Omnis Weekly Market Update – 17th February 2025
Last week’s performance – major stock markets
| S&P 500 | 1.52% |
| Nikkei 225 | 0.93% |
| CSI 300 | 1.19% |
| Euro Stoxx 50 | 3.27% |
| FTSE 100 | 0.45% |
US stocks had a good run last week with the S&P 500 index finishing 1.5% higher. Stocks had their best day of the week on Thursday, largely in response to President Donald Trump’s decision to not introduce new global tariffs, instead signing an order that—following further study—could lead to the implementation of reciprocal tariffs on a country-by-country basis by April 1. While the news left some uncertainty, investors were encouraged as the move will further delay the implementation of additional tariffs and seemingly allow room for negotiation between the U.S. and its individual trade partners.
From an economic data standpoint, inflation data was released last week in the US which came in higher than expected. This fuelled concerns for interest rates to continue staying higher for longer. This was a slight negative for bond markets. Markets took this information and reassessed their expectations for interest rates to show only 1 full cut of 0.25% to happen this year in the US. However, its worth remembering that this data can be volatile, as we have seen over the last 18 months, and we can expect this number and the reality, to fluctuate over the year. We still believe bonds offer fair value at the moment, the biggest driver of bond returns is the income they distribute, which is at very attractive levels given these elevated interest rates we are seeing.
Europe was a standout performer last week rising 3.3%. The main driver for this uptick in stock prices was the news of delayed tariffs from the US. Europe has seen stock prices move lower as the prospect of tariffs has been spoken about, and this news of a potential delay has allowed stock prices to recover.
It was a busy week in the UK last week, where the FTSE 100 ended 0.5% higher. Britain’s economy unexpectedly grew by 0.1% in the final quarter of last year, according to the Office for National Statistics (ONS). Analysts had forecast gross domestic product (GDP) would shrink by 0.1%, but growth of 0.4% in December lifted the quarter. The ONS said growth in services and construction was partly offset by a drop in production. GDP grew 0.9% in 2024, up from 0.3% in 2023.
Separately, the Bank of England cut interest rates last week by 0.25%, taking them now to 4.5%. However, Bank of England (BoE) Chief Economist Huw Pill told a business group that policymakers must still be cautious about cutting interest rates because of continuing strong pay growth. In an interview with Reuters, he added that more work had to be done to bring down inflation, “and that means we can’t just remove all restriction overnight, cut rates aggressively, etc.” Fellow Monetary Policy Committee (MPC) member Catherine Mann, previously one of the most pro higher interest rate members of the MPC, argued that the BoE should have cut rates by half a percentage point at its last meeting instead of a quarter point because a weakening labour market and slowing consumer demand were helping to subdue inflation.
