Stock Markets Start 2025 with Declines

Major European and Asian stock markets kicked off 2025 on a downward note as investors expressed concerns about potential tariffs from US president-elect Donald Trump, which add to the economic difficulties facing China.

The dollar showed mixed performance; it appreciated against the euro and pound but weakened against the yen. Oil prices experienced a rise amid expectations of increased demand.

Investment director at AJ Bell, Russ Mould, remarked, "January can be a challenging month for markets, and it's proving to be the case as investors worry about the implications of Donald Trump's trade policies." He highlighted that technology and industrial sectors suffered, impacted by poor manufacturing data from China and the anticipation of Trump assuming office in just over a fortnight.

"Tariffs are likely to be prioritized by the new president, with China expected to bear the brunt of the consequences," Mould stated.

Stock markets in Hong Kong and Shanghai plummeted by over two percent by the end of trading on Thursday.

As European markets approached midday, Paris, Madrid, and Milan faced declines of around one percent.

The euro weakened to its lowest value against the dollar since November 2022.

Despite expectations that the US Federal Reserve will cut interest rates less than initially predicted, the European Central Bank is anticipated to continue its reductions, especially given the economic challenges in Germany, Europe's largest economy.

Head of money and markets at Hargreaves Lansdown, Susannah Streeter, stated, "The optimism surrounding the resilience of the US economy is still intact for 2025, with growth surpassing predictions as consumers and businesses seem undeterred by high interest rates."

After a successful performance in 2024, where inflation decreased and investor interest in technology stocks surged, sentiment turned negative towards the end of the year. Nevertheless, Wall Street's Dow index finished 2024 with a gain of about 13%, while the S&P 500 and Nasdaq, which are heavily weighted with technology stocks, surged more than 23% and approximately 29%, respectively, largely due to the growth in artificial intelligence.

The German DAX and Japan's Nikkei also recorded gains of almost 20%. The FTSE 100 rose by nearly six percent, although France's CAC 40 was the exception with a small decrease of 2.2%.

Current stock indexes include:

• London - FTSE 100: FLAT at 8,172.25 points
• Paris - CAC 40: DOWN 1.2 percent at 7,294.11
• Frankfurt - DAX: DOWN 0.3 percent at 19,854.45
• Tokyo - Nikkei 225: closed
• Hong Kong - Hang Seng Index: DOWN 2.2 percent at 19,623.32 (close)
• Shanghai - Composite: DOWN 2.7 percent at 3,262.56 (close)

Currency exchanges:

• Euro/dollar: DOWN at $1.0324 from $1.0360 on Tuesday
• Pound/dollar: DOWN at $1.2451 from $1.2520
• Dollar/yen: DOWN at 157.09 yen from 157.32 yen

Oil prices:

• Brent North Sea Crude: UP 1.4 percent at $75.66 per barrel
• West Texas Intermediate: UP 1.4 percent at $72.73 per barrel

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