By Alex Financials

The U.S. stock markets are closed in observance of a National Day of Mourning for former President Jimmy Carter. Despite the closure, several significant developments are influencing global financial markets.

Global Markets React Amid U.S. Closure

With U.S. markets closed, global indices have shown mixed reactions. European markets experienced modest gains, with Germany’s DAX, France’s CAC 40, and Britain’s FTSE 100 all inching up. In contrast, Asian markets mostly declined, influenced by factors such as Japan’s strong wage growth, which may prompt a central bank interest rate hike, and ongoing uncertainties related to President-elect Donald Trump’s impending administration. Notably, markets in Tokyo, Hong Kong, and Shanghai saw declines, while South Korea’s Kospi had slight gains.

Bond Market Movements

U.S. Treasury yields have recently increased, with the 10-year Treasury yield reaching notable highs. This rise is attributed to inflation concerns amid Donald Trump’s second presidency. Federal Reserve Governor Lisa Cook and Goldman Sachs’ Peter Oppenheimer have noted the susceptibility of stock markets to significant declines and suggested potential corrections due to rising bond yields and economic uncertainties.

European Equities Poised for Outperformance

Deutsche Bank projects that European stocks will see a tactical outperformance compared to U.S. stocks in 2025. Factors influencing this outlook include improved macroeconomic data in Europe, lower interest rates, rising earnings, and potential positive surprises from China. In contrast, the U.S. stock market has seen impressive gains, particularly driven by the “Magnificent Seven” tech stocks, but risks include high concentration, economic policies under President-elect Donald Trump, rising bond yields, and peak economic surprises.

Tech Sector Developments

Nvidia Corporation (NVDA) has experienced a slight decline in its stock price following news of new restrictions on its exports. Additionally, quantum computing stocks like IonQ Inc. (IONQ) and Rigetti Computing (RGTI) have seen significant drops after adverse statements on the sector’s short-term usefulness. These developments highlight the volatility within the tech sector, particularly concerning emerging technologies.

Mergers and Acquisitions Activity

The start of 2025 has highlighted that UK-listed companies are perpetually on sale, with many established names identified as ripe for takeover. A report by Canaccord Genuity’s Quest team indicates that despite a thriving mergers and acquisitions market, UK companies remain undervalued and attractive to private equity. This situation is exacerbated by a stagnant IPO market and a bleak UK macroeconomic outlook.

Upcoming Economic Indicators

Investors are keenly awaiting the U.S. Labor Department’s jobs report, expected to provide insights into the health of the labor market and potential implications for Federal Reserve policies. This report is anticipated to balance concerns between economic strength and the Federal Reserve’s interest rate policies.

Conclusion

While U.S. stock markets pause to honor former President Jimmy Carter, global financial markets continue to navigate a complex landscape of economic indicators, policy developments, and sector-specific news. Investors should remain attentive to these dynamics as markets prepare to reopen.