InvestMacro

By the end of Thursday, the Dow Jones Index (US30) added more than 400 points and closed positive 0.92%. The S&P 500 Index (US500) gained 0.53% and hit a new record high, breaking the 6,100 mark. The Nasdaq Technology Index (US100) added 0.22%. Favorable corporate earnings results supported the overall market on Thursday. General Electric (GE) closed higher by more than 6% after reporting fourth-quarter adjusted earnings per share and announcing $7 billion in share repurchase plans. Moderna (MRNA) shares rose more than 10% and led the S&P 500 higher, adding to a 7% rally Wednesday after Oracle CEO Ellison spoke about the promise of artificial intelligence in early cancer diagnosis and the development of cancer vaccines. Netflix (NFLX) shares closed higher by more than 3% after Wolfe Research upgraded the stock to “outperform” from “perform” with a price target of $1,100. Electronic Arts (EA) fell more than 16% and topped the list of losers in the S&P 500 and Nasdaq 100 after the company reported preliminary third-quarter net revenues of $2.22 billion, weaker than consensus of $2.51 billion, and lowered its full-year net revenue guidance.

President Donald Trump reiterated in Davos his previous promises of tax cuts, tariffs on trading partners and increased energy production, and called on the Federal Reserve and other major central banks to cut interest rates. As for economic data, weekly US initial jobless claims rose 6,000 to a 6-week high of 223,000, indicating a weaker labor market than expected at 220,000.

The Mexican peso (USD/MXN) exchange rate rose to 20.4 per USD as the latest inflation data bolstered hawkish arguments from Bank of Mexico officials, dampening expectations of further monetary policy easing. While Mexico’s annual core inflation fell to 3.69% in mid-January, the lowest in four years, core inflation rebounded to 3.72%, beating estimates of 3.68%, signaling continued price pressures.

Equity markets in Europe were mostly up on Thursday. Germany’s DAX (DE40) rose by 0.74%, France’s CAC 40 (FR40) closed up 0.70%, Spain’s IBEX 35 (ES35) added 0.92%, and the UK’s FTSE 100 (UK100) closed positive 0.23%. In Europe, Puma shares fell about 20% after the German sportswear brand reported lower-than-expected fourth-quarter sales and lower annual profit, missing its 2024 earnings target.

The Bank of Norway decided to leave the discount rate at 4.5% on January 22, matching market expectations, but the head of Norges Bank said a rate cut is possible in March. Unemployment has risen slightly, but inflation is close to target. Although inflation is lower than expected, rising business costs may spur it again.

WTI crude oil fell to $74 a barrel on Thursday as President Donald Trump delivered a virtual speech at the Davos forum. In his speech, Trump announced plans to ask Saudi Arabia and OPEC to lower oil prices, emphasizing his administration’s energy priorities. Meanwhile, crude inventories fell by 1.02 million barrels, below market consensus that expected a 2.1 million barrel decline, and extended a 2 million barrel drop from the previous week.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) added 0.79%, China’s FTSE China A50 (CHA50) rose by 0.64%, Hong Kong’s Hang Seng (HK50) gained 0.40%, and Australia’s ASX 200 (AU200) was negative 0.61%.

S&P Global’s Australian manufacturing PMI rose to 49.8 in January 2025 from 47.8 in December, according to flash data. This is the highest reading in 12 months, following 13 consecutive months of contraction. The index of business activity in the services sector fell to 50.4 in January 2025 from 50.8 in December 2024, according to flash data. That’s the lowest reading in six months, suggesting the sector’s growth is slowing. The Australian dollar climbed above $0.63 on Friday, hitting a five-week high after US President Donald Trump said after speaking with Chinese President Xi Jinping that he would prefer to strike a trade deal with China rather than impose tariffs. Given the close economic ties between Australia and China, it could have a significant impact on Australian markets. Trump also called on the US Federal Reserve to lower interest rates.

