Market update: 14 January 2025
Global markets had a mixed week, driven by key economic data and shifting rate cut expectations. The ASX 200 managed a 0.5% gain, supported by cooling core inflation.
In Australia, the ASX 200 advanced as investors responded positively to core inflation data, which dropped to 3.2% in November from 3.5%. Job vacancies also rose for the first time in two years, bolstering the market’s view that the RBA could cut rates as early as February.
U.S. markets finished the week lower, with the Nasdaq down 2.3% and the S&P 500 and Dow Jones both losing 1.9%. December’s labour report showed 256,000 jobs added, well above forecasts. These figures pushed Treasury yields higher, leading markets to scale back expectations for 2025 rate cuts from 1.7 to 1.1.
European markets fared better, with the Euro Stoxx 50 up 2.2% and the FTSE gaining 0.3%. Eurozone inflation rose to 2.4% in December, its highest in five months, driven largely by energy prices. However, core inflation remained steady at 2.7%. Meanwhile, the pound hit a 14-month low against the USD amid a sell-off in UK government bonds.
Asian markets struggled, with the Hang Seng and Shanghai Composite falling 3.5% and 1.3%, respectively, as China’s CPI slipped to 0.1% YoY. Concerns over disinflation, a weakening Yuan, and looming trade tensions weighed on sentiment. Japan’s Nikkei dropped 1.8%, with market confidence hit by news of potential U.S. tariffs and ongoing Fed rate cut uncertainty.
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