In January, the U.S. reported a 4.4% quarter-on-quarter growth in real GDP for Q3, marking the fastest pace in two years. This growth was driven by consumer spending, exports, government expenditure, and investment, alongside a decline in imports. The Federal Reserve held interest rates steady during the FOMC meeting, with the labour market showing signs of cooling. Although unemployment in December slowed, it remained above the Fed’s 2% target, and inflation persists. Trump formally nominated Kevin Walsh as the next Fed chair, whose hawkish stance suggests potential “Quantitative Tightening and rate cuts.”
In the last week of January, precious metals experienced extreme volatility. Early in the week, expectations of rate cuts, geopolitical risks, and statements about the dollar led to a significant drop in the dollar index and rising precious and industrial metal prices. However, after Walsh’s nomination fuelled hawkish market expectations, prices plummeted, with silver dropping as much as 35% in one day. This decline appeared to be a sharp correction following rapid previous gains, but the long-term outlook for metals remains strong.
In China, industrial profits rose 5.3% year-on-year in December, meeting expectations, but overall industrial gross profit fell 3.3%. The January manufacturing PMI fell to 49.3, signalling contraction, driven by insufficient market demand for new orders. Retail sales grew only 0.9%, the first dip below 1% since 2023. Annual fixed asset investment decreased by 3.8%, reflecting weak construction trends. Despite a lack of improvement in economic fundamentals, recent antitrust regulations and tax increases are intensifying deflationary pressures and increasing market volatility.
Entering February, popular assets such as tech stocks, precious metals, and cryptocurrencies continue to exhibit high volatility. We maintain a value-investing strategy, avoiding excessive speculation and waiting for market opportunities.