Economy

LONDON/SINGAPORE (Reuters) -The dollar hit new multi-month highs against the euro and the pound on Thursday, the first day of 2025 trading, as it built on last year’s strong gains on expectations U.S. interest rates will remain high relative to peers. The euro fell to as low as $1.0314, its lowest since November 2022, down around 0.3% on the day. It is now down nearly 8% since its late September highs above $1.12, one major victim of the dollar’s recent surge. Traders anticipate deep interest rate cuts from the European Central Bank in 2025, with markets pricing in at least four 25 basis point cuts, while not being certain of even two such moves from the U.S. Federal Reserve. The dollar was hitting milestones across the board and the pound was last down 0.65% at $1.2443, its lowest since April, with its fall accelerating after it broke through resistance around $1.2475. “It’s more of the same at the start of the new calendar year with the dollar continuing to extend its advances in anticipation of Trump putting in place friendly policies at the start of his term,” said Lee Hardman, senior currency analyst at MUFG.U.S. President-elect Donald Trump’s policies are widely expected to not only boost growth but also add to upward price pressure. That will lead to a Fed cautious about cutting rates too much further, in turn underpinning U.S. Treasury yields and boost dollar demand.A weaker growth outlook outside the U.S., conflict in the Middle East and the Russia-Ukraine war have also added to demand for the dollar. The dollar also reversed an early loss on Thursday to climb against the Japanese yen, and was last up 0.17% at 157.26. It reached a five-month high above 158 yen in late December, potentially putting pressure on the Bank of Japan, which is expected to raise interest rates early this year, but possibly not immediately. “If dollar/yen were to break above 160 ahead of the next BOJ meeting, that could be a catalyst for the BOJ to hike in January rather than wait until March,” said Hardman. “Though for now markets are leaning towards March after the dovish comments from (governor Kazuo) Ueda at his last press conference.” Even those who are more cautious about sustained dollar strength think it could take a long time to play out. “The dollar may be vulnerable – but only if the U.S. data confound market expectations that the Fed doesn’t cut rates more than once in the first half of this year, and not by more than 50bp in the whole of 2025,” said Kit Juckes chief FX strategist at Societe Generale (OTC:SCGLY) in a note. “There’s a good chance of that happening, but it seems very unlikely that cracks in U.S. growth will appear early in the year – hence my preference for taking any bearish dollar thoughts with me into hibernation until the weather improves.” China’s yuan languished at 14-month lows as worries about the health of the world’s second-biggest economy, the prospect of U.S. import tariffs from the Trump administration and sliding local yields weighed on investor sentiment. [CNY/]Elsewhere, the Swiss franc, another victim of the recent dollar strength, gave back early gains to last trade flat at 0.90755 per dollar. CHF=EBS > The Australian and New Zealand dollars, however, managed to break away from two-year lows touched on Tuesday. The Aussie was 0.36% higher at $0.6215 having dropped 9% in 2024, its weakest yearly performance since 2018. [AUD/]The kiwi rose 0.47% to $0.5614. More

At 05:23 a.m. ET on Thursday, Dow E-minis were up 198 points, or 0.46%, S&P 500 E-minis were up 34 points, or 0.57%, and Nasdaq 100 E-minis were up 160.25 points, or 0.75%.Wall Street’s main indexes logged stellar gains in 2024 and the benchmark S&P 500 notched its best two-year run since 1997-1998.The main catalysts were the Fed easing interest rates for the first time in four years, investor hype around artificial intelligence and expectations of companies potentially benefiting from President-elect Donald Trump’s policies.Equity valuations are sitting above their long-term averages, but could be justified if corporate profits stay strong. Earnings per share for S&P 500 companies are projected to rise 10.67% in 2025, according to data compiled by LSEG.Brokerages expect the S&P 500 to touch levels between 6,000 and 7,000 points this year, up from Tuesday’s close of 5,881.However, 2024’s surge ended with the benchmark index and the Dow posting monthly declines in December as markets priced in Trump’s proposals on corporate tax cuts, loose regulations, stricter immigration laws and tariffs to be inflationary and likely to slow down the pace of the Fed’s monetary policy easing this year.With inflation still above the 2% target, traders see the central bank leaving interest rates unchanged at its meeting later this month, and expect borrowing costs to be lowered by a total of 50 basis points by year-end, according to the CME Group’s (NASDAQ:CME) FedWatch Tool.Markets also weighed the likelihood that the new administration could issue more debt to finance its policies, which could worsen market volatility. The yield on the 10-year benchmark Treasury note hovered near its eight-month high. [US/]”Investors are hopeful that a goldilocks scenario will be the story of 2025, amid promises of lower taxes and the deregulation under a second Trump presidency,” said Susannah Streeter, head of money and markets at Hargreaves (LON:HRGV) Lansdown.”But with fresh trade wars looming, if the worst of the tariff threats are imposed, the bears could be back to disrupt what has been a fairytale performance for the U.S. stock market.”On Thursday, traders will be eying a report on weekly jobless claims, followed by a final estimate on manufacturing activity in December, but the main focus will be a slew of labor market data next week.In premarket trading, Tesla (NASDAQ:TSLA) added 1.3% ahead of the release of its quarterly deliveries numbers. Among other megacaps, Meta (NASDAQ:META) and Amazon.com (NASDAQ:AMZN) added 0.8% each, while chip stocks Nvidia (NASDAQ:NVDA) and Broadcom (NASDAQ:AVGO) climbed 1% and 1.9%, respectively.These stocks were among the ones behind the S&P 500 Growth index’s 35% jump in 2024. The Value index rose 9.8%.SoFi Technologies (NASDAQ:SOFI) dropped 2.4% after brokerage KBW downgraded the stock to “underperform” from “market perform”. In a week shortened by Wednesday’s New Year’s holiday, trading volumes are expected to be light. More

