On Thursday the S&P 500 hit a record high and ended the week up 1.7%. Meanwhile the Dow Jones Industrial Average was up 2.2% and the tech-heavy Nasdaq Composite rose 1.7%. Investors cheered the announcement from Trump of a $500bn artificial intelligence infrastructure venture, Stargate, involving Oracle, OpenAI and SoftBank. One notable stock mover was Netflix, up nearly 14% for the week on posting record quarterly subscriber numbers. This week, major earnings reports will come from Apple, Meta, Microsoft and Tesla, and attention will also be paid to the Federal Reserve meeting. For the week, Treasury yields moved slightly higher, with the 10-year note ending at 4.62%.
Meanwhile the dollar saw its largest weekly loss since November 2023, down 1.8%. This was due to Trump taking a softer stance on tariffs against China. Despite previous comments, President Trump did not impose fresh tariffs on his first day in office, instead targeting Canada and Mexico from 01 February. With this, European stocks moved higher, and the STOXX 600 added 1.2% for the week. Regional performance was more mixed, with France and Germany gaining, the UK roughly flat and Italy slightly lower. Stocks also found support from growing belief that the European Central Bank will continue to cut interest rates, including at its meeting this week.
After weakness in the prior week, Japanese stocks made gains, with the Nikkei 225 rising 3.9%. It was aided by the lack of fresh tariffs from the US as well as central bank action. The Bank of Japan raised its interest rate by a quarter percentage point to 0.5%, its highest level since 2008, and inflation expectations were upwardly revised. Chinese markets also welcomed the softer tariff stance. For the week the Shanghai Composite was up 0.3% and the Hang Seng added 2.5%.
Mexico’s IPC index climbed 2.9% despite the looming tariffs and several controversial executive orders involving Mexico. These included declaring a national emergency at the border and sending troops there, as well as moving to end birthright citizenship. Meanwhile annual inflation eased to 3.69% in early January, its lowest level in nearly four years, likely keeping the central bank on track to continue lowering rates. In contrast, Brazil’s inflation rate cooled less than expected, backing the case for the central bank to hike interest rates this week, with Brazilian equities modestly higher for the week.