Positive Earnings Keep Market Rally Intact Across Atlantic, BoE Lowered Bank Rate

Alexander Garcia
06 Feb, 2025
Miami

Wall Street indexes extended the rally to the third consecutive session, and investors overlooked tariff-caused trade tensions. 

The S&P 500 index edged up 0.2%, and the Nasdaq Composite advanced 0.3% as more than 70 companies released earnings since the closure of regular trading hours on Wednesday. 

Investors reacted to announcements from Ford Motor Company, Honeywell International, Qualcomm, Arm Holdings, Costco, T. Rowe Price, Cognizant, and Peloton. 

Despite the mild rebound, investor confidence is shaken in the incoming presidential administration after reversing several tariff measures announced just a week ago. 

The Trump administration appears to score political victories and force foreign governments to meet its demands using tariffs as a negotiating tool. 

However, Trump was forced to cave in and "delay" imposing tariffs on goods from Mexico and Canada with little to show in return. 

The U.S. Postal Service was also forced to halt processing inbound shipments from China and Hong Kong, only to suspend the block hours later. 

Moreover, higher tariffs on foreign goods are stoking inflation, forcing the Federal Reserve to hold higher rates for longer.

 

U.S. Stock Movers 

Arm Holdings PLC decreased 3.9% to $166.50 despite the advanced semiconductor chip designers reporting better-than-expected revenue and adjusted earnings in the fiscal third quarter. 

Qualcomm dropped 4.5% to $168.0 despite the advanced chipmaker reporting better-than-expected revenue and earnings in the fiscal first quarter. 

Ford Motor declined 5.5% to $9.47 after the passenger car and vehicle maker estimated a difficult 2025 amid rising tariffs on parts shipped from foreign locations. 

Honeywell International Inc. declined 3.5% to $215.49 after the automation company's revenue and earnings outlook fell short of some investors expectations. 

The company estimated fiscal year revenue between $39.6 billion and $40.6 billion and earnings per share between $10.10 and $10.50.

 

European Markets Hovered Near Record Highs

Stock market indexes across Europe advanced, and investors reviewed the latest batch of corporate results. 

Benchmark indexes in Frankfurt and London hovered near record highs amid optimism about earnings, despite a weak outlook for growth in economic activities and exports. 

Investors shifted their focus to corporate results and reviewed the latest earnings from 90 companies, including Volvo Cars, Arcelor Mittal, Siemens Healthineers, Societe Generale, ING, and Maersk.

World markets have experienced heightened volatility after the newly appointed U.S. presidential administration announced and then dropped the threat of tariffs on Mexico and Canada and made a U-turn on trade restrictions on China. 

The U.S. trade policy uncertainty weighed on the market sentiment, and investors are bracing for a possible list of trade restrictions and tariffs on goods shipped from the European Union.

Crude oil prices eased for the second day in a row amid a supply glut and a lack of demand growth, and gold hovered near record highs as investors feared Trump's tariff war would support higher inflation. 

 

BoE Lowered Rates and Retained Gradual Bias

The Bank of England lowered its benchmark rate by 25 basis points to 4.5%, and the central bank cut the rate for the third time since the rate-cutting campaign started in August last year.  

The central bank reiterated its goal of reducing rates gradually as the need to control stubborn service inflation outweighs the mounting economic growth worries. 

 

German Factory Orders Rebounded In December but Dropped In 2024

On the economic front, German factory orders rebounded 6.9% from the previous month in December, according to the latest data from Destatis, the federal statistical office. 

A 55% surge in transportation orders lifted the overall orders, and orders rebounded from a downwardly revised 5.2% decline in November.

For the full year 2024, seasonally adjusted factory orders decreased 3.0%.

 

Europe Indexes and Yields

The DAX index increased by 0.70% to 21,737.00, the CAC-40 index rose 0.69% to 7,946.14, and the FTSE 100 index advanced by 1.13% to 8,721.09. 

The yield on 10-year German bonds inched higher to 2.37%, French bonds increased to 3.09%, the UK gilts moved up to 4.60%, and Italian bonds edged higher to 3.45%.

The euro decreased to $1.04; the British pound was lower at $1.24; and the U.S. dollar was higher and traded at 90.51 Swiss cents.

Brent crude increased $0.47 to $75.08 a barrel, and the Dutch TTF natural gas was higher by €0.17 to €49.91 per MWh.

 

Europe Stock Movers 

A.P. Moeller Maersk soared 9.2% to DKK 11,885.0 after the Danish shipping company and port terminal operator reported better-than-expected fourth quarter results.

ArcelorMittal SA jumped 1.7% to €24.40 after the second-largest steel company's fourth quarter results surpassed market expectations. 

The losses in the quarter shrank to $390 million from $2.9 billion, and steel production advanced to 14 million tons from 13.7 million tons a year ago, respectively.

In the full year 2024, the company's net income advanced to $1.3 billion from $919 million a year ago.

Volvo Car AB dropped 9.2% to 21.50 krona after the vehicle maker reported a decrease in operating profit in the fourth quarter, and the company estimated turbulent 2025 amid market uncertainties. 

Siemens Healthineers AG jumped 5.3% to €57.16 after the German medical equipment company's fiscal first quarter sales surpassed market expectations.

In addition, the company reiterated its fiscal 2025 outlook. 

