Market developments
Equities: Earlier in the week, markets were shaken by news that a Chinese AI startup, DeepSeek, had developed a low-cost artificial intelligence model, raising fears about inflated valuations in the booming AI sector. However, investors regained confidence after major tech firms, including Apple and Meta, delivered reassuring earnings. Nvidia’s CEO met with Trump, fueling speculation about AI policy and trade relations. U.S. stock markets closed lower even as we saw strong earnings forecasts from tech giants.
Fixed Income: The Federal Reserve maintain interest rates steady between 4.25% and 4.5% in this week’s meeting, while the ECB and Bank of Canada both cut rates by 25bps, as expected. Investors found relief in the Federal Reserve’s preferred inflation measure aligning with expectations, despite inflation remaining above the 2% target. Overall, yields were lower this week, pushing bond prices higher.
Commodities: Gold prices hit new highs on Friday. The surge came after Trump said he would follow through on imposing 25% levies on imports from Canada and Mexico on Feb. 1. He also threatened China with tariffs, without specifying a level.