A manufacturing slowdown in the euro zone intensified last month, with scant signs of a rebound anytime soon as the bloc’s three largest economies – Germany, France and Italy – remained stuck in an industrial recession.Manufacturing purchasing managers’ indexes for December from across Asia published on Thursday showed factory activity slowing in China and South Korea although there were some signs of a pickup in Taiwan and Southeast Asia.U.S. President-elect Trump has pledged to impose tariffs across the board, with bigger barriers on imports from three major trading partners – Mexico, Canada and China.The Caixin/S&P Global manufacturing PMI for China nudged down to 50.5 in December from 51.5 the previous month, undershooting analysts’ forecasts and indicating activity grew only modestly. Gabriel Ng, assistant economist at Capital Economics, said Beijing’s increased policy support in late 2024 provided a near-term boost to growth, which is likely to be seen in other fourth quarter indicators.”And this improvement should carry over into early 2025,” Ng said. “But the boost probably won’t last more than a few quarters, with Trump likely to follow through on his tariff threat before long and persistent structural imbalances still weighing on the economy.”In Europe, HCOB’s euro zone manufacturing Purchasing Managers’ Index, compiled by S&P Global, dipped to 45.1 in December, just under a preliminary estimate and further below the 50 mark separating growth from contraction, where it has been since mid-2022.”Output in the euro zone remained under pressure at the end of 2024, held back by a continued slide in new orders in both the domestic market and in exports,” noted Claus Vistesen, chief euro zone economist at Pantheon.Factory activity in Germany fell deeper into contraction territory last month on sharper declines in output and new orders while activity in France declined at the fastest pace in more than four years.In Britain, outside the European Union, factory activity shrank at the quickest rate in 11 months and firms reduced staffing levels due to higher taxes and weak foreign demand.Elsewhere in Asia, South Korea’s PMI showed activity shrinking in December and the decline in output gathering pace, a stark contrast to better-than-forecast export growth figures released on Wednesday.South Korea’s central bank governor said on Thursday the pace of monetary policy easing would need to be flexible this year due to heightened political and economic uncertainty.In addition, South Korea is dealing with the hit to business confidence from a national political crisis after a failed bid by President Yoon Suk Yeol last month to impose martial law.Earlier in the week, Japan’s PMI showed activity shrinking in December, albeit at a slower pace. Malaysia and Vietnam also reported declines in factory activity. India’s manufacturing activity grew at its weakest pace for 2024, its PMI showed, although the South Asian economy’s factories continued to outperform regional peers, reporting uninterrupted expansion for the past three-and-a-half years. More

The short-term repo allows banks to borrow money from the BoE – usually for a seven-day period – in exchange for high-quality collateral and is designed by the BoE to keep interbank lending rates close to its policy interest rate.The highest amount allotted in the repo was 46.743 billion pounds on Oct. 24.($1 = 0.8033 pounds) More

