Market Updates

AI-driven economic shifts are boosting energy demand, evident in the 2024 rally in utility stocks, and despite innovations like DeepSeek’s AI model, BlackRock see continued growth opportunities in utilities and infrastructure.

Global markets face a volatile week amid US tariff threats, inflation surprises, and shifting rate cut expectations, with key economic data releases including UK labour market figures, US retail sales, and Fed minutes. Meanwhile, China’s economy shows mixed signals, as strong credit expansion raises sustainability concerns ahead of the National People’s Congress.

U.S. policy shifts and AI advances are fueling market volatility, reinforcing a new macro environment; BlackRock remain risk-on, staying overweight U.S. equities for AI-driven growth while favoring eurozone government bonds amid expected rate cuts.

This week, key market events include Fed Chair Powell’s testimony, US CPI and PPI data, and earnings from major companies, while markets also monitor US-China trade tensions and further tariff announcements. Last week, uncertainty persisted amid trade war rhetoric, with softer US labor data, rising eurozone CPI, a BoE rate cut, and China’s inflation ticking up due to Lunar New Year spending, though deflationary pressures remain in its manufacturing sector.

Last week’s AI stock volatility highlights the market’s real-time learning curve, reinforcing the need for a structured framework to track mega forces like AI’s buildout, adoption, and transformation, as we see a widening range of beneficiaries and remain overweight U.S. stocks.

Key economic data, the BoE’s rate decision, and the US employment report will drive market movements this week, while escalating global trade tensions following Trump’s tariff announcements have triggered volatility, with stocks sliding and the dollar surging.

Strong Q4 earnings and resilient economic growth, boosted by AI-driven gains across sectors, support BlackRock’s overweight stance on U.S. stocks, though risks to investor sentiment from policy and earnings remain in focus.

This week, markets will focus on the Lunar New Year in Asia, key central bank meetings (FOMC and ECB), major tech earnings, and critical economic data like US PCE and GDP, alongside developments in China’s manufacturing slowdown and the Bank of Japan’s recent rate hike.

Surging bond yields align with our outlook for sustained higher rates, prompting BlackRock to favor short-dated Treasuries and credit for income while prioritizing stock investments driven by corporate earnings growth.

This week’s focus includes Trump’s inauguration, the Davos World Economic Forum, key corporate earnings, global economic data releases, and central bank actions, while markets digest last week’s inflation surprises, a rebound in U.S. equities, and China’s accelerating economic recovery.