Market Updates

Over the weekend, US President Donald Trump kicked off a ‘trade war’ with its top three trading partners by raising tariffs to 25% on all imports from Mexico and Canada, and 10% on imports from China.

Tech stocks, and the broader equity indices, fell sharply on Monday. Progress made by Chinese artificial intelligence start-up DeepSeek has raised concerns about US leadership in the sector.

In this weekly market update, we’re continuing to answer some questions we’ve received following the release of our 2025 Market Outlook.

First and foremost, we would like to wish you a happy, healthy and prosperous 2025. We’re using the first weekly market update of 2025 to answer some questions we’ve received following the release of our 2025 Market Outlook.

The US Federal Reserve (Fed) delivered a ‘hawkish’ quarter-point interest rate cut to bring the key policy rate target range to 4.25-4.50%. While investors expected this move, what’s new is that the US central bank also signalled a slower pace of rate reductions: the policy statement was updated to include the consideration of the “extent and timing” of additional adjustments.

After around 14 years of civil war, the fall of Bashar al-Assad’s regime in Syria has caught the world by surprise. Initial market reactions have been muted. Oil prices have risen by around USD1/bbl, while other markets (global equities and currencies) haven’t budged, suggesting the unfolding of events in Syria is not causing any worries in financial markets.

We’re not yet into the festive season but markets were relatively quiet last week and could be again this week, as the economic calendar is relatively light. However, there were some geopolitical jitters. Tensions flared up between Russia and Ukraine, causing a reaction in the commodity market.

Donald Trump, the 47th president-elect of the USA, has been given a strong mandate. He won both the electoral college and popular vote, while his Republican party secured a majority in both chambers of Congress.

Although not yet fully certified, Trump has secured a clearer victory than initial polls indicated. The election resulted in a ‘Red sweep’, with a Republican majority in both chambers of Congress.

It’s still impossible to predict who’s going to be the 47th US President as Americans head to the polls on November 5th. However, since October, the odds of a Donald Trump win and Republicans winning both chambers of Congress have risen, with Kamal Harris narrowing the gap over the weekend.

Last week was quiet, with no significant economic data releases, so markets continued to take cues from the US election polls. The US dollar rose and bonds declined. Surprisingly, stocks fell. It’s hard to attribute these dynamics to a single event. Trump had earlier taken a slight advantage in the polls in all swing states, though still within the margin of error, but his advance faded last week.

Last week, the European Central Bank (ECB) cut interest rates by 25 basis points (bps) as inflation fell below the 2% target in September and growth remains sluggish. While not pre-committing to more cuts, ECB President Lagarde’s communication hinted that more could be on the way, given growth worries.