Weekly market recap

Your weekly global financial market newsletter

  • One of the main movers in the markets last week was again Donald Trump and his erratic approach to international politics and the introduction of tariffs against his trading partners. Thus, the beginning of the week was marked by the shock of the newly announced tariffs against Canada, Mexico and China, only to eventually postpone the tariffs against the first two. He then announced further reciprocal tariffs against countries imposing tariffs against the US later in the week, so we can look forward to more of this never-ending series in the coming weeks.

Indices

U.S. stocks posted losses in the last week and only the tech-heavy Nasdaq 100 posted a slight gain. The start of the week was dramatic as markets fell sharply in response to the imposition of tariffs on US imports from Mexico and Canada. But then came relief in the form of a delay in the start of the tariffs when both countries agreed to better secure the border with the US and to cooperate more with Washington. Then on Friday, stocks posted losses after President Donald Trump announced plans to impose reciprocal tariffs.

European stocks, despite a drop at the beginning of the week due to the imposition of US tariffs and slowing economic growth, ended the week in the green. The pan-European STOXX Europe 600 ended 0.60% higher and reached a new all-time high during the week, as did the STOXX 50 index, Germany’s DAX added 0.25%, France’s CAC 40 Index tacked on 0.29% and the UK’s FTSE 100 Index increased 0.31%.

US30
-0.54%
US100
+0.06%
US500
-0.24%
GER30
+0.25%

Commodities

Gold again reached a new all-time record just below the $2,890 level at the end of last week as investors continue to count on a dovish approach from most of the world’s central banks. This was confirmed by the Bank of England, which additionally surprised with a more dovish vote, and the Royal Bank of India, which cut rates for the first time since the pandemic. Donald Trump’s tariffs and possible subsequent retaliatory measures by some countries, including China, which has already opted for these measures, may then play a relatively large role in further gold appreciation. This could lead to rising inflation and slowing economic growth around the world, which would again boost demand for gold as a safe haven.

US natural gas has also seen strong price gains in the week ahead, helped in particular by cooler weather in January, which has led to record withdrawals from storage that may approach the all-time high of 994 billion cubic feet seen in January 2022. Exports have also been strong, with gas flows to LNG export plants also rising to 15.1 bcf/d in February, up from 14.6 bcf/d in January so far and close to December’s record.

Gold
+2.23%
Silver
+1.64%
BRENT
-1.33%
NATGAS
+8.71%

Forex

The Japanese yen continues to strengthen after a very strong January, gaining more than 2% over the last week, reaching the level of $151 per yen on Friday, the strongest against the dollar since the beginning of December last year. This has been helped by predictions of a possible interest rate hike from the BoJ, which were also confirmed on Thursday by BOJ board member Naoki Tamura who stated that the central bank must raise the policy rate to at least 1% in the latter part of fiscal 2025. The country also saw household spending rise, up 2.7% year-on-year, and real wages also rose for the second month in a row, hitting a near three-year high.

The U.S. dollar strengthened on Friday thanks to the announcement of retaliatory tariffs by the U.S. against countries that apply trade levies against the U.S. However, as the week progressed, the dollar lost ground as the implementation of the new tariffs is not as fast as it seemed a week ago and moreover, it does not have as strong an impact on the dollar as it did in 2018. In addition, investors are starting to count on more than two interest rate cuts by the Federal Reserve this year.

EUR/USD
-0.36%
USD/JPY
-2.39%
GBP/USD
-0.05%
USD/CAD
-1.73%

Macro

The beginning of the week was marked by Purchasing Managers’ Indices in the manufacturing sector in Europe and the USA. The European PMIs surprised in a positive way but still remain in contractionary territory. USA PMIs also rose, with both the S&P Global and ISM indicators showing that activity in the US is expanding for the first time since 2022. Then on Wednesday, PMIs in both Europe and the US showed that the services sector is also in expansion territory, although the numbers from ISM fell short of expectations.

Eurozone annual consumer price growth remained above the European Central Bank’s (ECB) target for the third consecutive month in January, accelerating to 2.5% from 2.4% in December. Core inflation held at 2.7%.

The Bank of England decided to cut interest rates, its base rate fell by 25 basis points to 4.50%, as expected. This is the third easing of monetary policy since the rate cut cycle began last August. All nine members of the monetary committee raised their hands in favour of a rate cut in February, with one vote expected to be in favour of keeping rates unchanged.

Data on the US labour market were also released during the week. First, the Bureau of Labor Statistics reported on Tuesday that the number of job openings in the US fell to a three-month low of 7.6 million in December. Then on Wednesday, ADP reported that private businesses in the US added 183K workers to their payrolls in January 2025, above forecasts of 150K. Thursday’s data on initial jobless claims showed that in the week ending February 1, the number of new claims for unemployment benefits increased by 11K to 219K. The most important number, however, was Friday’s nonfarm payrolls report, which showed that the U.S. economy created 143,000 new jobs in January, below economists’ expectations of 170,000. The unemployment rate also unexpectedly fell to 4.0% from 4.1% in the previous month.

What to watch out for this week

  • The first days of the new week will be dominated by speeches by central bankers, with Fed Chair Powell's testimony before Congress on Tuesday and Wednesday attracting the most interest.
  • Then on Wednesday, the first inflation-related number will be released, namely the CPI, which is expected to rise by 0.3% in January (0.4% in December), while the core CPI is expected to accelerate from 0.2% in December to 0.3% in January. The year-on-year rate should remain at 2.9% and 3.2% for core CPI. On Thursday, the PPI figures will be released, which is expected to rise by the same 0.2% as in December. Then on Friday, data will be released regarding retail sales, which are expected to be stagnant in January after rising 0.4% in December.
  • In Europe, GDP data will be the main focus, both in the Auro Area and the United Kingdom. The second estimate of GDP in the EA is expected to confirm the unexpected stagnation of the Eurozone economy in Q4, with year-on-year growth of 0.9%. In the UK, GDP is expected to fall by 0.1% in Q4, with a modest recovery of 0.1% forecast for Q1 2025.

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