Global markets initially dipped in the week due to the tariff conflicts between the U.S. and its major trading partners Canada, Mexico and China. The delay in tariffs on Mexico and Canada gave little relief to investors as China imposed tariffs on U.S. products. Strong corporate earnings raised investor optimism over the week. China’s equity markets continued to gain from the tech rally due to DeepSeek and the rising sales of electric vehicles. China imposed retaliatory tariffs on the U.S following the announcement of President Trump’s tariffs on China. The imposition of tariffs on major trade partners Canada and Mexico was postponed, after the countries agreed to enhance their border control. Panama granted U.S. warships free passage through the Panama Canal. Panama also withdrew from China’s ‘Belt and Road’ initiative under pressure from the U.S. The Trump administration also negated the ‘De Minimis Exemption’ on goods under $800 from China. Trump’s proposal of a U.S. takeover and development of Gaza took the middle eastern countries by surprise.

Global Updates
  • The MSCI All Country World Index gained this week despite an initial tumble due to the commencement of a tariff war between the U.S. and China. The recovery was spurred by strong company earnings reports by in Europe. The continuing tech rally in Chinese equity market also contributed to the performance of global equities. 
  • The Bank of England and Reserve Bank of India eased their policy rates by 25 bps this week. 
  • Germany reported a 2.9% growth in exports in December, 2024, despite a 1% contraction in annual exports in 2024 due to high interest and energy costs. Germany industrial production also declined by 2.4% in December. 
  • Spain’s Banco Santander reported a higher-than-expected 75% jump in fourth quarter profits to $668.62 million. The bank announced a $10.42 billion share buyback program following the strong earnings report. 
  • British pharma giant GSK announce a $2.5 billion share buyback and raised its sales target to $50 billion based on the growing sales of its HIV and Cancer drugs. The company had earlier reported a 18% jump in its net income to £414 million in the fourth quarter of 2024. 
  • French oil company TotalEnergies reported a 21% drop in its annual net income of $18.3 billion in 2024. The company’s stock gained despite the loss, driven by a 7% increase in the company’s $3.35 dividend per share for 2024. TotalEnergy also announced a $2 billion share buyback program for every quarter in 2025.  
  • Denmark’s Danske Bank posted a record annual net profit of 2.63 billion Danish crowns in 2024 and will be launching a share buy back program worth $695.27 million. 
  • Novo Nordisk’s fourth-quarter profits of 91 cents per American Depositary Receipt (ADR) beat estimates driven by the sales of its GLP-1 Obesity-Diabetes care drug Wegovy. The company’s revenue rose 30% to $12.3 billion.
  • Walmart Canada announced plans to invest $6.5 billion in its Canadian operations over the next five years.
  • The Canadian Dollar dropped to a 22-year low this week due to the possibility of trade tariffs being imposed by the U.S. but later recovered with the postponement of tariffs. Canada’s two largest provinces, British Columbia and Ontario, have announced a ban on American brands of alcohol from tomorrow in retaliation to the U.S. tariffs.
U.S. Equity
  • The S&P 500, Nasdaq and Dow Jones indices dragged this week due to the tariff conflict. The markets initially dropped sharply in the week and subsequently recovered due to increased optimism from corporate earnings. The U.S. government mandated Securities and Exchange Commission staff to seek approval from the government appointed leadership prior to initiating an investigation on any company. The United States Postal Service lifted its suspension of parcel service from China and Hong Kong, which had been imposed earlier in the week. 
  • The JOLTS job openings in the U.S. came in lower than expected at 7.6 million in December, a significant drop from the 8.09 million openings in November. 
  • Apple stock price dropped this week following the news of an anti-trust probe of Apple’s monopolistic practices in its app store, by China’s antitrust regulator.
  • Alphabet announced plans to raise its capex on AI by $75 billion in 2025, even as fourth-quarter cloud sales of $12 billion fell short of expectations. The company’s overall quarterly sales came in at $81.6 billion in the fourth quarter.
  • Moderna’s stock continued to lag, after Goldman Sachs downgraded it to “neutral” this week, based on the company’s break-even target being pushed to 2029.
  • Franklin Resources stock price fell this week despite posting better-than-expected profits for the fiscal first quarter. The decline was precipitated by the decline in assets under management (AUM) due to increased net outflows.
  • Companies with exposure to China, like Tesla faced a decline in stock value due to the tariff face-off between the U.S. and China.
  • Eli Lilly posted higher than expected Adjusted Earnings per Share of $5.32 despite a lower-than-expected revenue of $13.53 billion for the last quarter.
  • The shares of luxury brands like Ralph Lauren and Tapestry (parent company of Coach, Kate Spade and others) posted gains due to higher-than-expected sales in the holiday season and raising their guidance for 2025.
  • Apple’s chips supplier Skyworks Solutions stock price fell after the company reported growing competition as a reason for slowdown in revenues.
Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index rose this week.
  • The U.S. 10-year Treasury yield dipped to 4.44% and the yield on the 2-year note rose slightly to 4.23% over the week.
  • The U.S. Dollar Index depreciated to 107.61 this week after China imposed retaliatory tariffs on the U.S.

HCM-030624-063.GWS