This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereGood morning and happy New Year. Here are today’s highlights: A warning about the impact of Trump’s protectionist policies US authorities investigate an “act of terrorism” in New OrleansAfrica’s newest stock exchange prepares to open Ten tips to get your personal finances into shapeDonald Trump’s vision to reshape the world’s largest economy through protectionist policies that put “America First” will damage growth, according to economists polled by the Financial Times, in contrast to investors who believe the US president-elect’s plans are good for the economy.Surveys of more than 220 economists in the US, UK and Eurozone on the economic impact of Trump’s return to the White House showed most respondents believed his protectionist shift would overshadow the benefits of what the president-elect has dubbed “Maganomics”.Many economists in the US, who were polled jointly by the FT and the University of Chicago’s Booth School of Business, also believe a new Trump term will spur inflation and lead to more caution from the Federal Reserve on cutting interest rates.Some content could not load. Check your internet connection or browser settings.However, most economists — including at the IMF, the OECD and the European Commission — forecast stronger growth in the US than in Europe in 2025.Overall, more than half of the 47 economists polled specifically on the US economy expect “some negative impact” from the Trump agenda, and another tenth forecast a “large negative impact”. On the other hand, a fifth of those surveyed expect a positive impact.The gloom among economists contrasts with investors’ optimism over Trump’s second term. Read the full results of the survey. We will be publishing a special edition of FirstFT Americas in the run-up to Donald Trump’s inauguration and we need your help. Please email any questions you have about the incoming administration to firstft@ft.com and remember to include your name and location details for publication. Also, there is a subscriber-only webinar on January 23 to discuss what Trump’s return to the White House means for America and the world. Register for free here. Five more top stories1. The FBI is investigating an “act of terrorism” after a man drove a pick-up truck into a large crowd in the heart of New Orleans yesterday. The agency identified Shamsud-Din Jabbar, a 42-year-old US citizen from Texas, as the main suspect and said it did not believe he acted alone. US President Joe Biden said authorities were also investigating the explosion of a Tesla Cybertruck outside the Trump hotel in Las Vegas to see if the two incidents were related. Here’s more on the twin investigations.2. Nvidia invested $1bn in artificial intelligence companies in 2024, as it emerged as a crucial backer of start-ups trying to gain from the AI revolution the group’s chips are powering. The semiconductor group, which surpassed a $3tn market capitalisation in June, spent a total of $1bn across 50 start-up funding rounds and several corporate deals in 2024. Read more on Nvidia’s investments. 3. Banks are on course to generate their highest annual trading revenues since 2010, according to estimates from Coalition Greenwich, an industry research group. The industry is expected to bring in almost $225bn in trading revenues in 2024 as volatility around the US election and the unwinding of the so-called yen carry trade helped bolster business. 4. European scientists have started work on a project to create simple forms of life from scratch in the lab by using inanimate chemicals that they hope will divide and show “Darwinian evolution” within six years. The “MiniLife” project is sponsored by the European Research Council and plans to capitalise on theoretical and experimental advances in the fast-growing field of synthetic biology. Read more about how the project works. 5. Russian gas flows through Ukraine stopped in the early hours of yesterday after a transit deal between the two countries expired in the wake of Moscow’s full-scale invasion. The pipeline was one of the last two routes still carrying Russian gas to Europe, nearly three years into the full-scale war. EU countries will lose about 5 per cent of gas imports in the middle of winter.What to watch in 2025© FT montage/James FergusonFinancial Times reporters consider the rise of “sovereign” artificial intelligence, whether the “masters of the universe” will be investing your pension savings and the threat looming over the luxury goods sector, in our survey of business trends to watch in the year ahead.We’re also reading . . . ‘The mother of all stress tests’: Donald Trump has consistently vowed to use the tools of US justice to settle scores with enemies. He should be taken literally as well as seriously, writes our editorial board. Crypto’s golden era: The sector expects lighter regulation and wider adoption under Donald Trump, but some worry about systemic risks.Financial to-do list: From money-saving work perks to investments and tax planning, Claer Barrett has 10 tips to get your finances in shape this new year.Chart of the daySome content could not load. Check your internet connection or browser settings.Later this month Ethiopia will open its first stock market since the last days of emperor Haile Selassie, a milestone for one of the poorest countries on Earth. The opening of the Addis Ababa exchange is part of efforts by Prime Minister Abiy Ahmed to modernise the economy of Africa’s second-most populous nation following a devastating civil war that killed at least 600,000 people. Take a break from the newsThe FT’s critics pick the most anticipated hot tickets in 2025, from film, theatre, dance and TV to art exhibitions, games, pop and classical music.© ​Kerry James Marshall/Jack Shainman GalleryThank you for reading and remember you can add FirstFT to myFT. You can also elect to receive a FirstFT push notification every morning on the app. Send your recommendations and feedback to firstft@ft.comRecommended newsletters for youOne Must-Read — Remarkable journalism you won’t want to miss. Sign up hereNewswrap — Our business and economics round-up. Sign up here More

