Weekly Review: Global Indices Rally Amid Improved Sentiment

The three major U.S. indices ended the week in the green, as sentiment improved after investors got more certainty around President Donald Trump’s tariff plans, while new inflation data wound up being more constructive than first thought.

For the week, the S&P 500 gained approximately 1.5%, the Dow advanced around 0.6%, and the Nasdaq surged 2.6%.

The consumer price index (CPI), which measures the cost of goods and services across the U.S. economy, increased by a seasonally adjusted 0.5% in January, pushing the annual inflation rate to 3%, up from 2.9% in the previous month, according to the Bureau of Labor Statistics (BLS). Shelter costs, which rose 0.4%, accounted for nearly 30% of the total increase. Excluding volatile food and energy prices, the core CPI rose 0.4% for the month, bringing the 12-month inflation rate to 3.3%, exceeding estimates of 0.3% and 3.1%, respectively.

On Thursday, the BLS reported that the producer price index (PPI) also rose more than expected, advancing 0.4% in January compared with consensus expectations of a 0.3% increase. However, some key components, such as healthcare items and airfares, showed signs of cooling, helping to ease inflation concerns. Bond yields saw sharp gains on Wednesday but later reversed course on Thursday to end the week firmer.

Also on Thursday, President Trump directed the US Trade Representative and the Department of Commerce to study on a country-by-country basis how to adjust US tariff rates on trade partners to match their existing duties and non-tariff barriers. The study is expected to be completed by 1 April, with US levies expected to follow shortly after.

In Europe, the pan-European STOXX Europe 50 Index climbed 3.15%, reaching a fresh record high. Sentiment was buoyed by optimism over a potential resolution to the Ukraine-Russia conflict and strong corporate earnings. Economic data showed that the eurozone economy expanded at a quarterly pace of 0.1% in the last quarter of 2024, avoiding stagnation, with annual growth reaching 0.7% for the full year.

Meanwhile, the UK economy also posted an unexpected 0.1% expansion in the final quarter of 2024, with full-year GDP growth rising to 0.9% in 2024, up from 0.3% in 2023. The FTSE 100 ended the week 0.37% higher.

Japan’s Nikkei 225 Index gained 0.93% for the week, supported by a weaker yen and positive sentiment after President Trump decided against imposing immediate reciprocal tariffs on U.S. trading partners.

Mainland Chinese stocks also performed well, driven by hopes that U.S. tariffs on Chinese imports may be less severe than previously expected. The Shanghai Composite Index ended 1.3% higher, while the Hong Kong Hang Seng Index surged 6.88%, with strong buying interest in artificial intelligence and tech stocks. China’s consumer price index rose 0.5% year-over-year in January, marking the first pickup in inflation since August, likely fuelled by increased spending ahead of the Lunar New Year holiday.

Gold prices remained steady on Friday, trading at the close at $2,882 per ounce, posting a 0.77% weekly gain. The precious metal continued its seven-week rally, bolstered by its status as a safe- haven amid inflation and economic uncertainty.

In the energy sector, Brent crude oil prices ended the week slightly lower at $74.51 per barrel. A potential peace agreement between Russia and Ukraine raised concerns among traders that the lifting of sanctions on Moscow could increase global energy supply.

Market Moves of the Week:

Tensions between Washington and Pretoria remained elevated this week as South African President Cyril Ramaphosa called for national unity after the country’s new land-expropriation laws and foreign policy came under attack from US President Donald Trump. Trump recently froze most aid to South Africa, citing concerns over race-based discrimination policies and relations with Hamas and Iran.

The law signed by President Ramaphosa in December grants the government the authority to expropriate land for public purposes, such as infrastructure development, with compensation determined as “just and equitable.” — though some cases may involve no compensation.

South Africa is set to host a G20 foreign ministers’ meeting next week, with U.S. Secretary of State Marco Rubio boycotting the event in protest of South Africa’s land policies and “anti-Americanism.”

For the week, the JSE All-Share Index gained 1.42%, driven by a 3.5% rise in industrial stocks. The rand strengthened against the U.S. dollar, closing the week at R18.34/$. Concerns over a trade war lifted gold prices, providing additional support for the local currency.

Chart of the Week:

The U.S. Consumer Price index (CPI) accelerated a seasonally adjusted 0.5% for the month of January, putting the annual inflation rate at 3%, while core CPI (excluding food and fuel) ran at 0.4% and 3.3% respectively, both above forecasts.

Important Information

The information included above as well as individual companies and/or securities mentioned should not be construed as investment advice, a recommendation to buy or sell or an indication of trading intent on behalf of any Strategiq product. This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action. Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy. All charts and tables are shown for illustrative purposes only.

The views expressed in this newsletter are that of STRATEGIQ Capital, an authorised financial services provider (FSP 46624).