InvestMacro

On Tuesday, the US stock indices traded mixed. By the end of the session, the Dow Jones (US30) declined by 0.83%, while the S&P 500 (US500) gained 0.41%. The tech-heavy Nasdaq (US100) closed higher by 0.88%. Investors continued to build positions ahead of a busy week of corporate earnings and key policy decisions. With approximately three-quarters of S&P 500 companies that have reported so far exceeding expectations, the market focus now shifts to the Federal Reserve’s decision and the accompanying signals to be announced today.

Today, the Bank of Canada (BoC) will hold its scheduled monetary policy meeting. According to the consensus among major banks, the key interest rate is expected to remain unchanged at 2.25%. The regulator has paused to assess the impact of US trade tariffs and the economic policies of Prime Minister Mark Carney’s government on exports and the broader economic balance. Markets will closely watch the Monetary Policy Report (MPR) for signals regarding the resilience of Canadian economic growth and GDP amid intensifying global uncertainty, as well as hints at the future policy trajectory. A “hawkish” scenario that emphasizes inflationary risks and a strong labor market could boost the Canadian Dollar (CAD).

European equity markets mostly rose on Tuesday. Germany’s DAX (DE40) fell by 0.15%, France’s CAC 40 (FR40) closed up 0.27%, Spain’s IBEX 35 (ES35) gained 0.70%, and the UK’s FTSE 100 (UK100) finished at 0.58%. Investors adopted a wait-and-see approach ahead of the Fed statement and US Big Tech earnings, while also digesting news regarding the EU-India trade deal. The automotive sector faced the most pressure: under the agreement, tariffs on cars were reduced from 110% to 10% for a quota of 250,000 vehicles per year. Consequently, shares of Porsche Automobil Holding, Mercedes-Benz, Volkswagen, and BMW lost between 0.6% and 2.6%.

On Wednesday, Silver prices (XAG) rose to $115 per ounce, approaching a new all-time high amid a sharp weakening of the US Dollar and increased demand for safe-haven assets. The movement was catalyzed by statements from US President Donald Trump, who indicated he was not concerned about the falling Dollar, which has dropped to four-year lows. These comments bolstered expectations that the administration is willing to tolerate a weak Dollar to enhance the competitiveness of US exports. Further support for precious metals came from political uncertainty in Washington, including threats of new trade tariffs and escalating attacks on the Federal Reserve’s independence, which are undermining investor confidence in the Greenback and US assets.

WTI Oil prices rose by approximately 2% on Tuesday, climbing toward the $62 per barrel level. Prices were supported by a severe winter storm in the US, which significantly disrupted oil production and refinery operations. Estimates suggest that US oil producers lost up to 2 million barrels per day over the weekend, roughly 15% of national output, as extreme frost strained energy infrastructure and power grids. Geopolitics also remained in focus, as the US deployed an aircraft carrier and escort ships to the Middle East, raising tension levels and supporting the risk premium in oil prices.

The US Natural Gas prices (XNG) declined by more than 7% to $6.27 per MMBtu following an unprecedented rally of approximately 117% over the previous five trading sessions. Warmer weather forecasts and early signs of production recovery following the massive disruptions triggered the correction.

Asian markets rose confidently yesterday. Japan’s Nikkei 225 (JP225) gained 0.85%, China’s FTSE China A50 (CHA50) rose by 0.37%, Hong Kong’s Hang Seng (HK50) climbed 1.35%, and Australia’s ASX 200 (AU200) posted a positive result of 0.92%.

On Wednesday, the Australian Dollar (AUD) traded near 0.699 USD, holding close to a three-year high following the release of inflation data. According to the report, annual inflation in December accelerated to 3.8% from 3.4% in November, and the monthly figure rose by 1.0%, significantly exceeding expectations of 0.7%. Closely watched core inflation also remained stubbornly high: the annual figure rose to 3.4%, well above the RBA’s target range of 2-3%. Against this backdrop, markets swiftly repriced rate expectations, with the probability of a 25 bps hike at the February 3rd RBA meeting rising to 72%, up from 63% before the inflation data release.

