News Recap • Week 1 2025

Happy New Year, everyone! We completed another year and kicked off 2025 this week. NYE also meant that most markets were closed for part of the week and we didn’t get a tonne of big news. However, there’s always something happening in the financial markets. Let’s take a look at the numbers and the main stories.

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Market recap

Equities

• 🇺🇸 S&P 500 headed lower early in the week but recovered most of the losses with a strong rally on Friday, finishing the week down just 0.48%. The Nasdaq Composite showed similar action and ended 0.51% lower.
• 🇪🇺 STOXX 600 inched up by 0.2% for the week.
• 🇬🇧 FTSE 100 outperformed most of its peers with a 0.91% gain this week.
• 🇩🇪 DAX traded in a narrow range and closed the week 0.39% lower than where it started.
• 🇮🇳 Nifty 50 gained 0.8% as the Indian market attempts to resume its uptrend.
• 🇯🇵 Nikkei 225 was closed the entire week except Monday where it fell 0.96%.
• 🇨🇳 Hang Seng declined 1.64% and almost erased last week’s gain. The CSI 300 index plummeted 5.17% for its worst week in over two years.

Currencies & Commodities

• The dollar index (DXY) gained another 0.85% to 108.922, its highest level in over two years.
• The USD.GBP pair was one of the main contributors to the dollar’s strength, rising 1.28% for the week.
• The USD.EUR pair wasn’t far behind with a 1.11% gain for the week.
• And for my fellow Danes, 1 USD now costs 7.234 DKK.
• The dollar did decline a bit against the Japanese yen though, weakening 0.34% this week.
• The US dollar strengthened 0.81% against the Chinese yuan this week and is now just a fraction away from reaching a new 17-year high(!).
• Gold rose 0.65% for the week and continues to consolidate near record levels.
• The crypto market has gained 6.5% for the week as of Saturday morning (CET). Ripple (XRP) and Solana (SOL) are once again leading the way among the majors, up 16.3% and 13.6% respectively. Ethereum (ETH) has gained 7% while Bitcoin (BTC) is lagging with a 4.7% gain.

Other

• The VIX spiked early in the week but settled down and closed just 1.13% higher for the week.
• The 10-year US treasury yield took a break from its strong 3-week run, declining 0.58% to just over 4.6%. The 2-year followed with a 1.02% decline.

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US dollar at 2-year high

The US dollar index (DXY) topped 109.50 this week before pulling back to 108.92 on Friday. This marks another highpoint since the peak above 114 in the fall of 2022. And if we take out that brief period of time, the dollar hasn’t been this strong since 2002.

As with most assets, the price of a currency is defined by the supply and demand balance. Higher supply puts downward pressure on prices while increased demand pushes prices up. And there’s definitely been increased demand for the dollar lately due to the strong US economy and growth expectations, as well as higher rates.

The 10-year US government bond currently yields 4.60%. The 10-year EU bond yield, meanwhile, is only at 2.43%. A “risk-free” annual return of 4.6% makes US bonds a legit competitor to the equity market while the EU version will barely keep up with inflation.

Trade your euros, yen, yuan, or whatever currency you have for dollars and buy US government bonds. Higher demand for dollars drives up the price while doing the opposite to other currencies.

Assessing the implications

In oversimplified terms, a strong dollar is good for the local US economy and its consumers who benefit from cheaper imports and lower expenses when traveling. Non-US consumers and businesses experience the exact opposite.

On the other hand, a strong dollar hurts US companies that export to or operate in foreign countries. When they sell their goods or services in foreign currencies, they simply get fewer dollars in return when converting them to their base currency.

While I don’t think the current dollar level is anything to worry about, it’s worth following the development. It will eventually eat into US multi-nationals’ profits and hurt foreign businesses as well.

Furthermore, other countries may decide to intervene and strengthen their local currencies. The Bank of Japan did this in July, causing a big (but temporary) market crash.

It’s a complex topic and there’s a lot more to unpack. I will do a deeper dive into all of this in the near future.

