USA
The U.S. economy showed resilience during the week, with inflation holding steady at 2.9% year-over-year and core inflation at 3.2%. Initial jobless claims rose slightly to 223,000, indicating a stable yet tight labor market. The manufacturing PMI reflected ongoing expansion, supported by robust domestic demand. Despite this, corporate earnings painted a mixed picture, with technology stocks underperforming due to intensified global competition. The S&P 500 climbed modestly, driven by optimism in non-tech sectors, while the NASDAQ faced a sharp 3.1% decline due to a sell-off in technology shares. The Dow Jones Industrial Average ended the week slightly higher, supported by strength in industrials and consumer staples.
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 were bolstered by positive economic developments and monetary policy adjustments. The Bank of Japan raised short-term interest rates to 0.5%, signaling a gradual exit from its ultra-loose monetary stance as inflation aligned with targets. The Nikkei 225 climbed 1.2% during the week, reaching 38,902.50, driven by optimism over the BoJ’s policy shift. Similarly, the TOPIX mirrored this upward momentum. Economic growth projections remained stable, supported by robust domestic demand and a surge in machinery orders, which grew 10.3% year-over-year. Japan's resilience underscored investor confidence in its recovery trajectory.
China
China faced mixed economic signals as the manufacturing PMI slipped to 49.1, indicating a contraction likely influenced by the Lunar New Year holiday slowdown. Nevertheless, the government’s economic stimulus measures and stable GDP growth at 5% for 2024 supported investor sentiment. The Shanghai Composite remained stable, reflecting confidence in domestic recovery efforts, while the Hang Seng Index experienced minor declines due to global tech market pressures and geopolitical concerns. The launch of DeepSeek's advanced AI application intensified U.S.-China competition in the tech sector, influencing investor behaviour in both regions and adding to market volatility.