On Monday, the US stock indices posted solid gains. By the end of the day, the Dow Jones (US30) rose by 0.64%, while the S&P 500 (US500) increased by 0.50%. The tech-heavy Nasdaq (US100) closed higher by 0.43%. Growth was driven primarily by the technology and communication services sectors: shares of Apple, Meta, and Microsoft strengthened significantly ahead of their financial results, whereas the consumer goods sector lagged due to a decline in Tesla stock. Market focus shifted to Wednesday’s Fed meeting and speculation about the potential appointment of a new Chairman, as well as the risk of a renewed US government “shutdown” over budget disagreements. Additional uncertainty was fueled by trade threats against Canada over its potential rapprochement with China, despite Ottawa’s efforts to de-escalate the situation.

The Canadian dollar (CAD) stabilized near 1.37 against the US dollar, halting its rally near monthly highs amid a balance of supporting and restraining factors. On the one hand, the currency continues to be supported by rising oil prices, driven by a supply crunch in high-sulfur fuel amid slowing exports from Russia, disruptions in key US regions, and lower shipments from Venezuela to China. On the other hand, further upside potential is limited by rising trade and geopolitical uncertainty. Pressure on CAD resumed following President Trump’s threats to impose 100% tariffs on Canadian imports should Ottawa pursue closer ties with China.

European equity markets mostly rose on Monday. Germany’s DAX (DE40) climbed 0.13%, France’s CAC 40 (FR40) closed down 0.15%, Spain’s IBEX 35 (ES35) rose by 0.78%, and the UK’s FTSE 100 (UK100) finished 0.05% yesterday. Despite recent easing of concerns about US rhetoric on Greenland and the risk of a transatlantic trade conflict, the broader geopolitical backdrop remained tense. Macro data from Germany provided no surprises: the Ifo Business Climate Index remained at 87.6 in January, missing expectations for growth.

On Tuesday, Silver (XAG) prices surged by more than 6%, climbing above $110 per ounce and continuing a record-breaking rally. The spike was driven by a combination of geopolitical and trade risks, alongside a reallocation of capital from sovereign bonds and currencies into precious metals as safe-haven assets. Market tension was further exacerbated by President Donald Trump’s statements about a possible tariff hike on South Korean goods from 15% to 25% due to delays in ratifying a trade agreement.

Palladium (XPD) prices rose above $2,000 per ounce, reaching a three-year high as supply concerns intensified due to heightened geopolitical risks. The primary catalyst was reports of potential 100% tariffs on Canadian goods in the event of its trade rapprochement with China, fueling fears of supply disruptions to North America, given Canada’s role as a major global producer. Additional market support came from a UBS forecast revision that raised price targets, citing steady investment inflows. Demand also strengthened in China following the launch of yuan-denominated platinum futures in Guangzhou, boosting interest in platinum group metals.

The US Natural Gas (XNG) prices soared by approximately 20%, exceeding $6.3 per MMBtu, marking a high since December 2022 and continuing an extreme rally driven by weather factors. Since the beginning of last week, the increase has exceeded 90%, following a record jump of nearly 70%, which was the strongest weekly gain since records began in 1990. Extreme cold has simultaneously hit supply and sharply increased demand for heating and electricity. Frigid weather knocked out about 10% of US gas production capacity, with average January production falling from December records and daily output dropping to two-year lows. Market focus remains on the duration of these production disruptions, as their prolonged nature could lead to further price increases.

Asian markets traded with mixed results yesterday. Japan’s Nikkei 225 (JP225) fell by 1.79%, China’s FTSE China A50 (CHA50) rose by 0.34%, Hong Kong’s Hang Seng (HK50) gained 0.06%, and Australia’s ASX 200 (AU200) posted a result of 0.13%. On Tuesday morning, Hong Kong and Chinese stocks continued to rise. Support was broad-based, with the largest contribution coming from the financial sector, which grew by about 2% after Beijing announced intentions to deepen the integration of mainland Chinese and Hong Kong financial markets. Further positive sentiment was provided by Chinese macro data: industrial profits in 2025 grew by 0.6% year-on-year, a notable acceleration from the 0.1% growth recorded during the January-November period.