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Mixed factory and services activity in China

China’s factory activity continued to grow in December, albeit at a slower pace than expected. The manufacturing index came in at 50.5, which still shows growth, but was significantly lower than the 51.7 measured in November and 51.5 expected for December.

Sales were dampened by falling export orders due to concerns about the trade outlook and increased tensions with the US after Donald Trump takes office.

Furthermore, China’s services activity jumped to a nine-month high in December, marking its longest growth streak since March 2023. Analysts point to the recent stimulus initiatives as a driver of increased local demand.

Speaking of which, the People’s Bank of China is reportedly preparing to cut interest rates even further in 2025 from the current 1.5% level. The country will also ramp up issuance of ultra-long bonds and efforts to boost local consumption.

None of this managed to bolster the stock market though. The mainland CSI 300 index plummeted 5.17% for its worst weekly performance in over two years. The Hang Seng held up significantly better but still declined 1.64% for the week.

China’s bond yields also continued their slump and hit new record lows this week. The 10-year yield declined to 1.598% while the 30-year dropped to 1.819%.

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Automakers report production and delivery numbers

First up, let’s talk Tesla. Tesla’s Q4 delivery numbers missed the mark, coming in at 495,570 vs 504,770 expected. The company delivered a total of 1,789,226 vehicles in 2024.

What’s most notable about that number is that it was lower than the 1,81 million delivered in 2023. This marked Tesla’s first ever annual drop in deliveries.

The stock fell more than 6% on Thursday after the report.

On a much brighter note, however, Tesla reported on Friday that its China sales rose 8.8% to a new record in 2024. Shares all of Thursday’s losses and then some on Friday. It’s still down 16% from the peak on December 18 though.

Meanwhile, Ford and General Motors reported their best annual U.S. new vehicle sales since 2019. GM sold more than 2.7 million vehicles, 4.3% more than a year earlier.

Ford reported sales of 2.08 million vehicles, up from just under 2 million last year. The two companies have had wildly different years on the stock market, however. GM gained an impressive 48% in 2024 while Ford declined by almost 19%.

Last but not least, we got Rivian. Rivian had a rough 2024 where it lost more than 43% of its value. And that’s after being down as much as 63% at the bottom in April. Fast forward to Friday, Rivian stock had its best day ever with a 24.5% pop after reporting production and delivery numbers in line with expectations.

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In other news

Macro

• A group of Swiss Bitcoin advocates made a proposal for the Swiss National Bank to hold part of its reserves in gold and bitcoin. The initiative now has 18 months to collect 100,000 signatures in order to be put to a public referendum.
• Bitcoin turned 16 on Friday. The very first block, aka the ‘genesis block’, was mined by Satoshi Nakamoto on January 3, 2009.
• Republican Mike Johnson was reelected as speaker of the House of Representatives, defeating Rep. Hakeem Jeffries of New York.

Other

• Shipments to China of foreign-branded smartphones fell by 47.4% in November from a year earlier, estimated at 3.04 million vs 5.769 million units.
• Joe Biden blocked Japanese Nippon Steel’s $15 billion takeover bid for U.S. Steel, seeing the latter as too important to national security and production supply to let it be acquired by a foreign entity.
• Nvidia wants to power humanoid robots, first up by releasing a new generation of compact computers called Jetson Thor in the first half of 2025.
• In other Nvidia news, the company finally closed its $700 million acquisition of Run:ai after overcoming some regulatory hurdles.
• Meanwhile, Alphabet is doubling down on its AI model ‘Gemini’. CEO Sundar Pichai reportedly told employees that 2025 will be a critical year for the company.
• Donald Trump asked the US Supreme Court to delay its TikTok ban scheduled for January 19, giving him time to negotiate a resolution after he takes office.
• Microsoft expects to spend $80 billion in fiscal 2025 on construction of data centers that can handle artificial intelligence workloads. More than half of that is planned to be spent in the US.
• US Surgeon General Vivek Murthy called for cancer risk warnings on alcoholic beverages, similar to the labels you’ll find on cigarettes. He cited new research that links alcohol to seven different types of cancer, saying that most people are unaware of the risk.

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