Market update: 11 February 2025
Global equity markets delivered a mixed performance this week as investors grappled with ongoing trade tensions, central bank decisions, corporate earnings, and key economic data. Tariffs remain front and centre, with Trump’s administration pausing duties on Mexico and Canada while moving forward with a 10% tariff on China. This caused ripple effects across markets, while gold prices hit near all-time highs as investors sought safety.
In Australia, the ASX 200 finished 0.2% lower for the week. Tariff headlines triggered early volatility, but the index rebounded midweek amid optimism around commodity price gains and hopes of progress in U.S. trade negotiations. Mining stocks led the recovery, while tech and consumer companies kicked off the February earnings season. The Australian dollar rose 0.9% to US62.74c, bouncing back after a volatile few sessions.
In the U.S., markets saw declines, with the Nasdaq and Dow Jones both down 0.5% and the S&P 500 off 0.2%. Nonfarm payrolls came in below expectations, with 143,000 jobs added in January, hinting at a cooling but still healthy labour market. Earnings reports continued to roll in, with 68% of S&P 500 companies beating earnings per share estimates. However, consumer sentiment fell as year-ahead inflation expectations jumped from 3.3% to 4.3%, largely driven by tariff concerns. Gold remained strong, while Trump’s softer stance on Mexico and Canada alleviated some trade fears.
European markets ended the week higher, with the Euro Stoxx 50 up 0.7%. Corporate earnings helped lift sentiment, and the Bank of England cut rates by 25bps for the third straight time. Investors remain cautious about further rate cuts, which the BoE has tied to future economic data. Meanwhile, Eurozone inflation came in firmer than expected, though driven by temporary factors.
In Greater China, markets reopened after the Lunar New Year with strong gains. The Hang Seng rose 4.5%, and the Shanghai Composite climbed 1.6%, as AI companies spurred investor optimism. Sentiment improved further as Beijing responded moderately to U.S. tariff actions, offering some relief to investors concerned about escalating trade tensions.
In Japan, the Nikkei fell 2.0% after region-wide weakness early in the week. Concerns mounted over possible tariffs targeting Japan due to its trade surplus with the U.S. However, Japan’s December household spending showed a surprising 2.7% year-on-year increase, strengthening the case for future Bank of Japan rate hikes. Bank of Japan (BoJ) signalled a hawkish outlook by discussing future interest rate hikes, indicating that they are becoming more aggressive about combating inflation if it rises in line with their forecasts.
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