At the end of Tuesday, the Dow Jones Index (US30) was up 1.24%. The S&P 500 Index (US500) added 0.88%. The Nasdaq Technology Index (US100) increased by 0.58%. Yesterday, on his first day in office, Trump took a number of steps to advance his agenda, but refrained from immediately imposing tariffs as many expected. However, he later revealed plans to impose a 25% levy on Mexico and Canada, while avoiding mentioning China. First and foremost, the move would put pressure on the peso by depriving Mexican manufacturing, especially the auto sector, of a major source of demand, which could force the Bank of Mexico to accelerate rate cuts. Second, these tariffs will significantly reduce demand for Canada’s largest exports, which will reduce dollar inflows. Further pressure comes from Trump’s emphasis on increasing domestic energy production in the US, which could reduce Canadian energy exports, forcing producers to lower selling prices.

Canada’s annualized inflation rate for December 2024 fell to 1.8% from 1.9% in the previous month, slightly below market expectations, which had expected it to remain at 1.9%, and marked the lowest rate of price increases since September. As a result, inflation remained at or below the Bank of Canada’s (BoC) 2% average target for the fifth consecutive month, reinforcing expectations for further rate cuts this year.

Equity markets in Europe were mostly up on Tuesday. Germany’s DAX (DE40) rose by 0.25%, France’s CAC 40 (FR40) closed up 0.48%, Spain’s IBEX 35 (ES35) fell by 0.14%, and the UK’s FTSE 100 (UK100) closed positive 0.33%. The ZEW Economic Sentiment Indicator for Germany fell to 10.3 in January 2025 from 15.7 in December and well below the projection of 15.3 as the German economy contracted for the second consecutive year in 2024 and inflationary pressures are rising. If these trends continue this year, Germany will fall further and further behind other eurozone countries. In addition, political uncertainty is increasing due to the potentially difficult coalition-building process in Germany and the unpredictability of economic policies implemented by the new Trump administration.

Silver (XAG/USD) rose to $31 an ounce on Wednesday, hitting its highest level in six weeks, as US President Donald Trump’s tariff threats fueled demand for safe-haven assets. Silver is also supported by expectations of further interest rate cuts by the Federal Reserve this year, which could weaken the dollar and boost demand for commodities.

Asian markets were predominantly rising yesterday. Japan’s Nikkei 225 (JP225) added 0.32%, China’s FTSE China A50 (CHA50) was down 0.10%, Hong Kong’s Hang Seng (HK50) was up 0.91% and Australia’s ASX 200 (AU200) was positive 0.66%. Chinese stocks opened lower on Wednesday after US President Donald Trump said his team is discussing imposing 10% tariffs on goods imported from China, which could take effect as early as February 1. Trump’s comments overshadowed more positive developments Friday, when he held a friendly phone conversation with Chinese President Xi Jinping. At the World Economic Forum, Chinese Vice Premier Ding Xuexiang emphasized that there are no winners in the trade war and called for greater international economic cooperation.

Hong Kong’s annualized inflation rate stood at 1.4% in December 2024, unchanged for the third consecutive month and the lowest since May. On a month-on-month basis, consumer prices rose by 0.1% in December after stalling in the previous month.

Malaysia’s annualized inflation rate for December 2024 was 1.7%, slightly below market consensus and November’s 1.8%. Core consumer prices, excluding volatile fresh food and administrative costs, were 1.6% y/y in December, the lowest since January 2022.

The New Zealand dollar fell to $0.565 on Wednesday as investors priced in the country’s latest inflation data. New Zealand’s annualized inflation rate for the fourth quarter of 2024 remained at 2%, slightly higher than expected but still within the Reserve Bank of New Zealand’s (RBNZ) target range of 1-3%. On a quarterly basis, the Consumer Price Index rose by 0.5%, down slightly from a 0.6% increase in the previous period. The data suggests that price pressures remain largely subdued, reinforcing expectations of a 50bp rate cut at the Central Bank’s February meeting.

The US stock indices were not traded yesterday due to the Martin Luther King Jr. holiday. However, the US stock futures continued to rise on Monday. The rise followed a WSJ report that the president plans to direct federal agencies to review trade policy and assess US trade relations with China and neighboring countries. Contrary to earlier concerns, no new tariffs are expected to be imposed on his first day in office.

