The significant events in the global economy over the past week – London Business News | London Wallet

Major U.S. stock indexes posted modest gains during the holiday-shortened week, with technology stocks leading the charge early on before experiencing a pullback.

The Nasdaq Composite and the Russell 1000 Growth Index initially outperformed, driven by a rally in large-cap growth stocks, but the momentum waned after Wednesday’s Christmas market closure. By the end of the week, most indexes surrendered some of their earlier advances.

Consumer confidence declined in December, as reported by The Conference Board, with the index falling to 104.7 from November’s 112.8.

Notably, expectations for income, business, and labor conditions dropped sharply, signaling potential economic challenges ahead.

November also saw disappointing data in durable goods orders, which declined 1.1%, driven by fewer commercial aircraft orders and reduced defense spending. On a brighter note, new home sales improved month-over-month but still fell slightly below expectations at an annualized rate of 664,000 units.

Labor market data showed mixed signals: while initial jobless claims fell to a six-week low of 219,000, continuing claims rose to 1.91 million, indicating longer job searches for unemployed individuals. Treasury yields climbed during the week, with the 10-year note yield touching 4.641% as muted trading volumes characterized the bond market.

Overall, the Dow Jones Industrial Average rose 151.95 points (14.07% YTD), while the S&P 500 and Nasdaq Composite gained 39.99 points and 149.43 points, respectively, further underscoring a strong year for U.S. equities.

European equities performed well during the shortened trading week, with the STOXX 600 Index gaining 0.99%. France’s CAC 40 rose 1.11%, and Germany’s DAX climbed 0.50%, supported by investor optimism despite concerning economic data and political developments.

The UK’s Office for National Statistics revised its third-quarter economic growth estimate to zero, down from an initial 0.1%. This stagnation, coupled with a downgraded second-quarter growth figure, heightened concerns about a potential slowdown as the government plans tax increases to address fiscal challenges.

In France, President Emmanuel Macron reshuffled his cabinet yet again, appointing Prime Minister Francois Bayrou to lead the new government amid fiscal challenges. Meanwhile, trade tensions simmered as U.S. President-elect Donald Trump criticized the European Union’s trade imbalance with the U.S., signaling potential tariffs if energy imports do not increase.

European Central Bank (ECB) President Christine Lagarde remarked on nearing the ECB’s 2% inflation target but expressed caution regarding the services sector’s inflation trajectory. Her comments reflected uncertainty about the eurozone’s monetary policy direction amid persistent economic headwinds.

Japan’s stock markets rallied, with the Nikkei 225 Index rising 4.08% and the TOPIX Index up 3.69%. A weakening yen, which slipped to JPY 157 against the U.S. dollar, buoyed export-heavy industries, while the yield on the 10-year Japanese government bond rose to a five-week high of 1.1%. Bank of Japan Governor Kazuo Ueda hinted at potential rate hikes, although the timing remains uncertain. Tokyo’s consumer price index rose 3% year-over-year in December, exceeding forecasts, while mixed industrial production and retail sales data underscored uneven economic recovery.

Chinese markets also advanced, with the Shanghai Composite Index gaining 0.95% and the CSI 300 up 1.36%. Anticipation of further government stimulus fueled optimism, as reports emerged of plans to issue a record RMB 3 trillion in special Treasury bonds in 2025 to bolster consumption and innovation. Meanwhile, the People’s Bank of China conducted significant liquidity operations, resulting in the largest banking system liquidity drain since 2014.

However, manufacturing profits continued to decline, dropping 7.3% year-over-year in November. While the slower pace of contraction suggested some impact from stimulus measures, corporate earnings remained under pressure amid broader deflationary trends.