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What happened last week?
Equity markets rallied on Tuesday and Friday to deliver results that put all indexes back into positive territory for 2025. The Dow leapt over 3½ percent besting the 1 percent of the TSX, the 2½ percent of the NASDAQ and the S&P 500’s nearly 3 percent. News on U.S. inflation, early American fourth quarter corporate results, and China’s Gross Domestic Product (GDP) provided the energy for the uptick.
The U.S. Bureau of Labor Statistics (BLS) released the Consumer Price Index (CPI) for December. Consumer prices rose 0.4 percent in December, and the all-items index increased by 2.9 percent before seasonal adjustment. Over 40 percent of the month’s price increase is attributed to the 2.6 percent increase in the price for energy, including a 4.4 percent increase in the price for gasoline in December. The annual rate for Core CPI, which excludes more volatile food and energy, was 3.2 percent and slightly better than expectations of 3.3 percent. BLS CPI release CNBC and December 2024 CPI
As of Friday, only 9% of S&P 500 companies have reported fourth quarter results, but the announcements to-date bode well for the current earnings season. Companies have reported positive earnings, earnings per share and revenue surprises above 10-year historical averages. If the results continue, it will be the seventeenth consecutive quarter with revenue growth. The Financials sector was the largest contributor to the overall earnings growth rate. FactSet release
China’s economy expanded by 5.4% in the in fourth quarter, exceeding expectations. The full year GDP reached 5% as stimulus measures delivered results aligned with overall goals. Future GDP growth may be hampered by tariffs imposed by President Trump, and the effects would likely be felt after the first quarter and beginning in the second half of the year. CNBC and China GDP
Additionally, the European Central Bank released the meeting minutes from their mid-December interest rate announcement. The complexity of the deliberations is well represented. ECB minutes
What’s ahead for this week and beyond?
In Canada, consumer, producer and raw materials inflation data, retail sales, manufacturing sales, new housing price index will be reported. The Bank of Canada will release its Business Outlook Survey.
In the U.S, Monday is Martin Luther King, Jr. Day, and begins a very light week for American economic announcements, which would have been overshadowed by Monday’s holiday and inauguration of President Trump.
Globally, Japan’s inflation, machinery orders, capacity utilization, industrial production, trade balance, and a Bank of Japan interest rate decision, Eurozone’s construction output, ZEW economic sentiment, and U.K.’s employment report will be released.
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