INN8 will never ask you to carry out money-related actions on WhatsApp, Telegram or personal email addresses. Official communication from STANLIB employees is conducted via work email addresses which end in @stanlib.com | Report fraud to fraud@stanlib.com
X
Monthly Market Wrap: January 2025
Trump laid the groundwork for continental trade war.
Key points
United States: Positive start - markets up.
UK/Europe: ECB cut rates.
Asia: BoJ raised rates. China - GDP up 5%.
South Africa: CPI continued to ease.
United States
The US economy grew by a robust 2.8% in 2024.
Consumer spending fuelled growth despite ongoing fears about inflation. Headline CPI matched forecasts with core CPI softer, down to 3.2% from 3.3% in November.
The Fed kept its benchmark rate steady in the 4.25% to 4.5% range.
US shares rose in January, even as fears surrounding tariffs, interest rates and China’s surprise AI ‘win’ of DeepSeek took turns rattling investors. The S&P 500 added 2.8% and the Nasdaq rose 1.7%.
The US imposed a 25% tariff on imports from Canada, apart from oil/gas which will have an import duty of 10%. It also imposed a 25% tariff on imports from Mexico and an additional 10% tariff on imports from China. The US struck last-minute deals with Mexico and Canada to delay new tariffs by a month, after separate calls with the leaders of both countries.
UK/Europe
Economists are becoming increasingly worried that the UK is facing a stagflationary trap where high inflation meets low growth. The Treasury’s January 2025 survey of independent GDP forecasts showed an average forecast of only 0.8% for 2024.
The European Central Bank lowered interest rates to 2.75% from 3% and signalled more rate cuts to come, aiming to bolster a stagnant eurozone economy.
Asia
The Bank of Japan (BoJ) persisted with its divergent monetary policy, raising its policy rate to 0.5%. This is the highest level in 17 years and follows a report that CPI in the world’s third largest economy rose to 3% – above the BoJ’s inflation target.
Despite meeting its growth target of 5% in 2024, China had another year of uneven growth with exports and manufacturing staying robust while consumption remained weak.
South Africa
CPI averaged a respectable 4.4% in 2024 – the lowest annual average since 2020 and in-line with the midpoint of the 3% to 6% inflation target. The SARB subsequently cut the repo rate by a further 25bps to 7.5%.
Foreign investors have sold SA equities to the sum of $3.8 billion since SA’s National Election last year. This, together with a wide range of economic variables, indicates that SA’s economic fundamentals remain weak.
The JSE All Share index was up 2.3% for the month, led by resources (+ 16%). The gold price was up more than 5% in dollar terms as tariff threats aid demand and uncertainty.
