Weekly Market Update 24/01/2025

On Monday, Donald Trump was inaugurated as the 47th president of the United States. He started his second term with a bang, signing executive orders to rescind Biden-era directives, pardoning hundreds of January 6th rioters, withdrawing from the Paris climate accords and World Health Organisation, and sending troops to the US border with Mexico. However, his address did not explicitly announce tariffs which initially caused the dollar to weaken, but this soon rallied when he mentioned that he could impose levies of 25% on Mexico and Canada.

On Thursday, President Trump appeared by video link at the World Economic Forum in Davos, his first speech to a global audience during his second term. He called for Opec to reduce global oil prices, and for central banks around the world to then lower interest rates. He insisted that companies start to manufacture products in the US or be faced with tariffs for importing goods from elsewhere. Following the speech, the price of Brent crude oil fell by 1% to just over $78 per barrel.

Away from the US, the Bank of Japan has raised interest rates to “around 0.5%”, the highest level since 2008. The bank cited economic activity, wage growth, and price inflation all moving in line with targets as justification for raising the rate to try to “normalise” monetary policy. The news saw the yen strengthen 0.6% against the dollar, while Japanese equities remained flat, and 10-year government bond yields rose 0.02 percentage points to 1.22%.

Andrea Wood, Chartered MCSI
Investment Manager