Despite the strong news in January, the financial markets ended this bumpy month in a positive development (MSCI Word 2.91%; MSCI EM 1.13%)*. From gold to government bonds to equities in the US and emerging markets, they were able to gain despite escalating trade disputes, uncertain interest rate developments and the DeepSeek-AI-shock. The weaker dollar had a positive effect on the valuation of equities, but the higher yields driven by increasing inflation fears had a dampening effect.
While President Biden imposed new export control regulations on a list of Chinese military and tech companies in the last days of his term in office, the first days of Trump’s second term brought a series of executive orders. The foreseeable changes in the areas of trade (tariff increases), immigration (more restrictive), taxes (reductions), regulation (easing), energy (fossil fuel extraction) and foreign policy (unilaterality) have become more concrete. However, investors seemed optimistic about Trump’s return to the White House, with the S&P500 ending the month significantly positive. Technology stocks came under heavy pressure after China unveiled its new AI model DeepSeek, which could challenge the competitiveness of existing AI companies due to its efficiency and lower costs. China’s technological catch-up is surprising for the financial world because, on the one hand, China was far behind technologically and, on the other hand, because the US has done everything it can to slow it down in China. The US economy is booming and inflation is above the central bank’s target. The US labor market and consumption continue to be strong. Earnings growth has continued to bring robust price gains to US growth despite higher interest rates. In the eurozone, economic and corporate growth remains low but sustainable. Election in Germany and the budget crises in France are in focus. In this environment, the ATX index developed in line with the international stock market and showed positive performance. In addition to the reporting season, topics such as the effect of the Strabag court decision in Russia and the formation of the Austrian government dominate.
Despite geopolitical risks, the environment for risky asset classes such as equities remains attractive.
*in Euro
Author:
Gabriela Tinti, CPM
Head of Desk Equity AT
3 February 2025
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Note
Wiener Börse AG would explicitly like to point out that the data and calculations given in this report are historic values, which do not permit any conclusions as regards future developments or value stability. Price fluctuations and loss of capital are possible in securities trading. The contribution is the personal opinion of the analyst and does not constitute a financial analysis or a recommendation for investment by the exchange operating company, Wiener Börse AG.