On Friday, US stock markets closed mixed. The Dow Jones (US30) declined by 0.58% (-0.74% for the week), while the S&P 500 (US500) edged up 0.03% (-0.65% for the week). The tech-heavy Nasdaq (US100) gained 0.34% (-0.41% for the week). Energy companies led the day’s gains, and the technology segment was bolstered by Nvidia (+1.5%) and AMD (+2.3%) following signals from China regarding potential orders for H200 AI chips. Conversely, a sharp 17% drop in Intel shares, triggered by a weak forecast and news of operational challenges, weighed on the semiconductor sector and pulled down Broadcom, limiting overall gains. Macroeconomic data provided a conflicting picture: the University of Michigan consumer sentiment index was revised upward to a multi-month high, yet preliminary S&P Global PMIs pointed to a moderate slowdown in both services and manufacturing.

Geopolitical tensions escalated as US President Donald Trump threatened Canada with 100% tariffs on all exports to the US if Ottawa moves forward with a trade agreement with China, labeling such a move a “strategic error.” This follows Canada’s recent steps toward Beijing, including agreements to increase Chinese EV imports. Prime Minister Mark Carney stated he expects China to lower tariffs on Canadian canola following his recent meeting with Xi Jinping, the first visit by a Canadian leader to Beijing in eight years.

The Mexican peso (MXN) strengthened past the 17.4 mark against the dollar, returning to its June 2024 highs after a brief correction. Previously, the currency faced pressure from a global flight to safety amid US-Europe trade frictions sparked by Trump’s statements on Greenland. The peso’s recovery highlights its fundamental resilience, supported by the Bank of Mexico’s hawkish stance. The suspension of the easing cycle, with the key rate held at 7%, provides attractive real yields and continues to draw foreign investor interest into local debt instruments.

European equity markets mostly trended lower on Friday. Germany’s DAX (DE40) rose by 0.18% (-0.16% for the week), while France’s CAC 40 (FR40) fell 0.07% (+0.22% for the week). Spain’s IBEX 35 (ES35) dropped 0.67% (+0.23% for the week), and the UK’s FTSE 100 (UK100) slipped 0.07% (-0.90% for the week). In a sudden pivot at the Davos conference, President Trump temporarily walked back threats of tariffs against European countries that opposed the US acquisition of Greenland, citing a “framework deal” with NATO. While this eased immediate political tension, uncertainty regarding Washington’s long-term strategy remains. Macro data showed steady private-sector expansion in the Eurozone, as reflected in PMIs, reinforcing expectations that the ECB will maintain its current policy.

Silver (XAG) made history by breaking the $ 108-per-ounce threshold, driven by a weakening dollar, geopolitical strife, and economic uncertainty. The US dollar came under pressure as markets worried Europe might leverage its vast US assets in response to the Greenland crisis. Beyond macro factors, silver’s rally was fueled by a massive short squeeze, robust retail demand, and China’s tightening of export controls on industrial metals.

On Monday, US Natural Gas prices (XNG) surged by over 17%, exceeding $6/MMBtu for the first time since late 2022, as a historic winter storm gripped the nation. Prices have nearly doubled in the last two weeks, the largest gain on record, due to forecasts for sustained arctic temperatures. Inventory reports showed a larger-than-expected withdrawal of 120 billion cubic feet, and analysts anticipate further drawdowns as heating demand intensifies.
Asian markets showed mixed performance last week. Japan’s Nikkei 225 (JP225) rose by 0.86%, while the FTSE China A50 (CHA50) fell by 2.99%. Hong Kong’s Hang Seng (HK50) gained 0.41%, and Australia’s ASX 200 (AU200) closed the week down 0.27%.

The Singapore dollar (SGD) has strengthened to approximately 1.27 against the US dollar, marking its highest level since October 2014. This appreciation is fueled by capital inflows into safe-haven assets and market expectations that the Monetary Authority of Singapore (MAS) will maintain its current policy stance. The currency remains in steady demand due to its “safe haven” status, underpinned by Singapore’s AAA-rated bond market, high stock market dividend yields, and predictable economic policy amid heightened global uncertainty.