Team Asset Management offer a round-up of weekly global markets
Markets started off the week on the front foot as Donald Trump’s inauguration underlined his commitment to pursue a business-friendly agenda in his second stint in the White House. During the ceremony in the Capitol rotunda, billionaire leaders of the biggest tech companies, many of whom were vocal critics of the president during his first term, were positioned next to Trump family members and in front of cabinet nominees. Investors have welcomed promises to cut red tape and tax cuts, reflected by the strong run up in US stocks since the election on 5 November.
Once the pomp and ceremony was over, the returning president wasted little time and signed no fewer than 50 executive orders, ranging from declaring a national emergency at the southern border, to a hiring freeze for public-sector employees and an America First policy directive to the Secretary of State. He also revealed the creation of Stargate, a $500 billion artificial intelligence (AI) infrastructure project, backed by OpenAI, Oracle and Japan’s Softbank.
However, the bounce in AI technology stocks was very short-lived after the success of a Chinese AI chatbot, DeepSeek, went viral over the weekend and triggered a wipeout in some of the sector’s biggest names during Monday’s trading session. Shares in chipmaker Nvidia fell 17%, erasing $589 billion of its market valuation, the biggest one-day fall in US stock market history.
Developers of DeepSeek, a free open-source language model that has quickly become the App Store’s most downloaded app, claim that it only took two months and less than $6 million to build, using less advanced Nvidia chips. If verified, it clearly undermines the billions of dollars being spent by US companies to develop AI technologies with more powerful processors.
Stocks in Europe have been overshadowed by the enthusiasm for America’s “Magnificent Seven” but it also has many world-class companies that are thriving, including Novo Nordisk, which has become the continent’s largest company by market value on the back of its top-selling weight-loss drug Ozempic. Its shares gained another 8% on Friday after trial results suggested it could have another blockbuster drug in the pipeline. The trial found that users of amycretin lost up to 22% of their body weight after 36 weeks, comparable to Eli Lilly’s Zepbound. Subject to larger late-stage trials, the new drug could be available in 2028.
Shares in Diageo also popped higher on Friday after reports emerged that it is reviewing its drink portfolio, which could lead to the sale of subscale or underperforming brands including Ciroc Vodka and Pimms. Subsequently over the weekend, the company issued a statement to deny speculation that it also intends to split the G, sell its Guinness beer brand, or offload its 34% stake in LVMH’s champagne and cognac business Moët Hennessy. The Guinness brand is estimated to be worth more than $10 billion.
Despite Friday’s gains, Diageo shares remain underwater year-to-date following three consecutive years of double-digit percentage losses. It has been impacted by the trend of younger adults drinking less alcohol and was dealt another blow earlier this year when the US surgeon general issued a health advisory, linking alcohol consumption to cancer and proposed bottles and cans should contain warnings similar to that on cigarettes packaging.
In commodities markets, Brent crude slid $3 to $77 a barrel after President Trump vowed to “drill, baby, drill” to boost production in the US. In his address to the World Economic Forum in Davos, he also revealed that he will urge Saudi Arabia and other Opec members to bring down the cost of oil or face higher tariffs.
In the week ahead, investors’ attention will be drawn towards the fourth-quarter earnings of Big Tech, with Microsoft and Facebook’s parent Meta Platforms due to report on Wednesday evening and Apple the following day.
The economic calendar is headlined by the Federal Reserve and European Central Bank’s interest rate decisions, with the latter expected to announce another quarter of the percentage point cut to its deposit rate.