Bitcoin retreated towards the $100,000 mark on Tuesday after hitting a record high of $109,000 in the previous session as volatility persists following the inauguration of Donald Trump as the 47th president of the United States. Investors are expecting Trump to issue an executive order declaring digital assets a “national priority,” but it has yet to be issued. Trump is also expected to create a digital assets’ advisory board and increase deregulation to support the sector. Over the weekend, Trump unveiled his own digital token, which trades under the ticker “Trump” on the Solana blockchain. Melania Trump also joined the wave of digital assets by launching her own memecoin, further emphasizing the administration’s growing involvement in this space.

Equity markets in Europe were mostly up on Monday. Germany’s DAX (DE40) rose by 0.42%, France’s CAC 40 (FR 40) closed 0.31% higher, Spain’s IBEX 35 (ES35) Index gained 0.23%, and the UK’s FTSE 100 (UK100) closed 0.18% higher. On Monday, the FTSE 100 closed at 8521, a new record high. Traders were reassured by news that the incoming Trump administration will refrain from imposing trade tariffs for now.

WTI crude oil prices held below $76.9 a barrel on Monday as markets reacted to US President Donald Trump’s pledge to boost domestic oil production, including plans to invoke emergency powers to boost energy production immediately after taking office. In addition, his decision to delay the imposition of tariffs against China, Canada, and Mexico brought temporary relief, easing fears of supply disruptions, especially from Canada, the largest supplier of oil to the US.

Silver (XAG/USD) rose to $30.34 an ounce on Monday amid supply concerns and narrowing price discrepancies between New York and London markets. The threat of tariffs, especially after President Trump’s inauguration, initially raised premiums on silver futures as traders braced for potential disruptions. Geopolitical factors, including a reduction in tensions between the US and China following a positive conversation between Trump and Xi, are also boosting silver’s appeal as an asset.

Platinum (XPT/USD) prices fell below $950 per ounce, a sharp retreat from the two-month high of $982 reached on January 10, and continued last year’s lagging performance against other precious metals amid weaker demand for platinum for industrial use. The World Platinum Investment Council (WPIC) said slowing demand for internal combustion engines, which use platinum as a raw material for a catalyst, had pressured prices throughout the year due to a slowing Chinese economy and a growing preference for electric vehicles.

Asian markets were predominantly rising yesterday. Japan’s Nikkei 225 (JP225) added 1.17%, China’s FTSE China A50 (CHA50) gained 0.69%, Hong Kong’s Hang Seng (HK50) rose by 1.75% and Australia’s ASX 200 (AU200) was positive 0.45%. Hong Kong’s stock market rose by 142 points on Tuesday morning, marking its sixth session of gains and holding at its highest level in three weeks. The bullish momentum came after Donald Trump steered clear of China in his inauguration speech on Monday and did not immediately impose previously threatened tariffs. Meanwhile, Chinese President Xi Jinping urged policymakers to pursue more active macroeconomic policies this year to support growth.

In Japan, investors remain cautious ahead of the Bank of Japan’s upcoming monetary policy decision this week as BoJ officials hinted at the possibility of a rate hike. Such a move would push up Japan’s short-term borrowing costs to 0.5%, the highest level since the 2008 global financial crisis.

The Dow Jones (US30) Index fell by 0.16% at the end of Thursday. The S&P500 Index (US500) was down 0.21%. The Nasdaq Technology Index (US100) decreased by 0.69%. Weakness in mega-cap technology stocks on Thursday impacted the broader market. Health insurance stocks also declined, hurting the broader market after UnitedHealth Group fell more than 6% after reporting weaker-than-expected fourth-quarter earnings. Bond yields declined slightly amid dovish comments from Fed Chief Waller, who said that if inflation is falling, rate cuts could be larger than the market expects, with 3-4 rate cuts possible this year if data is favorable.

The Canadian dollar weakened to 1.44 per dollar, approaching the January 2016 low of 1.445, driven by monetary policy divergence, weak domestic data, and geopolitical uncertainty. Aggressive rate cuts by the Bank of Canada (expected to be 25 bps lower this month) contrast with the Federal Reserve’s less lenient stance, contributing to a widening yield gap between US and Canadian government bonds, which draws capital to the US dollar, adding pressure on the loonie.

Equity markets in Europe were mostly up on Thursday. Germany’s DAX (DE40) rose by 0.39%, France’s CAC 40 (FR40) closed 2.14% higher, Spain’s IBEX 35 (ES35) index fell by 0.49%, and the UK’s FTSE 100 (UK100) closed 1.09% yesterday. The FTSE 100 (UK100) Index rose to a three-month high on Thursday, supported by investor optimism over a possible rate cut.