ING Groep NV declined 2.9% to €15.51 after the Dutch bank said annual total income in 2025 is likely to be flat compared to the previous year. 

Société Générale SA surged 9.2% to €33.79 after the French bank said fourth-quarter profit doubled on higher revenues.

Pernod Ricard SA advanced 2.7% to €104.90 despite the French wine and spirit maker lowering its outlook for the current fiscal year. 

 

Japan Rally Extends to Third Day

Stock market indexes in Tokyo advanced for the third day in a row, tracking gains in tech stocks on Wall Street. 

The Nikkei 225 stock average and the TOPIX advanced between 0.3% and 0.6% as investors shifted their attention away from tariff threats to corporate earnings. 

Investors reacted to the latest batch of earnings, including results from Toyota Motor, Renesas Electronics, Tokyo Electron, Nippon Electric Glass, Nomura Holdings, and Yamaha. 

In addition, Honda and Nissan were in focus amid reports that the two companies may walk away from the merger deal after Honda proposed to acquire Nissan and operate as one of its subsidiaries. 

Despite the recent gains in benchmark indexes, investors were cautious amid worries of possible new trade restrictions in the U.S., after the newly appointed presidential administration slapped additional 10% tariffs on goods shipped from China and Hong Kong. 

 

Japan Indexes and Stocks; Marubeni, Nippon Electric Glass, Renesas Electronics In Focus 

The Nikkei 225 Stock Average increased 0.6% to 39,066.53, and the TOPIX advanced 0.3% to 2,752.20. 

Honda Motor declined 4% to ¥1,440.0, and Nissan Motor jumped 7% to ¥415.10 after the two companies ended their merger talks, and

Honda instead proposed to acquire Nissan.

Renesas Electronics jumped 12.6% to ¥2,305.50 after the advanced semiconductor chipmaker reported full-year 2024 results. 

Consolidated revenue decreased 8.2% to 1.4 trillion yen, and profit plunged 35% to 219.4 billion yen from 337.3 billion yen.

This was mainly attributable to a decrease in revenue from the industrial, infrastructure, and IoT business driven by weakening demand, although revenue increase in the automotive business was driven by weakening yen and channel inventory expansion.

Nippon Electric Glass soared 9% to ¥3,702.0 after the company announced a stock repurchase plan. 

The company said it plans to acquire 7 million common shares, or 8.7% of total outstanding shares, for about 20 billion yen, between February 6 and December 23, 2025.

Marubeni Corp. increased 4% to ¥2,399.50, and the diversified conglomerate reported better-than-expected results in the fiscal third quarter ending in December. 

Revenue increased 9% to 1.83 trillion yen, and net income advanced 56% to 187.06 billion yen.

The company raised its estimate for annual dividends to 95 yen from 90 yen and the full-year net income estimate to 500 billion yen from the previous estimate of 480 billion yen.

The company announced a stock buyback program worth up to 30 billion yen or 30 million shares between February 6 and June 30.

  

U.S. Trade Policy Uncertainty Weighed On Market Sentiment In China

 Stock market indexes in China and Hong Kong rebounded, and investors remained cautious amid U.S. trade policy uncertainty.

The Hang Seng index increased 0.5%, and the CSI 300 index advanced 0.8%, and investors pinned their hopes that trade tensions between the U.S. and China will ease in the months ahead. 

Despite the loud rhetoric from the Trump administration and an increase in U.S. tariffs, China's exports have continued to rise over the last eight years, including in the first 4-year term of Donald Trump. 

However, markets are bracing for heightened volatility amid policy reversal and chaotic U.S. presidential administration. 

The U.S. Postal Service reversed its plans to halt processing goods shipped from China and Hong Kong only hours after implementing it. 

The move will avoid duty on Chinese goods worth less than $800 under the "de minimis" rule, which will continue the flow of cheap goods sourced from online markets operated by Chinese e-commerce companies.

Nearly half of all goods entering the U.S. and processed under the de minimis policy originated from China and Hong Kong, according to a U.S. Congressional Research Service report released in June 2023.

About $245 billion worth of Chinese goods were shipped annually to the U.S., and about 3 million packages arrive daily to the U.S. from China and Hong Kong, according to estimates from industry sources. 

Despite the removal of the temporary block on processing inbound shipments from China, tensions remained high, and investors are bracing for additional trade barriers for Chinese goods shipped via Mexico, Vietnam, and other third countries. 

 

China Indexes and Stock Movers 

The Hang Seng index advanced 0.5% to 20,700.30, and the CSI 300 index gained 0.8% to 3,825.81.

E-commerce companies were in focus after the U.S. Postal Service made a U-turn on processing inbound shipments from China and Hong Kong. 

Alibaba Group increased 0.2% to $97.75, Meituan decreased 0.2% to HK $149.20, JD.com added 0.3% to HK $157.0, and Tencent Holdings declined 0.3% to HK $416.80.

China Literature Ltd increased 8.1% to HK $29.15, and the Tencent-backed e-book seller extended this year's gains to 19%. 

Semiconductor stocks advanced in the hopes that Chinese companies will find a way around the U.S. sanctions to continue to improve their production capabilities.

Hua Hong Semiconductor advanced 5.2% to HK $26.55, and SMIC advanced 5.5% to HK $47.25.