World Shares Stumble as 2025 Begins with Market Uncertainty
World shares experienced a subdued start to 2025 and cautious market sentiment due to lingering uncertainties on the incoming U.S. Presidency and monetary policies. Having recorded an astonishing 16% annual growth in 2024, world shares declined over 2% in December and slid off an additional 0.05% in early European trading.
The pan-European STOXX 600 index fell by 0.25% in its first trading session of the year, and the French equities underperforming in Europe, with the CAC 40 down 0.9%. On the other hand, the US stock futures raised expectations, and S&P 500 futures surged by 0.6%, while Nasdaq futures were up by 0.8%. On the other hand, Chinese markets endured significant losses as disappointing factory data led the CSI 300 and Shanghai Composite indices to decline by 2.9 and 2.7, respectively.
Economic Concerns Weigh on Markets
Market fluctuations are due to policy risks in the United States concerning the trade tariffs and decisions surrounding the Federal Reserve. The Trump administration, elected recently, has indicated possible tariffs of over 60% for Chinese imports, which may alter world trade.
In China, President Xi Jinping dedicated his New Year speech to promoting proposals for proactive economic measures to boost growth in 2025. However, the latest purchasing managers’ index (PMI) data pointed to persistent challenges in the manufacturing sector. Analysts have warned that delays in carrying out stimulus measures may domestic economic vulnerabilities.
European oil and gas stocks found support as crude oil prices rose after Russia said it would cease gas supplies through Ukraine after Kyiv declined to renew a transit agreement. Benchmark Brent crude futures rose to $74.96 per barrel, and U.S. West Texas Intermediate crude increased to $72.02.
Currency and Commodity Movements
Commodity currencies showed a mixed picture, while the US dollar declined to 0.1% against its major counterparts. The euro was slightly up at $1.03615, close to the one-month low set earlier in the session. Anticipations also changed to interest rate forecasts. The markets expected the central banks to cut interest rates moderately.
Gold continued its strong performance, trading 0.5% higher at $2,636 an ounce after recording its largest annual gain since 2010. Meanwhile, European natural gas prices surged, with Dutch TTF contracts reaching a 14-month high at 50.85 euros per megawatt hour following Russia’s pipeline shutdown.