Silver (XAG/USD) slipped to $30.66 per ounce on Friday but maintained its trend for a third straight weekly gain, helped by a decline in US core inflation that reinforced expectations of further interest rate cuts by the Federal Reserve this year. However, despite the bullish momentum, silver prices remain below the 12-year high of $35 reached in October as concerns over uncertain industrial demand persist.

WTI crude oil prices rose above $79 a barrel on Friday, rebounding from the previous session’s losses and heading for a fourth straight weekly gain. The overnight drop was driven by speculation that President-elect Trump may ease sanctions on Russian energy exports as part of diplomatic efforts to resolve tensions between Russia and Ukraine. Reports of a cease-fire in the Middle East also helped lower the geopolitical risk premium.

The US natural gas prices (XNG/USD) eased slightly to $4.055/MMBtu after the EIA reported declining storage inventories in line with expectations. Federal data showed that utilities pulled 258 billion cubic feet of gas from storage in the week ended Jan. 10, well above the 150 Bcf in the same week last year and well above the five-year average of 128 Bcf. Analysts expect the next two January 17 and 24 reports to show further consumption above 200 Bcf amid rising heating demand.

Asian markets were mostly up. Japan’s Nikkei 225 (JP225) was up 0.33%, China’s FTSE China A50 (CHA50) was down 0.21%, Hong Kong’s Hang Seng (HK50) added 1.23% and Australia’s ASX 200 (AU200) was positive 1.38% for yesterday.

China’s economy grew at an annualized rate of 5.4% in the fourth quarter of 2024, accelerating from 4.6% in the third quarter and beating expectations of 5%. Industrial production and retail sales in December exceeded forecasts, while new home prices declined. The latest data did not indicate whether Beijing will take additional stimulus measures in the near term. However, state media reported that China’s central bank may lower the reserve requirement ratio for banks ahead of the Spring Festival later this month.

Malaysia’s economy grew at a 4.8% annualized rate in the fourth quarter of 2024, slowing from a 5.3% expansion in the previous quarter. On a seasonally adjusted basis, GDP grew by 2.5% in Q4, easing from an upwardly revised 4.6% growth in the previous quarter.

The Dow Jones (US30) rose 1.65% on Wednesday. The S&P 500 Index (US500) gained 1.83%. The Nasdaq Technology Index (US100) jumped 2.31%. The core inflation rate rose for the third consecutive month to 2.9% in line with expectations, but the core rate unexpectedly slowed to 3.2%. The data added confidence that the Fed may continue to cut interest rates this year. In addition, corporate earnings results from major banks boosted investor sentiment. JPMorgan shares rose about 0.4% after beating earnings and revenue estimates and raising its 2025 net interest income outlook. Wells Fargo shares rose more than 3% after reporting higher earnings. Goldman Sachs climbed 4.8% on better-than-expected earnings and revenue, and BlackRock jumped nearly 2.5% as its assets reached a record $11.6 trillion.

The Canadian dollar strengthened to 1.43 per US dollar, hitting a one-month-high, as the US dollar weakened after weaker-than-expected core inflation figures dampened expectations of a prolonged continuation of high interest rates by the Federal Reserve. Meanwhile, rising crude oil prices and Canada’s status as the largest oil exporter to the US, bolstered by new US sanctions against Russian oil, improved the outlook for demand for the loonie.

The Mexican peso strengthened to 20.5 per US dollar, recovering after falling to a March 2022 low, as the US dollar weakened after lower-than-expected core inflation data dampened expectations of a prolonged continuation of high interest rates by the Federal Reserve. In addition, reports that President-elect Donald Trump’s administration may gradually impose tariffs to ease inflationary pressures eased fears of trade disruptions, lending support to the peso.

Equity markets in Europe were mostly up on Wednesday. Germany’s DAX (DE40) rose by 1.50%, France’s CAC 40 (FR40) closed 0.69% higher, Spain’s IBEX 35 (ES35) gained 1.25%, and the UK’s FTSE 100 (UK100) closed positive 1.21%. In France, the annual inflation rate for December 2024 was confirmed at 1.3%, in line with preliminary estimates and unchanged from the previous month. Among individual stocks, financial institutions led the gains, with AXA, BNP Paribas, Credit Agricole and Societe Generale up 1.6-3.1%.

