Before the bell: will falling interest rates save a shrinking economy?

ECB pushes forward. IBM outshines Microsoft. UPS faces years of slowdown. Apple holds its ground. Gold price hits a new record. Belgian investors pay record taxes.

Who says Europe isn’t dynamic? The ECB has now cut rates for the fourth consecutive time. Yesterday, Christine Lagarde & co trimmed another 25 basis points, bringing the rate down to 2.75%. “And yet, this is still not stimulating,” echoed Lagarde, much like her Fed counterpart did on Wednesday. But the Fed’s rate, at 4.25-4.50%, remains significantly higher. Still, Lagarde made it clear that even 2.75% is far from rock bottom. Yesterday’s GDP figures for Germany (-0.2%) and France (-0.1%) confirmed that something needs to be done. The eurozone economy stagnated at 0%, with Spain preventing an even worse outcome. Yesterday was also packed with corporate earnings, but expectations were high. Microsoft’s cloud platform Azure grew “only” by 31% instead of the expected 33%, costing the stock 6%. However, when expectations are lower, stock prices can move favorably. IBM, the computing giant from the stone age, surged 13% thanks to strong software sales—driven by AI, of course. Courier giant UPS (-14.1%) demonstrated how a company can be in real trouble. Both revenue and profit declined, and worse, this trend is expected to continue for years. Its largest customer, Amazon, is gradually handling more of its own deliveries, a shift that could also impact Belgium’s bpost. Caterpillar expects declining revenue and dropped 4.5%. After hours, Apple—the world’s largest company by market cap—posted quarterly results that beat expectations for both revenue (+4%) and profit (+10%). Meanwhile, gold is trading at a new record of 2,845.60 dollars per ounce, proving that the old guard isn’t giving up against the young upstart Bitcoin just yet.

On the final trading day of January, things are quieter in terms of corporate earnings, but we still await inflation data from both the eurozone and the U.S. And who knows? Belgian politician Bart De Wever might announce a new government. We’re curious to see what happens.

Wall Street: The verdict after the first month of 2025

With just one day left, we can already assess the trends—there are clear patterns emerging. First, the old Dow Jones outperformed the modern benchmark indices, rising 5.5% compared to the S&P 500 (+3.1%) and the Nasdaq (+1.9%). Technology stocks struggled, finishing near the bottom. Top names like Nvidia (-7.2%), Microsoft (-1.5%), and Apple (-5.2%) had to endure some serious bruising. The anxiety over cheaper AI models may not be justified, but after years of extraordinary gains, the trend is still noteworthy. Surprisingly, the best-performing stocks weren’t the usual tech darlings but rather some old-school industrials. Chemical giant 3M (+19.6%) led the pack, along with IBM (+17.5%) and Goldman Sachs (+12.7%). As Bredero would say: “Things can change quickly,” especially when no one expects it.

Europe & Belgium: The Verdict After the First Month of 2025

The Euro Stoxx 50 had an explosive start to the year, surging 8% and leaving Wall Street trailing behind. A 30-day gain of this magnitude would already make for a solid yearly return. And just like across the Atlantic, it wasn’t the usual sectors leading the charge. Instead, the top performer was Spanish bank BBVA (+18.6%), with Southern Europe emerging as the eurozone’s growth engine. Coming in second on the Euro Stoxx index was Bayer (+13.1%), followed closely by another German chemical giant, BASF (+11.3%). They have climbed from deep lows, but for investors who got in last year, that hardly matters—there may still be plenty of room to run. Eyewear and optics giant Essilor, often overlooked, gained 12.5%. Mercedes (+10.3%) rebounded, perhaps benefiting from a European Union that seems to be easing its stance on the automotive sector. In Brussels, the Bel20 struggled to maintain last year’s strong momentum, gaining just 1.5% so far. But that’s not surprising when UCB (-1.5%) and Argenx (+5.8%) needed to catch their breath. Lotus (-5%) also took a moment to pause. The star performer was Sofina (+13%), while WDP (+8.8%) provided a boost of optimism for real estate investors. Syensqo (+9.2%) finally showed signs of a turnaround, though its CEO, Ilham Kadri, isn’t quite earning another mega-bonus just yet. Still, it’s refreshing to see that even in Europe, fortunes can change quickly.

Did you know…

you pay an enormous amount in taxes as an investor? In 2024, revenues from withholding taxes, the securities transaction tax, and the tax on securities accounts soared 39% to a record-breaking 8.5 billion euro.

This article was translated from Dutch and was originally published on Spaarvarkens.be.