Global stock markets made impressive gains this week on signs that President Donald Trump’s approach to international trade may be less draconian than previously feared.
While the new president has wasted little time in addressing perceived domestic failings in areas such as immigration and government diversity programmes, the promised ‘day one’ tariffs on the likes of Canada, Mexico and China have yet to materialise. Solid corporate earnings statements for the past three months of 2024 have also driven shares higher, and a number of indexes have reached all-time highs in the past few days. Declining oil prices have been a further positive following the start of a ceasefire between Israel and Hamas in Gaza.
United States
On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 2.5% up for the week so far, with the S&P 500 gaining 2% to reach a record closing high. While President Trump began his second term with a flurry of executive orders, there has been little so far to worry markets. His call in a speech on Thursday 23 January for the Federal Reserve to cut interest rates immediately was welcomed by investors, as was his pledge to ask Saudi Arabia to reduce crude prices. Elsewhere, there were solid earnings reports from the technology sector and a positive reaction to government plans to make significant investment into AI infrastructure.
UK
In the UK, the FTSE 100 closed on Thursday 0.7% up for the week so far, just short of its all-time high. However, gains in London were less pronounced than those in the US and mainland Europe thanks partly to weakness among major oil companies. There were hopeful signs from the housing market, with property prices beginning 2025 on the front foot. Latest data showed that wage growth had hit a six-month high, although investors still expect the Bank of England to cut interest rates at its February meeting.
Europe
In Frankfurt, the DAX index ended Thursday’s session up 2.5% for the week, while France’s CAC 40 gained 2.4%. Investors across Europe were relieved that Trump did not unveil any immediate tariffs on US imports from the eurozone, but restrictions could be put in place by the start of next month. Trump urged European Union leaders to improve US firms’ access to the single market to head off a trade war. Consumer confidence across the bloc has recorded a slight improvement in January, and investors are practically certain that the European Central Bank will cut interest rates further next week.
Asia
In Asia, the Hang Seng index in Hong Kong had gained 0.6% by the end of trading on Thursday, with uncertainty around China’s trade with the US a dominant theme. Chinese markets rose at the start of the week due to the lack of tariff announcements from the US, but fell back after Trump indicated he was planning to introduce a flat 10% on imports from China within the next two weeks. Japan’s Nikkei 225 index of leading shares, meanwhile, advanced 3.9% to recoup some of the heavy losses incurred earlier in the month. Investors welcomed positive news from the US technology sector, and while the Bank of Japan is widely expected to increase rates on Friday, there are hopes that further cuts could be delayed.
January 17 | January 23 | Change (%) | |
|---|---|---|---|
FTSE 100 | 8505.2 | 8565.2 | 0.7 |
FTSE 250 | 20597.4 | 20520.4 | -0.4 |
S&P 500 | 5996.7 | 6118.7 | 2.0 |
Dow Jones | 43487.8 | 44565.1 | 2.5 |
DAX | 20903.4 | 21417.9 | 2.5 |
CAC 40 | 7709.8 | 7892.6 | 2.4 |
ACWI | 855.2 | 872.4 | 2.0 |
Hong Kong Hang Seng | 19584.1 | 19700.6 | 0.6 |
Nikkei 225 | 38451.5 | 39958.9 | 3.9 |
Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 23 January 2025.
