Global Markets Struggle to Find Footing in 2025
As the world rings in the new year, global shares are struggling to gain traction, weighed down by uncertainty surrounding the policies of incoming U.S. President Donald Trump and a more hawkish Federal Reserve outlook.
European and Asian Equities Take a Hit
The start of 2025 is shaping up to be a less-than-favorable one for European and Asian equities, with global shares clocking a monthly loss of more than 2% in December and ticking 0.1% lower ahead of the Wall Street open. European stocks eased during their first trading session of 2025, but the STOXX 600 index recovered earlier declines and steadied by midday.
U.S. Stock Futures Point Higher
Meanwhile, U.S. stock futures pointed higher, with S&P 500 and Nasdaq futures climbing roughly 1%. Other major bourses hovered either side of the unchanged mark, with notable underperformance seen in France, where the CAC 40 shed around 0.7%.
China Stocks Log Weakest New Year Start Since 2016
China stocks ended sharply lower, logging their weakest New Year start since 2016, as factory data disappointed investors who were also waiting for more policy support. China’s blue-chip CSI 300 Index closed down 2.9%, while the Shanghai Composite Index tumbled 2.7% and Hong Kong’s benchmark Hang Seng fell 2.2%.
Investors Eye Key Economic Indicators
Global markets are kicking off 2025 with a sharp focus on key economic and inflation indicators. “The latest PMI release from China, falling short of expectations, underscores challenges in the manufacturing sector,” said Bruno Schneller, managing director at Erlen Capital Management in Zurich. “However, President Xi’s announcement of more proactive policies to boost growth signals potential shifts in economic strategy for the region.”
Tariffs and Trade Tensions
Investors are closely monitoring China’s recovery, with Trump’s talk of tariffs in excess of 60% on imports of Chinese goods potentially posing a significant headwind. “With Donald Trump’s return to the White House amplifying external risks and an already fragile domestic economy, a debt-deflation trap leading to a generational downturn could be perilously close if upcoming stimulus measures are delayed or misdirected,” said Yingrui Wang, China emerging market economist at AXA Investment Managers.
Dollar Weakens Ahead of Trump’s Inauguration
The dollar erased downward pressure against other major currencies, up 0.2% by 1221 GMT. The euro ticked 0.2% lower to $1.0328 but strayed not too far from a more than one-month trough. Markets now price in about 42 basis points worth of rate cuts from the Federal Reserve this year, compared with more than 100 bps from the European Central Bank and 60 bps from the Bank of England.
Oil Prices Rise
Oil prices rose, with Brent crude futures up $1.03 to $75.67 a barrel. U.S. West Texas Intermediate crude gained $1.01 to $72.74. Spot gold traded 0.7% higher at $2,641 an ounce, building on its banner year in 2024, when it surged more than 27% in its largest annual gain since 2010.
Russian Gas Exports Halted
Russian gas exports via Soviet-era pipelines running through Ukraine came to a halt on New Year’s Day, marking the end of decades of Moscow’s dominance over Europe’s energy markets. The benchmark front-month contract at the Dutch TTF hub hit a 14-month high in earlier trading but then settled back a bit, up 2.29% at 50.01 euros per megawatt hour (MWh) by 1225 GMT.
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