Market Update

After a stellar performance for global equities in 2024, some investors opted to lock in profits as the year drew to a close. The first week of trading in 2025 was abbreviated, with many markets closed for the New Year holiday. Trading resumed on Thursday with a mood of cautious optimism.
UK and European markets kicked off the year on a strong note. Energy stocks benefited from rising oil prices, while mining shares gained on hopes that China might roll out additional stimulus to support its economy. The UK’s FTSE 100 led the charge, climbing 1.07% on Thursday. Major energy companies such as BP and Shell posted notable gains. European markets also saw a temporary lift, as investors remained hopeful that 2025 could bring some economic recovery. However, concerns lingered over China’s manufacturing slowdown and the eurozone’s ongoing contraction in the sector, now marking a 30-month decline.
In the UK, house prices continued to rise, approaching record levels. Still, the housing market faces potential turbulence, with volatility anticipated due to upcoming stamp duty changes and a weakening pound against the dollar.
US markets began the first week of 2025 with a muted tone, reflecting trends seen at the end of 2024.
Economic data painted a mixed picture. Initial jobless claims fell to 211,000—the lowest since April 2024—highlighting a resilient labor market. Conversely, the manufacturing PMI showed a modest decline, pointing to contraction in the sector, while construction spending came in below expectations.
Stock-specific developments added to the cautious sentiment. Tesla reported fourth-quarter delivery numbers that missed expectations, while Apple’s shares dropped following a decline in iPhone shipments to China.
However, by Friday, US equities rebounded sharply, erasing earlier losses. Tech stocks led the recovery, driven by bargain-hunting investors capitalizing on the prior session's pullback. Investor sentiment was further bolstered by better-than-expected manufacturing data and dovish comments from a Federal Reserve policymaker, which provided a glimmer of optimism for the year ahead.