Stock Markets Start 2025 with Declines

Major stock markets in Europe and Asia kicked off 2025 on a negative note as investors brace for impending tariffs from US president-elect Donald Trump, which further complicates the economic landscape in China.

The US dollar saw an increase against the euro and pound but fell against the yen. Oil prices have risen, fueled by expectations of increased demand.

Investment director Russ Mould at AJ Bell commented, "January can often present challenges for markets, and this year is no exception as investors worry about the implications of Donald Trump's trade policies."

Both technology and industrial sectors suffered the most, impacted by disappointing manufacturing data from China and with Trump set to assume office in just over two weeks.

"The new president's trade measures are anticipated to prioritize tariffs, likely making China the primary victim," Mould added.

Asian markets, including Hong Kong and Shanghai, experienced a slump of more than two percent at their closing on Thursday.

As Europe approached midday, major indices in Paris, Madrid, and Milan recorded losses of about 1 percent.

The euro dropped to its lowest exchange rate against the dollar since November 2022.

In the US, the Federal Reserve is expected to reduce interest rates less than initially predicted this year, while the European Central Bank is likely to continue lowering rates due to the economic weakness in Germany, Europe's largest economy.

Despite these issues, Susannah Streeter, head of money and markets at Hargreaves Lansdown, noted, "There remains strong optimism regarding the robustness of the US economy as we move into 2025, with growth consistently surpassing forecasts as consumers and businesses adjust to high interest rates."

After a mostly successful year for equity markets in 2024, driven by falling inflation and technology stock investments, overall sentiment shifted towards the year-end.

However, Wall Street's Dow Jones ended the previous year with an approximate gain of 13 percent, while the S&P 500 and Nasdaq, bolstered by the surge in artificial intelligence, climbed more than 23 percent and about 29 percent respectively.

In addition, both Frankfurt's DAX and Japan's Nikkei saw increases of nearly 20 percent. The FTSE 100 closed up nearly six percent, although France's CAC 40 fell by 2.2 percent.

Market Index Performances

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)

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

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

Stocks, Markets, Economy