Market Pulse - January 2025
- Monthly Market Pulse
- 10.02.25
Key themes
Global stock markets rebounded in January from losses in December, aided by a strong rally in European stocks amid a rosier growth outlook. US stocks rose overall, but AI bellwether Nvidia declined due to the release of a lower cost, less chip-intensive AI model from China’s DeepSeek.
German bond yields rose amid speculation of a potential easing of the ‘debt brake’ and possible increased debt issuance following elections in February.
The US dollar fell against the euro given initial perceptions of a softer US tariff stance post President Trump’s inauguration compared to rhetoric during the campaign.
Markets snapshot
The MSCI All Country World index was up by 3.3% (3.0% in euros) over the month.
This was driven by a strong rally in European stocks, with the MSCI Europe ex-UK rising by 7.1% (7.0% in euros) due to a better economic activity outlook and further expected ECB rate cuts.
The US rebounded from losses in December, with the MSCI USA index 3.0% higher (2.6% in euros), but there was volatility around tech stocks.
Emerging markets (EM) underperformed developed markets, as the threat of US tariffs weighed on sentiment, with the MSCI EM index rising by 1.6% (1.4% in euros) over the month.
Eurozone government bond returns were negative as a result of rising yields. The 10-year German bund yield was up by 11bps over the month to 2.46% due to the potential for increased debt issuance following Germany’s federal election on 23 February. The ICE BofA 5+ Year Euro Government bond index returned -0.3% in January.