Silver (XAG/USD) rose to $30.3 an ounce on Wednesday, hitting its highest level in a month, as a drop in US core inflation supported bets on a less tight Fed monetary policy. Still, uncertain demand for silver used in manufacturing has kept prices well below the 12-year high of $35 reached in October. Overcapacity in China’s solar panel industry has forced photovoltaic companies to sign up to the government’s self-discipline program to regulate supply, limiting the outlook for silver demand from the leading industry.

WTI crude oil prices climbed above $80 a barrel on Thursday, developing a 3% gain from the previous session and trading near the highest level since mid-July last year amid rising global supply risks. The IEA expects the oil market to be slightly tighter this year than previously estimated, and noted that new US sanctions against Russia and Iran could put additional pressure on the supply balance. The EIA data also showed an eighth consecutive weekly decline in commercial crude inventories, which hit their lowest level since April 2022. This is the longest streak of declines since 2021 and inventories are now at a six-year seasonal low.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) was down 0.08%, China’s FTSE China A50 (CHA50) decreased by 0.38%, Hong Kong’s Hang Seng (HK50) was up 0.34%, and Australia’s ASX 200 (AU200) was negative 0.22%.

The Australian dollar broke a three-day streak of gains as investors reacted to a mixed employment report. Although Australia’s unemployment rate rose slightly to 4% in December from 3.9% in November, employment growth exceeded expectations. Looking ahead, investors are focused on Australia’s fourth quarter inflation data due out later this month, which will be a key indicator ahead of the Reserve Bank of Australia’s upcoming monetary policy decision in February. Markets are currently pricing in a 70% chance that the RBA will cut its 4.35 percent monetary rate by 25 basis points next month.

At Tuesday’s close, the Dow Jones Index (US30) was up 0.52%. The S&P 500 Index (US500) added 0.11%. The Nasdaq Technology Index (US100) was down 0.13%. Yesterday, the overall market received support from a Bloomberg report that President-elect Trump’s economic team is considering a gradual increase in trade tariffs as part of a strategy to stave off a spike in inflation. Stocks also gained support after US producer prices rose less than expected, easing inflation concerns and boosting expectations for a favorable US Consumer Price Index report on Wednesday. Major US financial institutions including BlackRock, JPMorgan Chase, Citigroup, Goldman Sachs, and Wells Fargo are due to release their fourth-quarter results today.

Rising crude oil prices and Canada’s position as the largest oil exporter to the US, benefiting from new US sanctions on Russian oil, supported the outlook for loonie demand. In addition, reports of the gradual implementation of proposed US tariffs have reduced Canadian exporters’ fears, further boosting loonie demand. In addition, stronger-than-expected Canadian labor market data for December lowered expectations of an imminent interest rate cut by the Bank of Canada (BoC).

Equity markets in Europe were mostly up on Tuesday. Germany’s DAX (DE40) rose by 0.69%, France’s CAC 40 (FR40) closed 0.20% higher, Spain’s IBEX 35 (ES35) gained 0.55%, and the UK’s FTSE 100 (UK100) closed negative 0.28%. The recovery in European indices came amid reports that the Trump administration is considering a more gradual approach to tariffs, potentially increasing them gradually. At the same time, bond yields declined, halting their recent rally. Swaps are discounting the chances at 97% for a -25 bp rate cut by the ECB at its next meeting on January 30.

WTI crude oil prices fell to around $78.3 a barrel on Tuesday amid profit taking after three days of gains. Crude prices hit a five-month high on Monday as tougher US sanctions on Russia’s energy industry jeopardized global supplies. The restrictions have affected major producers and hundreds of ships and tankers, forcing key buyers such as India and China to seek alternative sources. The first signs of disruption are already evident, with a senior Indian official saying ships hit by the sanctions will be banned from unloading, while China has secured oil supplies from the UAE and Oman.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) fell by 1.83%, China’s FTSE China A50 (CHA50) gained 2.08%, Hong Kong’s Hang Seng (HK50) rose by 1.83%, and Australia’s ASX 200 (AU200) was positive 0.48%. Mainland stocks rose sharply on Tuesday after Chinese authorities stepped up policy support to stem the market’s slide. The China Securities Regulatory Commission pledged to prioritize market stability in 2025, while the People’s Bank of China (PBoC) promised to prevent risks from currency fluctuations.

