Markets update: The changing of the guard – Business & Finance

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Markets update: The changing of the guard – Business & Finance

The week commenced with Donald Trump’s inauguration on Monday, and markets seemed relieved that new tariffs were not enacted on the president’s first day in office, writes Ian Slattery.


Ian Slattery, Zurich Investments

The S&P 500 reclaimed its place above the 6,000 level, and was further boosted to a fresh all-time high after news broke on Wednesday of a $500 billion investment into AI infrastructure via a joint venture comprising OpenAI, SoftBank, and Oracle.

The 10-year US treasury yield traded largely flat, ending near 4.6%, while the dollar weakened against the euro, with EUR/USD rising above 1.046.

The 2024 World Economic Forum in Davos concluded on Friday, and European equities enjoyed a strong rally during the week as fears surrounding trade tensions with the US were eased. The Euro Stoxx 600 posted its seventh consecutive session of gains on Thursday to notch a new record high.

The Eurozone Composite PMI rose from 49.6 to 50.2, a five-month high that beat expectations. While the data is still indicative of a stagnant economy, it at least showed signs of marginal growth.

In the UK, the unemployment rate rose unexpectedly to 4.4% in the three months from September to November 2024, up from 4.3% in the previous period. The weakening labour market reinforced market projections for rate cuts next week, and the FTSE 100 rose to a new record high as stocks responded accordingly to the dovish sentiment.

On Friday, the Bank of Japan announced its decision to raise the policy rate from 0.25% to 0.5%, the highest it’s been in 17 years. The decision followed inflation data which showed that core CPI rose 3% annually in December, a 16-month high.

Equities

Global stocks finished at 0.0% in euro terms and 2.1% in local terms last week. Year-to-date global markets are up by 2.5% in euro terms and down by 4.1% in local terms. The US market, the largest in the world, finished at -0.3% in euro terms and 1.8% local terms.

Fixed Income & FX

The US 10-year yield finished at 4.6% last week. The German equivalent finished at 2.6%. The Irish 10-year bond yield finished at 2.8%. The Euro/US Dollar exchange rate finished at 1.05, whilst Euro/GBP finished at 0.84.

Commodities

Oil finished the week at $75 per barrel and is up 2.7% year-to-date in euro terms. Gold finished the week at $2,771 per troy ounce and is up 4.1% year-to-date in euro terms. Copper finished the week at $9,156 per tonne.

The week ahead

Wednesday 29th January

Fed rate decision is announced.

Thursday 30th January

ECB rate decision is announced.

Friday 31st January

US PCE price index goes to print.

About: Zurich Investments

The team at Zurich Investments is a long established and highly experienced team of investment managers who manage approximately €41.9bn in investments of which pension assets amount to €36.1bn. Find out more about Zurich Life’s funds and investments here.

The team at Zurich Investments is a long established and highly experienced team of investment managers who manage approximately €41.9bn in investment of which pension assets amount to €36.1bn. To find out more about Zurich Life’s funds and investments, w: zurichlife.ie/funds, Twitter: @ZurichLifeLinkedIn: linkedin.com/company/zurich-life-assurance-plc

Warning: Past performance is not a reliable guide to future performance. Benefits may be affected by changes in currency exchange rates. The value of your investment may go down as well as up. If you invest in these funds you may lose some or all of the money you invest.


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