Just hours before they were due to come into force, Trump suspended the 25% tariff on imported goods from Canada and Mexico for a month. China retaliated to a 10% increase in US tariffs by imposing tariffs on US energy exports as well as further trade restrictions on critical minerals and an antitrust probe of Google.
Trump proposed the US took over the Gaza strip and redeveloped it, with all Gaza citizens relocated to neighbouring countries.
UK
The FTSE 100 rose 0.3% over the week to reach a fresh record high.
The Bank of England cut rates by 25bps to 4.5%. It also halved its forecasts for UK growth from 1.5% to 0.75%.
US
The S&P 500 fell 1.2% over the week while the Nasdaq dropped 2.3%.
Mixed employment figures suggested slowing jobs growth and higher wage growth. Non-farm payrolls rose 143,000 in January, below economists’ expectations for 170,000, but December’s gains were revised up from 256,000 to 307,000. Average hourly earnings rose 0.5% over January 2025, the largest monthly increase since August 2024.
The University of Michigan index of US consumer sentiment fell to 67.8 in February from 71.1 in January, marking the lowest reading since July 2024.
The ISM Services PMI for the US declined to 52.8 in January from a downwardly revised 54 in December. The ISM Manufacturing PMI for the US rose to 50.9 in January 2025 from a downwardly revised 49.2 in December.
Alphabet said growth in its cloud computing business had stalled and it was spending a further $75bn on AI.
Europe
The Eurofirst 300 rallied 0.7% over the week.
Eurozone inflation accelerated to 2.5% in January from 2.4% in December, while core inflation held steady at 2.7%.
German factory orders jumped 6.9% in December, rebounding from a 5.4% fall in November.
Japan
The Nikkei 225 fell 2.0% over the week.
Pacific Basin ex Japan
China’s annual inflation rate climbed to 0.5% in January 2025 from 0.1% in December, helped by higher spending over the Lunar New Year holiday.
The Caixin China General Services PMI unexpectedly declined to 51.0 in January, down from December’s seven-month high of 52.2. Manufacturing activity also eased, with the Caixin manufacturing PMI falling to 50.1 from 50.5 in December.
Emerging Markets
The Bank of Mexico cut its benchmark interest rate by 50bps to 9.5%.
The Reserve Bank of India unanimously lowered its key repo rate by 25bps to 6.25%, marking the first reduction since May 2020.
The Czech National Bank cut its main policy rate, the two-week repo rate, by 25bps to 3.75%.
Bonds
The yield on the 10-year US Treasury bond eased 3bps to 4.49%, while the yield on the 2-year note rose 7bps to 4.28%.
The yield on the 10-year German Bund fell 9bps to 2.37%, while the 10-year UK Gilt yield dropped 5bps to 4.59%. 10-year JGB yields rose 6bps to 1.3%, the highest level in 14 years.