Insurers have consistently raised rates in recent years in response to losses from wars and natural catastrophes, and due to inflationary pressures.This has made them profitable, which has encouraged additional players into the market, pushing down prices.Reinsurance rates also fell on Jan. 1, the industry’s preferred policy renewal date, with global property catastrophe reinsurance rates down by 8%, Howden said. Reinsurers insure the insurers, and January reinsurance renewals typically set the trend for the following year’s insurance rates.”Our clients are beginning to see relief from the pricing pressures of the last three years,” said Tim Ronda, chief executive of Howden Re, Howden’s reinsurance business.Global property catastrophe reinsurance rates fell 5% to 15%on Jan. 1 for insurers’ client portfolios that have not suffered losses, reinsurance broker Guy Carpenter, a unit of Marsh McLennan (NYSE:MMC), said this week.However, Howden said this year could be volatile for insurers as they absorb most of the losses from natural catastrophes, such as hurricanes and wildfires themselves, with reinsurers continuing to limit the amount of cover they provide. More

Apple (NASDAQ:AAPL) is offering discounts on its latest iPhone models in China, a rare move that points to rising competition from domestic rivals in the world’s largest smartphone market.The promotion runs from Jan. 4-7, according to the company’s website, and applies to several iPhone models.Apple is grappling with declining market share in the important Chinese market, with competition from local manufacturers becoming more intense.Huawei has emerged as a particularly strong challenger, and it cut the prices of a variety of high-end devices, including mobile phones, over the weekend on one of China’s leading e-commerce platforms.Apple briefly fell out of China’s top five smartphone vendors in the second quarter of 2024 before recovering in the third quarter. That said, its smartphone sales in China still slipped 0.3% during the third quarter from a year earlier, while Huawei’s sales surged 42%, according to research firm IDC.US stock futures rose Thursday, as 2025 started with positive momentum following strong gains in the previous year. By 03:50 ET (08:50 GMT), the Dow futures contract was up 140 points, or 0.3%, S&P 500 futures climbed 30 points, or 0.5%, and Nasdaq 100 futures rose by 140 points, or 0.7%.The major averages handed back some gains in the final days of 2024, but still ended with solid returns. The S&P 500 surged 23% last year, the 30-stock Dow Jones Industrial Average added nearly 13%, and the tech-heavy Nasdaq Composite outperformed with a 29% advance.The US stock markets could struggle to continue posting such strong gains in 2025 given the Federal Reserve has signaled a more cautious stance to cutting interest rates.The holiday-shortened week has been light on economic data, but Thursday will bring a look at weekly jobless claims as well as the S&P Global manufacturing PMI data for December, ahead of next week’s monthly official jobs report.Chinese manufacturing activity grew in December, but at a slower than expected rate, suggesting recent stimulus measures are struggling to boost the second largest economy in the world. The Caixin manufacturing PMI grew 50.5 in December, compared to expectations of 51.6 and the prior month’s reading of 51.5. The private survey comes just days after government PMI data also showed the manufacturing sector expanded in December, but at a slightly slower than expected pace.The Caixin reading differs from the official reading in its scope, wherein the government survey focuses more on larger, state-run enterprises in the north, while the Caixin data covers smaller private companies in the south. Investors usually use both readings to gain a broader picture of the Chinese economy. Beijing has doled out a slew of stimulus measures since late-September, but is still expected to announce more hefty measures in 2025 in the face of increased trade headwinds as Donald Trump returns to the White House.Trump has vowed to impose steep trade tariffs on China, which could bode poorly for the world’s second-largest economy as it struggles to shore up growth. UK house prices rose in December, according to mortgage lender Nationwide, as the country’s property market upswing continued.House prices jumped by 0.7% in monthly terms during December, following a 1.2% increase in November, Nationwide said. The resilience of the UK housing market has surprised many given indications of weakening activity across the wider economy, with prices ending the year 4.7% higher than their level of December 2023, up from 3.7% in November – the highest annual growth rate since late 2022.”Mortgage market activity and house prices proved surprisingly resilient in 2024 given the ongoing affordability challenges facing potential buyers,” said Robert Gardner, chief economist at Nationwide.Crude prices edged higher Thursday, helped by declining US oil inventories while traders cautiously eyed an economic recovery in China, the largest importer in the world.By 03:50 ET, the US crude futures (WTI) climbed 0.4% to $71.98 a barrel, while the Brent contract rose 0.3% to $74.87 a barrel.China’s Xi Jinping said on Tuesday in his New Year’s address that the country would implement more proactive policies to promote growth in 2025.China’s factory activity grew in December, according to the private-sector Caixin/S&P Global survey on Thursday, but at a slower than expected pace. This echoed Tuesday’s official survey, and suggested policy stimulus is gradually trickling into the second largest economy in the world.The American Petroleum Institute reported on Tuesday that US oil inventories fell by 1.4 million barrels last week.Official data from the Energy Information Administration is due later on Thursday, and a drop in US oil inventories tends to indicate an increase in demand for crude oil. More