Davos is the highest town in Europe. It’s not only famous for its 300km of ski slopes, but also hosts the annual meeting of the World Economic Forum every January. This year’s theme is “Collaboration for the Intelligent Age” with a large emphasis on the rapid advancements in artificial intelligence, cryptocurrency and blockchain.
There were 24.6 million watching as US President Donald Trump was inaugurated on Monday afternoon. Mr Trump got straight to work on his first day, signing 46 executive orders and actions, which included policies on border security, energy, gender rights and pardoning the January 6 Capitol rioters. “Trump tariffs” have been trending buzzwords over the last months, but Trump did not sign any orders imposing tariffs on any foreign nations. He did speak remotely at Davos on Thursday, encouraging businesses to “come and make your products in America, and we will give you among the lowest taxes of any nation”.
US initial jobless claims were released on Thursday, and the number of Americans filling for unemployment benefits rose slightly from last week by 6,000 to 223,000. Markets had forecast 200,000 claims but the numbers still seem to be affected by the rampant wildfires that occurred in California. The US labour market was resilient over 2024 and has continued its strength this year. The US Federal Reserve will take all factors in account ahead of their meeting next week. There is not expected to be any change in interest rates with markets projecting the first rate cut to arrive in May.
The highly anticipated Season 2 of The Night Agent was released this week but that’s not the only reason Netflix is in the weekly. Netflix shares soared to an all-time high just under $1,000 as they reported $10.5bn in revenue and added 18.9m users over Q4 2024. This included the streaming of former heavyweight Mike Tyson and influencer Jake Paul’s boxing match, as well as two NFL games on Christmas day. Following the earnings reports, Netflix announced that they will be raising subscription prices by one dollar in the US, Canada and Portugal.
In the UK, wage growth figures for the three months to November 2024 rose in both the private sector and the overall economy. For the private sector, growth increased to 6% from 5.5% in October, while for the economy as a whole it rose to 5.6%. The stubbornly strong wage growth remains an ever-present issue for monetary policy makers. The UK’s unemployment figures for November 2024 were also released and rose unexpectedly to 4.4%. Following the Chancellor’s autumn budget, where it became apparent businesses would bear the brunt of new tax measures, markets expect wage growth figures and job vacancies to dip over December.
The Bank of Japan (BoJ) started the year with a 25bps (0.25%) raise to interest rates, bringing rates to 0.5%, the highest level since the 2008 global financial crisis. Inflation figures for December rose to a staggering 3.6% up from 2.9% in November, the highest reading since January 2023. As a result, the vote was almost unanimous, with eight of the nine policymakers voting to hike. BoJ Governor, Mr Ueda stated the central bank will continue on the rate hike path until they see inflation trend towards the 2% target.
On a positive note, equities have been strong with the S&P 500 and FTSE 100 reaching all-time highs. We expect next week to be as busy as this week, with inflation reports from the US and Germany and central bank decisions from the US Federal Reserve, European Central Bank and the Bank of Canada.
Nathan Amaning, Investment Analyst
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