China’s economy showed promising signs in early 2025, with retail sales rising 4%, driven by the government’s strong efforts to boost domestic consumption and mitigate trade tensions with the US. Industrial production also grew by 5.9%, and fixed asset investment exceeded expectations with a 4.1% increase, adding a positive momentum to the outlook.
On Friday, Chinese policymakers lowered their inflation target to around 2%. By Monday, the National Bureau of Statistics reported that February’s Consumer Price Index (CPI) had fallen 0.7% year over year, with core inflation—excluding food and energy—declining by 0.1% last month.
China’s Caixin manufacturing PMI climbed to 50.8 on Monday, marking its strongest expansion in three months and exceeding expectations. Since last October, the private-sector PMI has consistently stayed above the 50-point threshold that distinguishes growth from contraction.
This week has been relatively quiet for financial markets, but there are signs of renewed momentum in Europe’s luxury goods sector which, after a period of sluggish performance, appears to be enjoying moderate revival.
This week, the spotlight was on Ukraine-Russia peace talks, as US and Russian officials met in Saudi Arabia. The US administration said it would hold direct talks with Russian President Vladimir Putin to end the war.
Speaking to European Union lawmakers on Monday, ECB President Christine Lagarde indicated that inflation in the Euro Area appears on track to reach its 2% target in the coming months.
Stocks slipped at the start of the week as investors reacted to Donald Trump’s tariffs.
On Monday, a groundbreaking development from a Chinese AI startup sent shockwaves through U.S. stock markets.
On Monday, US President Trump was re-elected and sworn into office. In his inaugural address, he emphasised priorities such as strengthening immigration and border security, expanding the United States’ presence in space, and introducing tariffs to protect American businesses.
UK headline inflation eased to 2.5% year-on-year in December, down from 2.6% in November. Core CPI, which excludes volatile components like food and fuel, also slowed, declining from 3.5% to 3.2%.
