Wall Street lifts spirits after Asia starts year in red

AFP | London

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Wall Street made a positive start to the year Monday, shrugging off falls in Asia as investors await planned tariffs from US president-elect Donald Trump, adding to China’s economic struggles.

Midway through 2025’s first session, while the Dow was just 0.2% in the green the techheavy Nasdaq Composite Index had added around 0.6%.

That was despite EV maker Tesla, facing rising electric vehicle competition in China and other major markets, slipping around 5% after posting its first annual drop in electric vehicle deliveries.

“The stock market ended 2024 with a whimper, but it is poised to begin 2025 with a bang,” Briefing.com’s Patrick O’Hare wrote in a note before markets opened on Wall Street.

Axel Rudolph, senior analyst with IG, saw European indices as “being dragged higher by their US counterparts”, helping lift Paris, currently mired in political uncertainty, to a positive finnish.

London, bolstered by rising commodity shares to offset banks going in the opposite direction, closed with a 1% gain, while Frankfurt ended 0.6 up. The euro fell to its lowest level against the dollar since November 2022 while sterling lost similar ground to an eightmonth low on weak UK factory data.

Oil prices jumped on hopes of rebounding demand.

“January can be a testing time for markets and that’s already proved the case as investors fret about the impact of Donald Trump’s trade policies,” said Russ Mould, investment director at AJ Bell.

“Technology and industrial stocks were among the areas worst hit, dragged down by weak Chinese manufacturing data and the fact Trump will be back in power in just over a fortnight.

“Tariffs are expected to be at the top of the new president’s agenda and China is expected to be the biggest loser,” Mould added.

The Hong Kong and Shanghai stock markets had set a negative tone earlier, slumping more than 2% by day end.

Tokyo was closed. While the US Federal Reserve is seen cutting interest rates less than forecast this year, the European Central Bank is expected to keep reducing amid weakness for Europe’s biggest economy Germany.

“Optimism about the strength of the mighty US economy remains buoyant for 2025,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said Thursday.

“Already growth has kept outpacing forecasts as consumers and companies have shrugged off the impact of high interest rates.” Following a largely successful 2024 for equity markets, as inflation reduced further and investors scooped up technology stocks, sentiment soured towards the end of the year.

Nevertheless, Wall Street’s Dow index ended the year up around 13%, while the S&P 500 and the Nasdaq -- which have more tech stocks -- climbed more than 23% and around 29% respectively on the artificial intelligence boom.

Frankfurt’s DAX added almost 20%, as did Japan’s Nikkei. The FTSE 100 gained nearly six%, but France’s CAC 40 was the outlier with a drop of 2.2%.