Inflationary pressures are rising in the Eurozone. Platinum prices have reached a seven-week high

At the end of Tuesday, the Dow Jones Index (US30) decreased by 0.42%. The S&P 500 Index (US500) was down 1.11%. The Nasdaq Technology Index (US100) lost 1.78%. The US stocks closed lower on Tuesday as good economic data drove Treasury yields higher, dampening expectations of a Federal Reserve rate cut this year. The Institute for Supply Management report showed faster-than-expected US service sector growth, adding to inflation concerns. In addition, job openings rose by 259,000 to 8.098 million in November, the highest in six months and above estimates of 7.7 million. The US trade deficit widened to $78.2 billion in November 2024, up from a revised $73.6 billion in October and roughly in line with projections.

Nvidia shares fell by 6.2%, driven by CEO Jensen Huang’s speech at CES on new artificial intelligence technologies and technological advancements. Tesla shares lost 4% after a downgrade by Bank of America, and Meta shares were down 1.9% after Zuckerberg announced that he would discontinue his third-party fact-checking program.

Canada’s trade deficit in November 2024 was CAD 0.32 billion, down from the previous month’s upwardly revised CAD 0.54 billion and better than market expectations for a deficit of CAD 0.9 billion. Despite the improvement, this is the ninth consecutive monthly deficit.

Equity markets in Europe were mostly up on Tuesday. Germany’s DAX (DE40) rose by 0.62%, France’s CAC 40 (FR40) closed higher by 0.59%, Spain’s IBEX 35 (ES35) gained 0.03%, and the UK’s FTSE 100 (UK100) closed negative 0.05%. Eurozone inflation rose to 2.4% in December from 2.2% in November, thanks to a rise in the cost of services and energy prices, which was in line with expectations. Median inflation expectations for the next 12 months in the Eurozone rose for a second month to 2.6% in November 2024 from 2.5% in October. Median expectations for inflation three years ahead also rose to 2.4%.

Switzerland’s annualized inflation rate fell to 0.6% in December 2024 from 0.7% in the previous month, in line with projections. Monthly, consumer prices declined by 0.1% in December, maintaining the same rate of decline as in the previous two months and in line with market expectations.

Platinum (XPT/USD) prices rose to $960/oz in January, hitting a seven-week high, driven by optimism about China’s economic outlook. Beijing’s measures, including planned rate cuts and monetary stimulus, boosted platinum demand in the automotive and clean energy sectors, while a rebound in service sector activity and a more stable yuan supported market sentiment.

WTI crude oil prices rose to $75 a barrel on Wednesday, extending gains and approaching three-month highs amid signs of declining US crude inventories. API data showed a 4.022 million barrel decline in inventories last week, far exceeding the expected 0.25 million barrel drop. If the government data is confirmed, it would mark the fourth consecutive weekly decline and seventh in 12 weeks, the longest streak in three years.

The US natural gas (XNG/USD) prices fell more than 5% to below $3.5/mmbtu on Tuesday, reversing a sharp 9.5% gain in the previous session. Severe cold weather in the eastern US has caused some wells and pipelines to freeze, reducing daily gas supply to a six-week low. Meteorologists expect colder-than-normal weather to continue in the US through January 21, with the coldest days still to come, which could further impact supply. In turn, Europe is adjusting to reduced gas supplies from Russia.

Asian markets were flat yesterday. Japan’s Nikkei 225 (JP225) rose by 1.97%, China’s FTSE China A50 (CHA50) declined 0.23%, Hong Kong’s Hang Seng (HK50) fell 1.22%, and Australia’s ASX 200 (AU200) was positive 0.34%.

The Australian dollar showed a subdued market reaction to the latest inflation data. The monthly Australian Consumer Price Index rose to 2.3% in November, accelerating from a 2.1% rise in the previous two months and slightly above the expectations of 2.2%. However, core inflation, as measured by the average, slowed to 3.2% in November from 3.5% in October, raising expectations of an earlier rate cut. Markets are currently divided on whether the Reserve Bank of Australia (RBA) will act in February, but a quarter-point rate cut in April is a foregone conclusion.