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Global Investment MattersEquity Market Insights
February 4 2025

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Equity Markets Weekly Data - Week Ending January 31 2025

Weekly Market SnapshotsFebruary 4 2025

The unveiling of DeepSeek's advanced AI model in China led to significant global market volatility, particularly impacting technology stocks and prompting a reassessment of competitive dynamics in the AI sector.

USA

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• Nasdaq Composite fell over 3% as Chinese startup DeepSeek unveiled a low-cost AI model, challenging US tech dominance and leading to significant declines in major tech stocks, including a 15% one-day drop in Nvidia shares.

• The Trump administration confirmed the implementation of 25% tariffs on imports from Mexico and Canada, and a 10% tariff on Chinese goods, citing concerns over immigration and drug trafficking.

• The Federal Reserve held its policy rate steady at a range of 4.25%-4.5%, with discussions emphasising the importance of rate stability over immediate cuts, given the economy's continued strong growth.

• Despite market volatility, several US companies reported robust earnings, contributing to investor optimism and partially offsetting concerns over international trade tensions.

UK

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• AstraZeneca announced the cancellation of its £450 million expansion project in Liverpool, attributing the decision to reduced government funding under the Labour administration.

• The FTSE 100 index had its strongest month since November 2022, buoyed by healthy earnings reports and interest rate cut expectations.

• UK house prices showed resilience, rising despite ongoing affordability pressures, indicating sustained demand in the housing sector.

• The UK's trade dynamics faced potential challenges due to the US imposing tariffs on Canada and Mexico, with concerns about possible ripple effects on global trade.

EUROZONE

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• European markets experienced another weekly gain, with the Euro Stoxx 600 rising by 1.8%, influenced by US policy changes under President Trump, including a focus away from European trade tariffs.

• The European Central Bank cut interest rates from 3% to 2.75% and left the door open for further rate cuts, contrasting with the US Federal Reserve's stable approach, contributing to a weaker euro and favourable export conditions.

• The EU proposed new customs reforms to hold e-commerce platforms like Temu, Shein, and Amazon liable for unsafe or illegal products sold online, aiming to enhance consumer protection.

• European tech stocks were affected by global market reactions to DeepSeek's AI developments, leading to a reassessment of valuations within the sector.

REST OF THE WORLD

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• Despite global market volatility, China's mainland blue-chip stocks showed resilience, with equities adding 1.1%, even after data indicated a surprise contraction in manufacturing.

• Chinese startup DeepSeek launched a free, open-source AI model rivalling Western counterparts, leading to significant impacts on global tech markets and challenging US tech dominance.

• The Japanese yen experienced a strong performance, driven by expectations of rate hikes from the Bank of Japan, influencing currency markets.

• Crude oil prices declined after President Trump reiterated calls for Organisation of the Petroleum Exporting Countries (OPEC) to reduce prices, with Brent crude futures dropping 2.2% to $78.5 a barrel.

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