In the week gone by, U.S. stock markets advanced as investors evaluated a mixed set of corporate earnings and reacted to statements from President Donald Trump. In this blog, we’ll know in detail what happened last week (January 20, 2025 to January 24, 2025) all across the globe.
US Universal Tariff Stand
Trump’s comments included a call for reductions in interest rates and oil prices, as well as a reiterated threat to impose universal tariffs on imported goods.
Investors are closely scrutinizing his remarks for insights into his stance on pressing geopolitical and economic issues, such as the Ukraine-Russia conflict, Israeli-Palestinian relations, and the U.S.’s economic rivalry with China.
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UK’s Consumer Confidence at Lowest
In Europe, the economic outlook appeared bleak. UK consumer confidence plummeted to its lowest level in over a year, reflecting a sharp drop from December to January, the steepest decline since 2011.
According to GfK, the consumer confidence index fell to -22 in January from -17 in December, significantly below economists’ expectations of -18.
Japan’s Weaker Yen
Japan’s stock market extended its rally for a fifth consecutive session, buoyed by a weaker yen ahead of the Bank of Japan’s (BOJ) monetary policy announcement.
On January 24, the BOJ raised its key interest rate to 0.5% from 0.25%, citing inflation reaching its desired target. The central bank indicated that further rate hikes may follow but emphasized a cautious approach to maintain economic stability.
Japan’s Flash Composite Output Index rose to 51.1 in January 2025 from 50.5 in December 2024, signaling modest expansion. Additionally, the country’s overall Consumer Price Index (CPI) surged by 3.6% year-on-year in December 2024, compared to 2.9% in November, marking the highest level since January 2023.
China Protects Market
China’s markets faced volatility as Beijing announced measures to support its struggling equity market. The government encouraged major state insurers and commercial insurance funds to increase investments in local stocks.
The China Securities Regulatory Commission urged mutual funds to boost their onshore equity holdings by at least 10% annually over the next three years. Additionally, state-owned insurers will allocate 30% of new policy premiums to investments starting in 2025.
These interventions aim to stabilize market sentiment and channel more government funds into the equity markets, reflecting Beijing’s commitment to reviving investor confidence.
Concern on FII Selling in India
Back at home, domestic markets witnessed a volatile movement and the sustained selling by Foreign Institutional Investors (FIls) has raised concerns. Actually, the strength of the U.S. markets, with the S&P 500 reaching yet another record high and the 10-year U.S. bond yield holding steady at 4.65%, continues to exert pressure on the Indian market.
Moreover, key challenges such as a slowdown in the domestic economy, and weaker-than-expected corporate earnings are weighing on investor sentiment. Flash composite Output Index fell to 57.9 in January 2025 from 59.2 in December 2024, largely due to a fall in the service PMI. The fall was partly offset by an increase in manufacturing PMI due to an increase in factory orders at the quickest pace for six months.
Conclusion
Looking ahead, the upcoming Union Budget is expected to include critical measures by the finance minister aimed at reviving the consumption cycle and driving economic growth. With these factors in play, there is cautious optimism about a gradual recovery in the new fiscal year, creating opportunities to benefit from increased spending by advertisers.
Going forward, the market will continue to take direction from both global as well as domestic factors. So, open Demat account with SMC Global Securities and invest as per your investment objective and risk profile.
Reference:
SMC Global Securities’ Research Team
Author: All Content is verified by SMC Global Securities.
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