Market Update

President Donald Trump’s return to the White House dominated market attention, as he swiftly signed a series of executive orders on his first day back in office. Key directives included measures to curb inflation, accelerate the development of new energy sources, and deport unauthorized immigrants. While Trump did not implement tariffs on “day one” as previously pledged, he announced that his administration is evaluating 25% tariffs on Mexico and Canada. Additionally, he revealed plans for an “External Revenue Service” to collect what he described as “substantial revenue streams from foreign sources.”
Big tech stocks surged after the administration announced a major AI infrastructure initiative, dubbed ‘Stargate,’ aimed at advancing artificial intelligence capabilities across industries.
UK and European markets held steady as investors reassessed the potential impact of Trump’s trade policies. Concerns eased as there was no immediate mention of tariffs targeting the UK or Europe. Trump did, however, signal the possibility of a 10% tariff on China by 1st February—significantly lower than the 60% he suggested during his campaign. Trump’s remark that he would prefer to avoid tariffs on China also fueled optimism about the prospect of a trade agreement between the two economic giants.
In the U.S., businesses entered 2025 with cautious optimism, supported by expectations that Trump’s policies could bolster economic growth. However, the S&P Global US PMI Flash Composite Output Index fell to 52.4 in January, a nine-month low from 55.4 in December. The decline was driven by slower growth in the services sector, which recorded its weakest expansion since last April, though it maintained 24 consecutive months of growth. Meanwhile, manufacturing output improved modestly after five months of contraction.
In the Eurozone, consumer confidence rose in January for the first time in three months, though it remained in negative territory. Despite lingering economic pessimism, the improvement marked significant progress compared to the lows of 2022.
In Japan, inflation surged to 3.0% year-on-year in December, its fastest pace in 16 months. This prompted the Bank of Japan to raise interest rates by 25 basis points to 0.5% on Friday, a move widely anticipated after Governor Ueda hinted at tightening monetary policy earlier in the month. In response, the yen strengthened, and Japanese government bond yields climbed to multi-year highs, reflecting the market’s reaction to the central bank’s shift.
With Trump’s administration shaping the policy landscape and central banks navigating inflation pressures globally, 2025 is off to a dynamic and closely watched start.