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US President Donald Trump’s remarks and executive orders have influenced global market trends this week. Stocks extended their rally on broad-based gains globally, with both European and US markets reaching new highs. In currencies, the US dollar weakened, allowing other G-10 currencies to strengthen. Commodities were mixed, with gold nearing an all-time high on a softened dollar and mounting haven demands, while crude oil and gas prices fell due to Trump’s stance on increasing US oil production and urging OPEC+ to lower prices. Bitcoin hit a new high before retreating following a disappointing executive action from President Trump.

Despite the prevailing bullish sentiment, investors remained cautious about a potential global trade war stemming from US President Trump’s sweeping tariff threats. Uncertainty also persists regarding the global inflation outlook, as tariffs could increase import costs for major economies. US government bond yields rose slightly throughout the week despite Trump’s call to lower global interest rates. In contrast, benchmark government bond yields in the eurozone declined over the week, raising doubts about how long the euro can maintain its rebound against the dollar. These divergent movements in bond yields suggest that the European Central Bank (ECB) may continue cutting interest rates to counteract the negative effects of potential US tariffs.

Europe

Major European benchmarks rallied throughout the week, with the pan-European Stoxx 600 Index up 1.84%, the DAX rising 2.43%, the CAC 40 climbing 2.37%, and the UK’s FTSE 100 gaining 0.71% week to week. Both the Euro Stoxx 600 and Germany’s DAX repeatedly reached new highs.

Most sectors in the Euro Stoxx 600 posted gains, led by industrial stocks. Trump’s call for increased European defence spending caused the sector to surge by more than 4% over the week. Airbus shares rose 6.9%, and Rheinmetall surged 11% over the past five trading days. Additionally, Siemens Energy shares soared more than 10% this week following Trump’s announcement of a $500 billion (€480 billion) investment in artificial intelligence infrastructure in the US. The German energy company anticipates a “massive tailwind” as it manufactures equipment ranging from gas and wind turbines to power network components.

European luxury goods stocks also performed strongly amid Trump’s less aggressive tariffs on China and Beijing’s additional stimulus measures. Positive earnings from Adidas boosted sentiment in the sector, with the German apparel maker’s shares rising 6.32% for the week. Over the week, LVMH advanced 4.43%, Hermès climbed 6.89%, Richemont gained 7.28%, and Kering rose 3.39%.

In other sectors, financial and technology shares also benefited from Trump’s policy stance, gaining 3% and 0.66%, respectively, on a weekly basis. Trump urged banks to loosen regulations and collaborate with tech giants to invest billions in developing AI technology.

Wall Street

US stock markets extended robust weekly gains following Trump’s inauguration. Over the past five trading days, the Dow Jones Industrial Average rose 2.48%, the S&P 500 gained 2.04% to a new high, and the Nasdaq Composite advanced 2.16%.

In the S&P 500, ten out of eleven sectors posted weekly gains, led by the industrials and technology sectors, which rose 4.18% and 3.69%, respectively. The gains were driven by President Trump’s remarks about building the US AI infrastructure. Energy was the only sector in negative territory, falling 0.71% for the week due to declining energy prices.

The Magnificent Seven stocks were in divergent movements on a weekly basis, with Nvidia surging 8%, Amazon jumping 5.4%, Microsoft rising 4.8%, Meta up 3.13%, and Alphabet climbing 1.32%, while Apple shares fell 6% following a report that iPhone shipment slid in China, and Tesla’s stock slipped 3.7%.

On the earnings front, Netflix reported strong quarterly results, driving its share price up 16% for the week to a record high. The streaming giant’s global subscribers reached 302 million, with sales revenue rising 16% year-on-year.

Asia

The Bank of Japan raised its interest rate by 25 basis points to 0.5%, the highest level since 2008, as expected, which strengthened the Japanese yen. The BOJ significantly increased its core inflation outlook for 2025 to 2.4% from 1.9% and indicated further rate hikes this year. Japan’s core CPI for December rose to 3% year on year, up from 2.7% in November. The USD/JPY pair fell 0.6% to just above 155 at 5:20 am ECT, a key technical support level. The Japanese benchmark Nikkei 225 declined following the decision but remains up 3.9% for the week.

Chinese markets rebounded from an initial drop after the Chinese government announced a series of measures to support its stock markets. Officials unveiled plans to increase the amount of pension funds that can be invested in A-shares, companies based in mainland China. The Hang Seng Index rose more than 2%, while the China A50 gained 0.5% for the week.