienced strong momentum amid improving economic indicators and monetary policy speculation. Inflation and wage growth in December 2024 fueled expectations of an imminent Bank of Japan interest rate hike, which supported the yen's best weekly performance in over a month, appreciating 1.5% against the dollar. GDP growth projections for 2025 were stable at 1%, signaling a moderate recovery. The Nikkei 225 and TOPIX indices both advanced, reflecting investor confidence. Positive sentiment was driven by hopes of policy normalization, which would mark a significant shift after years of ultra-loose monetary policy.

China

China's economic resilience was evident as GDP grew by 5.4% in Q4 2024, meeting the government’s annual target. The Manufacturing PMI of 50.8 indicated slight expansion, suggesting steady industrial activity. Market indices posted gains, with the Shanghai Composite Index and the Hong Kong Hang Seng Index both advancing, driven by strong economic fundamentals and improved trade sentiment. Optimism was bolstered by constructive discussions between President Trump and President Xi Jinping, which eased concerns over potential trade conflicts. However, geopolitical uncertainties surrounding U.S.-China trade relations remained a focal point for market participants.

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