The Australian dollar dipped below $0.62 on Wednesday as caution prevails in the market ahead of crucial US inflation data that could limit the potential for the Federal Reserve to cut interest rates this year. Domestically, traders’ attention is focused on Thursday’s release of Australian employment data looking for clues on the potential trajectory of rate cuts by the Reserve Bank of Australia (RBA). In addition, Australia’s fourth quarter inflation data due for release later this month will be under scrutiny as one of the last major indicators before the RBA’s monetary policy decision next month. Markets are currently pricing in a 70 percent chance that the RBA will cut its 4.35 percent monetary rate by 25 basis points in February.

At the end of Monday, the Dow Jones Index (US30) was up 0.86%. The S&P 500 Index (US500) added 0.16%. The Nasdaq Technology Index (US100) fell by 0.30%. Investor sentiment worsened as Treasury yields rose, driven by expectations of a Fed rate cut this year and concerns about potential inflationary pressures from the incoming Trump administration’s policies. The technology and communication services sectors were the worst performers, while energy excelled thanks to higher oil prices following the imposition of new US sanctions against Russia.

Equity markets in Europe were mostly down on Monday. Germany’s DAX (DE40) fell by 0.41%, France’s CAC 40 (FR40) closed down 0.30%, Spain’s IBEX 35 (ES35) lost 0.28%, and the UK’s FTSE 100 (UK100) closed negative 0.29%. Rising natural gas prices in the Eurozone have renewed fears of rising inflation in the bloc, while hawkish Fed rates continue to be supported by high inflation and a strong labor market.

UK 10-year Gilts yields continue to rise as investors lowered expectations for a Bank of England (BOE) rate cut in 2025 due to lingering concerns over inflation and economic uncertainty. Traders lowered their prognoses for a rate cut to 43 basis points by December 2025, down from the 50 basis points expected on Friday. The change came ahead of the release of UK inflation data, which is expected to show the annual inflation rate unchanged at 2.6%, while the core rate fell slightly to 3.4%

WTI crude prices fell to $78.4 a barrel on Tuesday but remained near four-month highs as tougher US sanctions on Russia’s energy industry threatened to cut global supplies. The restrictions have affected major producers and hundreds of ships and tankers, forcing key buyers such as India and China to seek alternative sources. There are already early signs of disruption, with a senior Indian official saying ships hit by the sanctions will be barred from unloading and Chinese buyers rushing to secure quick oil supplies from the UAE and Oman. On Monday, six European countries urged the EU to lower a $60-a-barrel price cap on Russian offshore crude and refined products to curb Russia’s military action in Ukraine. However, weakening demand from China could offset the effect of supply cuts.

Asian markets were declining yesterday. Japan’s Nikkei 225 (JP225) fell by 1.05%, China’s FTSE China A50 (CHA50) declined 0.29%, Hong Kong’s Hang Seng (HK50) lost 1.00% and Australia’s ASX 200 (AU200) was negative 0.23%.

The Australian dollar strengthened towards $0.62 on Tuesday, building on the previous session’s gains as the rally in the US dollar and Treasury yields paused. The Aussie was also supported by strong trade data from China, Beijing’s efforts to stabilize the yuan, and rising commodity prices. However, other data showed that consumer confidence in Australia declined for the second consecutive month in January, likely in response to the weakening of the Australian dollar against the US dollar. Markets are now pricing in a 67% probability that the Reserve Bank of Australia (RBA) will cut its 4.35% monetary rate by 25 basis points in February, and are fully factoring in the possibility of a rate change in April.

India’s annualized inflation rate for December 2024 eased to 5.22% from 5.38% in the previous month, broadly in line with market expectations of 5.3%, and remains within the RBI’s target of within 2 percentage points of 4%. On a month-on-month basis, retail prices in India fell 0.52%, the sharpest monthly decline in more than a year.