Moore or Less: The Market Rundown

As the new year begins, there’s much to anticipate as we return to work with renewed energy—though some of us are still trying to remember our passwords after the holiday break. In the days ahead, President Trump’s inauguration will take centre stage. While his pro-business policies have sparked optimism for Corporate America and U.S. assets, his tough rhetoric on global trade has raised concerns, and his unpredictability leaves stakeholders uncertain about the road ahead.

In Canada, Prime Minister Justin Trudeau’s resignation at the start of the week has created an opening for the Conservative Party to assume power. This shift could lead to the rollback of Trudeau’s progressive policies as Canada braces for the implications of another Trump era.

Across the Atlantic, British gilt yields have surged to levels not seen since 2008, driven by concerns over the UK’s fiscal stability. Meanwhile, rising inflation in the eurozone has pushed German bund yields to a five-month high. Despite these challenges, the UK economy is projected to recover in 2025, with predictions of at least four interest rate cuts and accelerated growth. However, fiscal constraints may force Chancellor Rachel Reeves to introduce further tax hikes.

In Asia, China’s long-term bond yields have reached unprecedented lows, raising fears of "Japanification"—a prolonged period of economic stagnation and deflation. Despite efforts to combat these challenges through rate cuts and confidence-boosting measures, Beijing’s incremental approach has yet to yield sustainable growth.

In Africa, Ethiopia is set to open a stock exchange for the first time in five decades, a significant step toward attracting investors as the country recovers from civil war.

Corporate news highlights a record-breaking start to 2025, with $83.4 billion in bond sales—the highest year-to-date total since 1990. Companies such as BNP Paribas, Société Générale, and Toyota are leveraging favourable conditions to refinance debt ahead of anticipated rate hikes tied to Trump’s inflationary policies.

Markets and currencies continue to react swiftly to new developments. U.S. Treasury yields have risen, with the 10-year yield reaching 4.73%, the highest since April 2024. This has impacted stocks, with the S&P 500 and Dow Jones closing higher while the Nasdaq slipped. Investors are balancing strong economic data with reduced expectations for Federal Reserve rate cuts. The dollar has surged to multi-decade highs, buoyed by robust economic performance and tempered hopes for rate cuts, with Bank of America analysts reporting a 55-year peak in its inflation-adjusted exchange rate. Strength is expected to persist into mid-2025.

Meanwhile, the South African rand has fallen to a seven-month low amid fears of sweeping tariffs from U.S. President-elect Donald Trump. At the time of writing the rand currently trades at 18.96 to the dollar.

Domestically, the manufacturing sector continues to struggle. The Absa Purchasing Managers' Index (PMI) for December 2024 dropped to 46.2 from 48.1 in November, marking a second consecutive month of contraction due to weak domestic demand, declining export sales, and logistical disruptions.

Adding to the challenges, ArcelorMittal South Africa announced plans to wind down its long-steel products business, citing unsustainable operations caused by weak economic conditions, high costs, and competition from Chinese steel imports. This decision is expected to affect approximately 3,500 jobs.

As 2025 begins, the world is already presenting a mix of opportunities and challenges. From shifting leadership and evolving economic policies to market volatility and industry disruptions, this year will require both vigilance and adaptability. While uncertainties lie ahead, they also offer opportunities to innovate, collaborate, and forge new paths toward progress. After all, let’s be honest—who would have guessed that 'new year, new me' would end up applying to the entire economy?