Stock Markets Open 2025 With Declines

As 2025 begins, major stock markets in Europe and Asia are starting the year on a negative note. Investors are closely monitoring upcoming tariffs expected to be imposed by President-elect Donald Trump, which are adding pressure to China’s already struggling economy.

The U.S. dollar saw an increase against the euro and the pound, but it did fall against the yen. Meanwhile, oil prices experienced a rise as market participants held out hope for increased demand.

Russ Mould, investment director at AJ Bell, remarked, "January can be a challenging period for the markets, and this year is proving to be no exception as investors worry about the implications of Donald Trump's trade policies." He highlighted that technology and industrial stocks are particularly suffering, heavily influenced by disappointing manufacturing data from China and the looming return of Trump to the presidency in just over two weeks.

Mould further emphasized, "Tariffs are expected to be a primary focus for the incoming president, and it is anticipated that China will be significantly impacted."

As of Thursday, both the Hong Kong and Shanghai stock markets experienced a decline of more than two percent by the end of the trading day. In Europe, by the afternoon hours, the Paris, Madrid, and Milan stock indexes had each fallen by approximately one percent.

The euro slipped to its lowest value against the dollar since November 2022. While it appears the U.S. Federal Reserve may cut interest rates less than previously anticipated this year, the European Central Bank is expected to continue its reductions, especially with Germany's economy showing signs of weakness.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, commented on the U.S. economy's strength. She noted that "optimism about the powerful U.S. economy continues to be strong for 2025." She pointed out that growth has exceeded expectations as consumers and companies persistently adapt to high interest rates.

After a mostly positive 2024 for equity markets, attributed to declining inflation and increased purchases in the tech sector, market sentiment has turned pessimistic as the year has drawn to a close.

Despite this, Wall Street's Dow Jones index finished 2024 with a gain of about 13 percent, while both the S&P 500 and the Nasdaq—home to a larger number of tech companies—rose by over 23 percent and nearly 29 percent respectively, propelled by advances in artificial intelligence.

In comparison, Germany's Frankfurt DAX enjoyed a rise of almost 20 percent, while Japan's Nikkei also saw a similar increase. The FTSE 100 had a modest gain of nearly six percent. Conversely, France's CAC 40 was the outlier with a decline of 2.2 percent.

As for specific stock market performances, the London FTSE 100 was stable at 8,172.25 points. The Paris CAC 40 was down 1.2 percent at 7,294.11, while the Frankfurt DAX decreased by 0.3 percent to 19,854.45. The Hong Kong Hang Seng Index fell by 2.2 percent to close at 19,623.32, and Shanghai's Composite Index was down 2.7 percent at 3,262.56.

In terms of currency values, the euro was down to $1.0324 from $1.0360 earlier in the week, while the pound also fell, registering $1.2451 down from $1.2520. The dollar weakened against the yen, moving to 157.09 from 157.32.

Regarding oil prices, Brent North Sea Crude saw an increase of 1.4 percent, reaching $75.66 per barrel, and West Texas Intermediate also rose by the same percentage, priced at $72.73 per barrel.

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