Whilst activity at the White House has garnered much of the newswire’s attention since President Trump’s inauguration in January, last week it was good old fashioned economic data that received some time in the spotlight. And more specifically, Consumer Price Index (CPI) inflation which surprisingly climbed last month, the index rising back to 3.0% on higher underlying shelter costs[1]. Federal Reserve (Fed) Chair Jerome Powell, who was testifying in front of Congress on Wednesday, noted that whilst the Central Bank has made great strides in bringing inflation lower, there is still more work to be done and indicated that policy will remain restrictive for the time being[2]. The notion that US interest rates are now likely to stay elevated for longer did little to dent sentiment for US equities however with the S&P 500 and Nasdaq advancing in local currency terms with both concluding the week within 1.0% of their record high levels[3].

European equities also made solid progress last week with initial hopes of an end to the Ukraine-Russia war providing a boost to sentiment. The MSCI Europe ex UK index jumped by +2.2% in euro terms whilst the FTSE 100 added +0.4%. The latter came as new data revealed that the domestic economy returned to growth during the fourth quarter, beating expectations of a modest decline[4]. Meanwhile in Asia, Chinese equities advanced on growing optimism around a less intensive future tariff environment. The Shanghai Composite rose by +1.3% (local currency) whilst the Hang Seng in Hong Kong spiked by +7.0% (local currency) due largely to a surge in interest in its technology listed companies. The Nikkei 225 benefited from a more favourable yen backdrop to record a weekly gain of +0.9%.

On the commodities front, gold continued its march upwards with the precious metal rising by a further +1.0% to cross the $2,900 threshold. Economic uncertainty has provided a springboard for gold which has advanced despite the typical headwinds of a stronger dollar and elevated US treasury yields. Oil prices also rose with Brent Crude adding +0.4% to $75.00 a barrel having declined across each the prior three weeks. Supply concerns relating to possible Russian and Iranian sanctions may have weighed on sentiment last week.
 

Source: Workspace DataStream, 17/02/25

[1] Bureau of Labor Statistics – Consumer Price Index Summary January 2025

[2] Federal Reserve – Semimanual Monetary Policy Report to Congress 12/02/2025

[3] T. Rowe Price – Global Markets Weekly Update 14/02/2025

[4] ONS – Q4’24 GDP

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