US stocks rose, driven by strong bank earnings and value stocks.
Major banks like JPMorgan and Goldman Sachs reported robust Q4 profits, while rising oil prices boosted the energy sector. December’s core inflation rose just 0.2% m/m, the smallest increase since July, slowing to 3.2% y/y. While the Fed is unlikely to cut rates in January, the data signaled progress on inflation, raising hopes for potential cuts later in 2025. Retail sales grew 0.4% in December, missing forecasts, while jobless claims rose slightly to 217,000 but remained steady. Bond yields fell after the inflation report, boosting demand for Treasury, municipal, and corporate bonds.
European stocks climbed as cooling inflation raised hopes for further rate cuts.
The STOXX Europe 600 gained 2.37%, with France’s CAC 40 up 3.75%, Germany’s DAX rising 3.41%, and the UK’s FTSE 100 adding 3.11%. UK inflation slowed to 2.5% in December, increasing chances of a February rate cut, though GDP growth remained weak at 0.1%, and retail sales fell 0.3% in December. Germany’s economy contracted 0.2% in 2024 for the second consecutive year due to falling investments, despite a rebound in consumption. The European Central Bank (ECB) signaled cautious rate cuts, with a reduction to 2.75% expected in January, citing risks from global trade, geopolitical tensions, and eurozone fiscal policies
