“Global markets closed the week with a tone of moderate optimism, driven by President Trump’s statements at the World Economic Forum, where he advocated for an immediate reduction in interest rates and a softer approach to imposing tariffs on China. However, uncertainty regarding the trade and fiscal policies of the new U.S. administration, coupled with mixed economic data, kept investors cautious.
Stock indices record weekly gains
Major global stock markets ended the week in positive territory, with the S&P 500 reaching new all-time highs. Optimism fueled by Trump’s remarks, along with strong corporate earnings, boosted stocks. The German DAX extended its winning streak to nine consecutive days, while the French CAC 40 reached its highest level in seven months. In Asia, Hong Kong’s Hang Seng posted weekly gains thanks to Beijing’s support for the stock market.
The dollar weakens against stronger counterparts
The U.S. dollar weakened against major currencies, hitting a one-month low. The strength of the euro, British pound, and Oceanic currencies reflected uncertainty surrounding Trump’s policies and optimism from economic data in Europe and other regions. The Japanese yen also appreciated following the Bank of Japan’s decision to raise interest rates.
Key movements in Latin America
In Latin America, the Brazilian real appreciated to an eight-week high, supported by foreign direct investment inflows and easing inflationary pressures. The Colombian peso also strengthened, while the Mexican peso posted significant weekly gains. However, Mexico’s economic activity slowed more than expected in November, raising concerns about the recovery pace of Latin America’s second-largest economy.
Mixed trends in commodities
Gold approached its all-time high, driven by the weak dollar and Trump’s comments on interest rates. Silver also appreciated, while copper showed operational weakness due to supply concerns. Oil recorded a weekly decline due to Trump’s pressure to lower crude prices.
Economic data and monetary policy
Economic data released during the week painted a mixed picture of the global economy. Private sector activity in the Eurozone unexpectedly expanded, while German manufacturing contracted at a slower pace. In the UK, services sector activity exceeded expectations, though employment growth remained weak.
Regarding monetary policy, the Bank of Japan raised interest rates and hinted at further increases. The European Central Bank is expected to cut rates next week, while the Bank of England may follow suit in February. The U.S. Federal Reserve meets next week, and while rates are expected to remain unchanged, investors will closely monitor signals regarding future policy directions.
Key factors to watch in the future
Markets will closely follow the Trump administration’s policies, particularly regarding international trade and fiscal policy. The trajectory of the global economy, decisions by central banks, and geopolitical tensions will also be critical factors to watch in the coming weeks.
In summary, global markets remain in a state of cautious optimism. Mixed signals from the Trump administration, economic data, and uncertainty about the future of the global economy keep investors on alert.”
- Analysis by Quasar Elizundia, Expert Research Strategist – Pepperstone
