Global markets trended up due to mixed corporate profits. President Donald Trump’s inauguration was held on Monday, followed by the signing of 80 wide ranging executive orders. Trump also announced the $500 billion stargate project for developing AI infrastructure across the U.S. The new President also opined his preference for a U.S.-China trade deal to correct the imbalance in their trade, following a conversation with President Xi Jinping. Chinese regulators unveiled a plan to promote Chinese equities and injected 200 billion yuan through one-year loans into financial institutions.  Strong winds and new wildfires raged in California, leading to further evacuations. Trump announced his plans to use sanctions and tariffs to end the Russia-Ukraine war. The first group of hostages were released on Sunday, following the ceasefire between Israel and Gaza.

Global Updates
  • The MSCI All Country World Index significantly gained this week driven by increased optimism in the U.S., European, Japanese and Chinese markets driven by policy changes and strong performance in the technology and industrial sectors. Markets also relaxed their concerns regarding tariffs, as Trump pivoted to internal issues and no tariffs were immediately forthcoming. Trump also demonstrated willingness to negotiate with China on trade. 
  • The ECB has signaled a rate cut is imminent in its next week’s meeting and further easing in the year will be data driven. 
  • Chinese equities gained following the announcement by six financial regulators of the plan to encourage insurance, pension, annuity, social security and other funds to increase the size and proportion of their investments in Chinese equities. Authorities also announced 800 billion yuan swap and relending schemes for stock purchases. The possibility of a China-U.S. trade deal instead of increased tariffs also gave fillip to international investors. 
  • Crude oil and Brent oil futures dipped this week following Trump’s request to OPEC to lower prices, to promote his plans to raise U.S. industrial production. Gold prices rose following President Trump’s call for raised interest rates. 
  • Inflation in Canada declined to 1.8% in December 2024, below the expected 1.9%, due to the ongoing tax holiday. On the other hand, industrial producer prices rose by 0.2% month-over-month in December. 
  • The Bank of Japan raised its key policy rate by 25 basis points to 0.5%, justified by rising wages and a steady rise in inflation. The central bank also indicated the possibility of further rate hikes. Japan’s inflation jumped to a two-year high of 3.6% in December, while manufacturing contracted in January. 
  • Stocks of Munich Re, the world’s largest reinsurer, trended up after the company confirmed that its target of $6.25 billion in net profits continued to be in place despite the wildfires in Canada.
  • Siemens Energy stock gained on the expectation of tailwinds from the Stargate project. 
  • Adidas stock gained after the company reported a 19% jump in sales for the fourth quarter to €5.97 billion and rise in operating profits to €1.34 billion. Adidas’ full year revenues also rose by 12% to €23.68 billion and gross margins improved by 3.3% to 50. 8%.
U.S. Equity
  • The S&P 500,  Dow Jones index &  Nasdaq indices registered growth in U.S. equities this week driven by mixed fourth-quarter corporate earnings reports. Markets were also enthused by Trump’s announcement of the Stargate project to build AI data centers across the U.S., which is expected to generate 100,000 jobs. OpenAI, SoftBank Group and Oracle plan to invest $500 billion in Stargate over the next four years. 
  • JP Morgan Chase CEO Jamie Dimon expressed his concern for the U.S. economic outlook at in the World Economic Forum, based on the high government deficit and current geopolitics. He also opined that the U.S. equities were overinflated.  
  • OpenAI, SoftBank Group and Oracle stock gained on the news of the Stargate project. 
  • United Airlines and Delta posted higher-than-expected fourth-quarter results. Delta registered a profit of $843 million and revenue of $15.56 billion for the quarter. United Airlines posted an adjusted profit of $3.26 per share and a 8% year-over-year growth to $14.70 billion. 
  • Alaska Air Group Inc. reported a record full year revenue of $11.7 billion and a GAAP pretax margin of 4.6%, for 2024. Alaska Air’s full year pretax margin of 7.1% is among the industry’s best, despite the costs of its acquisition of Hawaiian Airlines.
  • Union Pacific reported 7% higher fourth-quarter earnings per share (EPS) to $2.91, despite a 1% drop in operating revenue to $6.12 billion. The earnings growth was driven by declining fuel costs.
  • Elevance Health has raised quarterly dividends after reporting higher profits despite increased medical costs. The company posted $6 billion in 2024 profits and $418 million in fourth-quarter profits. 
  • Procter & Gamble stock gained after the company reported a 2% growth in second-quarter sales to $21.9 billion for the 2025 fiscal year. The company’s operating income also rose by 30% to $5.7 billion. 
  • Johnson & Johnson’s fourth quarter earnings beat estimates, with a 5.3% growth in sales to $22.52 billion. The company raised its 2025 outlook for sales to the $90.9 to $91.7 billion range and, for profits to the $10.75 to $10.95 per share range. 
  • Netflix stock price jumped after the company reported 19 million additional subscribers in the fourth quarter. The company estimates the fourth quarter revenue in the $10.11 to $10.25 billion range and earnings per share in the $4.20 to $4.27 range.
  • American Airlines stock lagged after the company released an estimated loss per share of 20 to first cents per share for the firt quarter of 2025 due to higher costs and lower capacity.
  • Freeport-McMoRan’s stock price dropped after the company posted a lower-than-estimated fourth quarter revenue of $5.72 billion due to a drop in copper production. The company’s higher-than-anticipated EPS of $0.31 was driven by higher copper prices.
Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index rose this week.
  • The U.S. 10-year Treasury yield rose to 4.62% and the yield on the 2-year note dipped to 4.26% over the week.
  • The U.S. Dollar Index declined to 107.83 this week.

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