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22.01.2025 01:17 PM
Stock markets rose on Wednesday, helped by U.S. President Donald Trump's ambitious initiatives and impressive financial results from major corporations. However, uncertainty over new trade tariffs continued to weigh on the dollar, keeping it at a two-week low.
Netflix (NFLX.O) shares soared 15% in pre-market trading, as record subscriber growth in the latest quarter allowed the streaming giant to raise subscription prices in the U.S. and other markets, further strengthening its position in the market.
Late Tuesday, Donald Trump announced a joint venture called Stargate between OpenAI, SoftBank, and Oracle. The companies plan to invest a whopping $500 billion in developing artificial intelligence infrastructure. The news was immediately reflected in stock markets, with SoftBank (9984.T) shares up 11% in Tokyo and Oracle (ORCL.N) shares jumping more than 8% in premarket trading.
News of Stargate's launch sent Nasdaq futures up 0.8% and S&P 500 futures up 0.5%. These figures suggest that investors are confident in the stability and potential of the tech sector.
Amid the positive news, tensions over U.S. trade policy remain. Trump has reiterated the possibility of new tariffs on goods from the European Union, and said that he is discussing 10% tariffs on Chinese goods from February 1. This threat continues to cause concerns among market participants.
Despite positive trends associated with corporate successes and technology initiatives, investors remain wary due to ongoing trade risks. However, confidence in the growth of key economic sectors gives reason to expect a further rise in global markets.
New US President Donald Trump signed a series of executive orders on his first day in office, but fears about the immediate introduction of tariffs have not yet been realized. This has become a kind of respite for investors, many of whom expected tariff restrictions to be part of his first decisions.
"It seems that Trump is now more focused on domestic issues, and Europe has temporarily gained a breather," commented Eddie Kennedy, head of individual funds at Marlborough. According to him, this situation created the conditions for a small market rally.
European markets reacted calmly but confidently to the tariff deferral. The STOXX 600 index (.STOXX) rose by 0.7%, reaching a record intraday high. Germany's DAX (.GDAXI) added 1.1%, also updating its historical maximum and strengthening its positions since the beginning of the year by 7%.
Japan's Nikkei index (.N225) showed a strong rise of 1.6%, supported by positive dynamics on Wall Street. However, the situation was less clear in other parts of Asia. MSCI's broad index of Asia-Pacific shares excluding Japan fell by 0.2%. This was due to a decline in the markets of China and Hong Kong.
Chinese blue chips (.CSI300) lost 0.9%, while Hong Kong's Hang Seng Index (.HSI) fell 1.8%. Despite these declines, the MSCI World Index (.MIWO00000PUS) posted an overall gain of 0.2%.
The overall situation on global markets remains mixed. On the one hand, improving corporate performance and a temporary pause in tariffs are stimulating growth. On the other hand, tensions in Asian markets are reminding investors of the instability of the global economy.
Experts continue to monitor the actions of the Trump administration, noting that long-term decisions on international trade could significantly change the picture on the stock exchanges. In the meantime, investors are taking advantage of the respite to strengthen their positions.
The decision to temporarily ease tariffs had a noticeable impact on US Treasuries. The yield on 10-year bonds in Europe was little changed, remaining at 4.5704%. However, on Tuesday, the indicator fell by 4 basis points to 4.53%, the lowest since early January.
Despite this decline, yields are still about 1 percentage point higher than before September last year, when the Federal Reserve began cutting rates. This reflects confidence in the strength of the US economy and expectations of a moderate change in Fed policy.
Futures imply a total rate cut of 37 basis points by the Fed during the year, although the first cut is not expected until July. This indicates a balanced approach by the regulator. "As long as economic indicators, including employment, remain robust, the Fed can afford to wait and see how the new administration's policies will play out," said Tim Dye, chief U.S. economist at SGH Macro Advisors.
The U.S. dollar index ended Tuesday's session at 107.97, close to a two-week low of 107.86. Currency markets were muted, with the euro little changed at $1.0430, not far from a recent high of $1.0435. The Japanese yen lost 0.1% to 155.74 per dollar.
The apparent stability in the euro and yen suggests that investors are taking a wait-and-see attitude. The lack of sharp moves in the major currencies points to continued uncertainty over long-term U.S. economic policy.
Lower bond yields, subdued currency dynamics, and a cautious outlook for Fed rates are creating a unique combination of factors weighing on global markets. As investors weigh the actions of the new administration, financial indicators are signaling temporary stability, but future decisions remain key to the direction of the global economy.
Bitcoin continued to strengthen its position on Tuesday, rising 4% to remain close to a record high of $109,071. The gains were fueled by news that the U.S. regulator has created a task force to develop a regulatory framework for cryptocurrencies.
"Given current trends and institutional interest, $120,000 looks like a realistic scenario," said Billy Leung, investment strategist at Global X.
After falling more than 2% on Tuesday, triggered by Donald Trump's announcement of plans to increase U.S. energy production, oil prices have begun to recover. Brent crude rose 0.5% to $79.66 a barrel, while U.S. crude rose 0.4% to $76.15 a barrel.
Despite pressure from energy policy, investors continue to closely monitor supply and demand dynamics, which play a key role in determining prices.
Amid market volatility, gold has once again proven its reputation as a safe haven asset. The spot price rose 0.5% to $2,759 an ounce, a two-and-a-half-month high. Earlier on Tuesday, gold rose 1.4%, confirming solid demand for the asset.
European stock markets continue to show positive dynamics. On Wednesday, health care stocks and strong financial results from Adidas pushed the German index to new records.
The health care index (.SXDP) rose 1.1%, thanks in large part to a gain in shares of pharmaceutical company Novo Nordisk (NOVOb.CO), which jumped 2.7%.
Adidas (ADSGn.DE) shares soared 6% after publishing preliminary data on fourth-quarter results. The company showed strong sales and high profitability during the key holiday period. These results exceeded analysts' expectations and confirmed the brand's strong position in the global market. Cryptocurrency, oil, gold and stock markets continue to respond to global economic and political changes. Each of these segments offers investors both challenges and opportunities, highlighting the importance of a strategic approach and readiness for change.
Puma (PUMG.DE) shares jumped 2.5%, strengthening the company's position amid general optimism in the stock market. At the same time, the German DAX (.GDAXI) beat expectations of its European peers, rising 0.9% to reach a new all-time high.
The rise underlines the resilient strength of the German economy and the ability of key companies to deliver positive results even in the face of global uncertainty.
Despite US President Donald Trump's continued statements about introducing new tariffs on goods from the European Union, as well as discussions about a 10% tariff on Chinese products from February 1, the market remained positive. Investors seem to be in a mood to ignore the threat of trade restrictions, focusing on strong corporate results.
Not all companies have been riding the wave of success. Shares in German auto parts maker Schaeffler (SHA0.DE) plunged 15% after reporting preliminary 2024 results that were below analysts' expectations. This was a cold shower for investors hoping for stronger results in the context of the growing automotive sector.
Puma and DAX records demonstrate the strength of individual leaders, but Schaeffler's weakness highlights the vulnerability of companies in the context of unstable demand and high expectations. Investors continue to monitor trade negotiations and US policy, which could play a decisive role in shaping further market dynamics.
European stock exchanges are showing confident growth thanks to strong results from key players. However, examples of companies like Schaeffler remind us that the instability of individual sectors can become a risk factor. Continued trade threats and expectations of new tariffs remain on the horizon, but for now, markets look ready to overcome obstacles.
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