Weekly Market Updates

Vol 5. Feb 3, 2025

Global Economic Headlines: Week in Review (Jan-27 – 31)

Tech Stocks Tumble as China’s DeepSeek Shakes Up AI Landscape

Wall Street was rocked on Monday as Nvidia and other U.S. tech giants suffered steep losses, spurred by fears of rising competition from Chinese AI startup DeepSeek. Nvidia plunged over 17%, marking its worst trading day since March 2020, while the broader tech sector followed suit. DeepSeek’s recent launch of its open-source AI model, R1, has taken the industry by storm, positioning it as a formidable rival to OpenAI and Google. As the AI race evolves, companies are shifting from large language models to AI agents, heightening investor uncertainty. The shake-up sent shockwaves through the market, erasing nearly $600 billion from Nvidia’s valuation in a historic single-day drop.

U.S. Military Sales Hit Record $318.7B in 2024

The U.S. State Department reported a 29% increase in military sales to foreign governments, reaching a record $318.7 billion. This includes an $18.8 billion jet fighter deal with Israel despite ongoing allegations of genocide in Gaza.

U.S.-Colombia Trade Spat Resolved Over Migrant Flights

Colombia lifted its ban on U.S. military flights deporting migrants after tensions flared over the weekend. President Gustavo Petro initially blocked flights, sparking tariff threats from the U.S., but later agreed to accept deportees without restrictions.

Norway’s Sovereign Wealth Fund Posts $222B Profit

Norway’s sovereign wealth fund posted a record $222.4 billion profit in 2024, surpassing last year’s earnings. The Government Pension Fund Global (GPFG) saw a 13% return, driven by strong U.S. tech stocks. Fund CEO Nicolai Tangen credited the surge to booming AI and semiconductor industries, with total assets reaching 19.7 trillion kroner.

Deutsche Bank’s Profits Plunge in Q4

Germany’s Deutsche Bank reported a sharp decline in fourth-quarter profit, posting earnings of just €106 million ($110.4 million)—a staggering drop from the €1.46 billion recorded in Q3. The results fell well below analyst expectations, which had forecast profits of around €282 million, highlighting the challenges facing Germany’s largest lender. The disappointing earnings were largely attributed to rising legal provisions, which weighed heavily on the bank’s bottom line.

Major Currency movements

• USD INDEX: Strengthened from 107.50 (Monday) to 108.13 (Friday). Indicates overall USD strength in the forex market.
• EUR/USD: Downward trend observed from 1.0520 (Monday) to 1.0379 (Friday). The consistent decline indicates a weakening Euro against the USD.
• GBP/USD: Started at 1.2515 on Monday and dropped to 1.2418 by Friday. Slight fluctuations midweek but overall, a downward movement.
• AUD/USD: Declining trend from 0.6301 (Monday) to 0.6226 (Friday). AUD weakened against USD, likely due to external economic factors or USD strengthening.
• USD/CHF: An increasing trend from 0.8981 (Monday) to 0.9105 (Friday). Indicates the Swiss Franc is weakening against the USD.
• USD/JPY: Gradual decline from 155.88 (Monday) to 154.60 (Friday). Indicates a stronger Japanese Yen against the USD.
• USD/SGD: Fluctuations observed, with a final increase to 1.3558 (Friday). Singapore Dollar showed mixed performance but weakened overall.

• USD/INR: ?Consistent appreciation of USD against INR from 86.3900 (Monday) to 86.6600 (Friday). Indicates the Indian Rupee weakening throughout the week.

Market Forecast

• USD likely to remain strong, continuing its upward trend in the USD Index.
• EUR/USD and GBP/USD might continue their downward trend unless economic data or central bank actions favor them.
• AUD/USD could stabilize around 0.6200 but remains bearish.
• USD/CHF and USD/INR expected to maintain their trends with CHF and INR weakening further.
• USD/JPY might see a reversal if it nears strong support levels.
• USD/SGD could remain volatile but lean towards a stronger USD.

Major Stock Market performance

• NASDAQ (US): Declined from 20,119 (Monday) to 19,514 (Tuesday), with some recovery to 19,786 (Friday).
• Overall, a downward trend with minor fluctuations, likely due to tech sector concerns.
• DOW JONES (US): Started at 44,546 (Monday) and ended at 45,009 (Friday). A steady increase, showing resilience in blue-chip stocks.
• S&P 500 (US): Dropped from 6,128 (Monday) to 6,017 (Tuesday) but recovered to 6,087 (Friday). Some volatility, possibly due to mixed earnings reports.
• FTSE 100 (London): Dipped on Tuesday but ended higher at 8,693 (Friday). Indicates overall bullish sentiment.
• DAX (Germany): Small drop on Tuesday but recovered steadily to 21,802 (Friday). Positive momentum suggests optimism in European markets.
• CAC 40 (France): Fluctuated slightly but remained stable around 7,900.
• Shanghai Composite (China): 3,274 on Monday and The China market was closed for holiday from Tuesday to Friday.
• Nikkei 225 (Japan): Dropped from 40,282 (Monday) to 39,376 (Tuesday) but slightly recovered to 39,684 (Friday).
• Volatility suggests external pressures affecting Japanese equities.
• Hang Seng (Hong Kong): Showed minimal fluctuations, stabilizing at 20,337. The Hongkong market was closed for holiday from Wednesday to Friday.

• NIFTY (India): Gradual uptrend from 23,007 (Monday) to 23,547 (Friday). Strong performance indicating positive investor sentiment.
• SENSEX (India): Steady rise from 75,546 (Monday) to 77,606 (Friday). Bullish momentum, likely driven by economic optimism.
• S&P/ASX 200 (Australia):? Showed consistent gains, closing at 8,567 (Friday). Indicates a positive outlook for Australian equities.

Market Forecast

• NASDAQ: May continue to struggle with volatility but could stabilize around 19,800-20,000 if earnings season improves sentiment.
• DOW JONES & S&P 500: Likely to maintain upward momentum, supported by economic stability.
• FTSE, DAX, and CAC: Should continue their upward trend, benefiting from economic optimism in Europe.
• Shanghai & Hang Seng: May remain flat unless new economic stimuli emerge from China.
• Nikkei 225: Could recover towards 40,000 if global risk appetite improves.
• Indian Markets (NIFTY & SENSEX): Likely to maintain their bullish trend, with strong corporate earnings driving further gains.
• Australian ASX 200: Should continue its steady rise, supported by commodity strength.

Commodities

• Gold ($/Oz): Started at $2,790.16 on Monday, dipped slightly on Tuesday ($2,772.22), but then rose steadily to $2,843.10 on Friday. The bullish trend suggests rising investor demand, possibly due to global economic uncertainty or inflation concerns.
• WTI Crude Oil ($/bbl.): Declined from $74.12 (Monday) to $72.44 (Friday). The downward trend indicates lower demand or increased supply, potentially due to economic slowdown fears or higher inventory levels.

• Brent Crude Oil ($/bbl.):? Declined from $76.99 (Monday) to $75.53 (Friday). Similar trend to WTI, suggesting overall bearish sentiment in crude markets.

Market Forecast

• Gold: Likely to maintain its uptrend, potentially testing $2,850+, driven by safe-haven demand. Factors to watch: inflation data, Federal Reserve policy, and geopolitical tensions.
• WTI & Brent Crude Oil: Likely to remain under pressure, possibly testing $72 (WTI) and $75 (Brent) if demand concerns persist. ?Potential catalysts: OPEC+ decisions, US inventory reports, and global economic indicators.

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