Market Updates

At face value, a peace deal should be a positive catalyst for markets, particularly in Europe. So why did markets close on a mixed note last week?

US inflation in January was higher than expected at around 3% for both headline and core inflation (which strips out volatile components). This was mainly due to rising energy prices, along with price increases in used cars, motor insurance, medical care commodities, and airline fares.

Last week was dominated by investors digesting the implications of President Trump imposing a 25% tariff on imports from Mexico and Canada, and 10% on China, plus a 25% tariff on steel and aluminium. Canada and Mexico vowed retaliation but then negotiated some measures leading to the temporary suspension of the US tariffs.

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.