Wall Street started the new year on a positive note, despite initial declines in Asian markets. Investors are looking ahead to potential tariffs from US President-elect Donald Trump, which could add to China’s economic concerns. In midday trading, the Dow Jones was up 0.2 percent and the tech-heavy Nasdaq Composite Index climbed about 0.6 percent.
This happened even though electric vehicle maker Tesla faced a roughly 5 percent drop after reporting its first yearly decrease in vehicle deliveries. The company attributed this largely to increased competition in China and other key markets. Patrick O’Hare, an analyst, noted in a pre-market commentary that “the stock market ended 2024 with a whimper, but it is poised to begin 2025 with a bang.”
European markets followed Wall Street’s lead.
Paris saw gains despite ongoing political uncertainty. London’s market closed up 1 percent, buoyed by rising commodity shares. Frankfurt finished 0.6 percent higher.
The euro fell to its lowest level against the dollar since November 2022, while the pound also dropped to an eight-month low after weak UK manufacturing data.
Wall Street starts year optimistically
Oil prices surged on hopes for rebounding demand.
Russ Mould, investment director at AJ Bell, commented that “January can be a testing time for markets, and that’s already been the case as investors worry about the impact of Donald Trump’s trade policies.” He noted that technology and industrial stocks were among the worst affected, dragged down by poor Chinese manufacturing data and geopolitical concerns. In Asia, the Hong Kong and Shanghai stock markets slumped more than 2 percent in early trading. Tokyo markets were closed for the day.
The US Federal Reserve is expected to cut interest rates less than previously forecasted this year, while the European Central Bank is anticipated to continue reducing rates amid economic weakness in Germany. Susannah Streeter, head of money and markets at Hargreaves Lansdown, said that “optimism about the strength of the mighty US economy remains buoyant for 2025.” She noted that growth has continued to outpace forecasts as both consumers and companies have shrugged off the impact of high interest rates. Despite a somewhat lackluster end to 2024 for equity markets, the Dow closed the year with an approximate gain of 13 percent.
The S&P 500 and the Nasdaq saw increases of over 23 percent and around 29 percent respectively, driven by a surge in technology stocks. Frankfurt’s DAX rose nearly 20 percent, as did Japan’s Nikkei. The FTSE 100 gained nearly 6 percent, though France’s CAC 40 was an outlier with a drop of 2.2 percent.
