Global Economy Weekly Roundup: The Key Events, Data and Market Moves Explained
Europe: Modest Growth Amid Political and Economic Uncertainty
European markets experienced a volatile but generally stable week, with major indexes ending close to flat. The pan-European STOXX 600 reached a record high during the week before retreating slightly, reflecting mixed investor sentiment.
Economic data showed that the eurozone economy continued to grow in the final quarter of 2025, expanding by 0.3%. This translated into annual growth of 1.5%, suggesting steady but moderate economic progress. Spain led the region with strong growth, while Germany posted weaker employment figures.
Labor market conditions remained relatively resilient, with employment in the euro area rising more than expected. However, challenges persist. France’s unemployment rate climbed to its highest level in over three years, with youth unemployment remaining particularly high.
Inflation pressures also reemerged in parts of Europe. In Germany, wholesale prices increased, driven by higher costs for metals and food products. These developments may influence future monetary policy decisions.
In the United Kingdom, political uncertainty affected investor confidence following controversy surrounding senior government appointments. Despite this, the economy showed modest expansion in the final quarter of
2025. Manufacturing activity improved, but construction weakened. Retail sales growth strengthened, indicating that consumer demand remains supportive.
Overall, European markets continue to balance moderate economic growth with political and inflation-related risks.
United States: Strong Jobs Data Meets Market Caution
U.S. financial markets ended the week on a cautious note as investors weighed strong employment data against growing concerns about the impact of artificial intelligence on traditional business models. Major stock indexes declined, led by technology-heavy shares, reflecting worries that rapid AI developments may disrupt established industries and earnings outlooks.
The Nasdaq Composite recorded the steepest losses, while the S&P 500 and Dow Jones Industrial Average also finished lower. Value-oriented stocks continued to outperform growth stocks, extending a trend that has persisted for several weeks.
Economic data played a key role in shaping market sentiment. The January employment report showed that U.S. employers added 130,000 jobs, the strongest monthly increase in over a year. The unemployment rate also declined slightly to 4.3%. Job growth was concentrated in healthcare, social services, and construction.
While the strong labor market reflects economic resilience, it reduced expectations for near-term interest rate cuts by the Federal Reserve. Investors now believe rates are more likely to remain elevated for longer.
Inflation data offered some relief, as consumer prices rose at a slower pace in January. However, retail sales stalled, indicating that consumer spending may be losing momentum. In bond markets, U.S. Treasury prices rose as investors sought stability amid equity market volatility.
Asia and China: Political Shifts, Policy Support, and Deflation Risks
Asian markets delivered mixed performance during the week, shaped by political developments, currency movements, and ongoing policy responses.
In Japan, stock markets surged following a decisive election victory for the ruling Liberal Democratic Party. The result strengthened confidence in the government’s plans for fiscal spending, infrastructure investment, and targeted tax relief. It also opened the possibility of increased defense spending in the coming years.
Bond yields in Japan remained stable, easing concerns about rising government debt. The Japanese yen strengthened after government officials signaled their readiness to intervene in currency markets. However, economic challenges remain, as real wages continued to decline due to inflation outpacing pay growth.
In China, stock markets recorded modest gains ahead of the Lunar New Year holidays. Economic data showed that consumer inflation slowed sharply in January, while producer prices remained in deflation for the 40th consecutive month. This highlights ongoing pressure on manufacturers and weak domestic demand.
The property sector showed tentative signs of stabilization, with slower declines in home prices. Policymakers continued to support the economy through liquidity injections and a commitment to “moderately loose” monetary policy in 2026. The central bank signaled potential for further interest rate and reserve requirement cuts.
Across Asia, governments remain focused on balancing growth, financial stability, and structural reform in a challenging global environment.
Looking Ahead –
As global markets navigate shifting economic data, policy expectations, and technological change, investors remain focused on resilience, adaptability, and long-term value creation. In this evolving environment, disciplined strategy and informed decision-making will remain essential for navigating both risks and emerging opportunities.
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