U.S. financial markets ended the shortened trading week on a positive note, supported by a major legal development and improving investor sentiment.
Stocks rose after the Supreme Court overturned broad global tariffs introduced under the Trump administration, easing concerns over trade restrictions and global supply chains.
This decision helped boost confidence, particularly in technology and growth-focused stocks.
At the same time, investors closely followed signals from the Federal Reserve. Minutes from its latest meeting showed that policymakers remain divided on whether interest rates should fall or rise in the coming months.
While some officials favour easing if inflation slows, others remain cautious due to persistent price pressures.
Data from the Bureau of Economic Analysis confirmed that inflation picked up slightly in December, reinforcing this uncertainty.
Economic growth also moderated. U.S. GDP slowed sharply in the final quarter of last year as consumer spending and exports weakened. Business activity softened in February, although expectations for future output improved. In housing, confidence among builders declined, reflecting affordability challenges, while new construction showed modest gains.
In financial markets, government bonds weakened slightly, while corporate and high-yield bonds performed better, supported by strong demand. Overall, U.S. markets were encouraged by easing trade risks but remained cautious about inflation and growth.
European market: Strong equity performance despite mixed data
European stock markets continued their upward momentum, with major regional indexes reaching new highs. Investors were encouraged by better earnings expectations and the appeal of diversification away from U.S.-centric technology stocks. Germany, France, Italy, and the UK all recorded solid weekly gains, reflecting broad-based optimism.
Economic data, however, presented a mixed picture. Industrial production in the eurozone fell more than expected in December, signalling ongoing challenges in manufacturing. In contrast, early business surveys showed improving new orders, suggesting that demand may be recovering. German investor confidence declined slightly from recent highs, but remained at elevated levels.
Political and institutional developments also drew attention. Reports that European Central Bank President Christine Lagarde might step down early sparked speculation about future leadership and policy direction. Although she stated that completing her term remains her baseline, uncertainty has added another layer to market discussions.
In the UK, easing inflation and slowing wage growth strengthened expectations that the Bank of England could begin cutting interest rates in the coming months. While price pressures remain above target, softer economic conditions may justify a more supportive monetary stance.
Overall, European markets benefited from improving sentiment and stable policy expectations, even as economic growth remains uneven.
Asia and global industries: Cautious outlook in Japan and China
Asian markets delivered more subdued performance, reflecting slower economic momentum and geopolitical concerns. In Japan, major stock indexes edged lower as economic growth fell short of expectations. GDP expanded only marginally in the final quarter, driven by weak consumer spending. Inflation also slowed to its lowest pace in two years, easing pressure on households but limiting pricing power for businesses.
Government bond yields declined after Prime Minister Sanae Takaichi emphasised balanced fiscal policies focused on long-term investment and financial discipline. The weaker yen supported exports, and January trade data showed resilience in shipments to Asia and Western Europe.
In China, markets were largely closed due to Lunar New Year holidays, limiting trading activity. Attention instead shifted to policy and structural issues. The International Monetary Fund reiterated that China should prioritise consumption-led growth to sustain long-term expansion. While the country has shown resilience, slower growth and deflationary pressures remain key risks.
Regulatory developments also affected major industries. Higher taxes on telecommunications services raised concerns among leading providers. Meanwhile, brief U.S. restrictions involving firms such as Alibaba Group Holding, BYD Co, and Baidu highlighted ongoing geopolitical tensions.
Taken together, Asian markets face a cautious outlook, shaped by slower growth, policy adjustments, and global trade dynamics.
Looking ahead
As global markets balance improving sentiment with ongoing economic and geopolitical uncertainties, investors will remain focused on policy decisions, growth trends, and risk management in the weeks ahead.
