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Markets Update: S&P 500 futures decline slightly ahead of US CPI and earnings reports. China's exports rise nearly 11%, widening the trade surplus with the US. The dollar remains strong, while the pound reaches a new low. Treasury yields approach a 14-month high as the Federal Reserve reduces easing. Oil reaches a 4-month peak due to reduced Russian supply.
Global Markets Roundup: 13 January 2025
FESX1! | Z1! | NI225 | NQ1! | ES1! | EURUSD | USDJPY | DXY | GOLD | CL1! | ZC1! | ZS1! HG1!
Stocks fell across Asia on Monday as the dollar reached 14-month highs following a strong payrolls report that increased bond yields and challenged high equity valuations just as the earnings season begins. This hawkish development also heightened the importance of U.S. consumer price data due on Wednesday, where any core increase beyond the forecasted 0.2% could potentially eliminate the possibility of easing. Contributing to the situation was a surge in oil prices to four-month highs due to signs of reduced crude shipments from Russia, as Washington intensified sanctions on the country. Data also indicated that China's export growth accelerated in December, while imports rebounded, as the world's second-largest economy prepares for increasing trade tensions with the incoming U.S. administration.
S&P 500 futures ES1! declined by 0.4%, and Nasdaq futures NQ1! dropped 0.5%, continuing Friday's downturn. EUROSTOXX 50 futures FESX1! and FTSE futures Z1! fell by 0.2%, while DAX futures DAX1! remained largely stable. Trading was light on Monday morning due to a holiday in Japan, and MSCI's broad index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) decreased by 0.4%. Although the Nikkei NI225 was closed, futures (NKc1) dropped sharply to 38,430 from a cash close of 39,190. South Korean stocks KOSPI declined by 1.0% amid ongoing political uncertainty, as a Constitutional Court hearing on Tuesday will decide whether the impeached president, Yoon Suk Yeol, will be removed or reinstated. Chinese blue chips 3399300 fell by 0.2%, as data showed exports unexpectedly rose by 10.7% and imports increased by 1%. The strong performance raised the December surplus with the U.S. to $105 billion, fueling arguments for stricter tariffs on Chinese goods. China's central bank intensified efforts to support a weakening yuan by easing rules for more offshore borrowing and issuing verbal warnings about the currency. Chinese GDP, retail sales, and industrial output figures are anticipated on Friday.
Markets have reduced their expectations for Federal Reserve rate cuts to just 27 basis points for all of 2025, with the Fed now anticipated to cut rates to around 4.0%, compared to the 3.0% many had hoped for at this time last year. (0#USDIRPR) At least five Fed officials are scheduled to speak this week to provide their reactions to the surprising jobs report, including the influential Federal Reserve Bank of New York President John Williams, who will appear on Wednesday. This shift in rate expectations pushed yields on 10-year Treasuries US10Y to 14-month highs of 4.79%, with the latest trading at 4.764% in Asia. Higher yields on risk-free bonds increase the discounting rate for corporate earnings and make debt more appealing compared to equities, cash, property, and commodities. They also increase borrowing costs for businesses and consumers, even before President-elect Donald Trump's proposed tariffs raise import prices. This could challenge the optimism surrounding corporate earnings as the season begins on Wednesday with major banks like Citigroup, Goldman Sachs, and JPMorgan.
In the foreign exchange markets, The relentless increase in Treasury yields has strengthened the dollar broadly, causing the euro to decline for eight consecutive weeks, reaching $1.0210 EURUSD, its lowest level since November 2022. The dollar index rose 0.2% to 108.94. The pound dropped 0.5% to another 14-month low of $1.2129 GBPUSD, with sentiment negatively impacted by a recent slump in the gilt market due to concerns that the Labour government might need to borrow more to fulfill spending commitments. British finance minister Rachel Reeves pledged on Saturday to take action to ensure the government's fiscal rules were adhered to. The dollar slightly eased to 157.50 yen USDJPY, down from a recent six-month high of 158.88, amid reports that the Bank of Japan might raise its inflation forecasts this month as a step toward increasing rates again. EURUSD | USDJPY | AUDUSD | DXY | NZDUSD
In commodities, gold prices remained steady at $2,686 an ounce GOLD, showing unexpected resilience despite a stronger dollar and rising bond yields. Oil prices continued to rise due to supply concerns, as Russia's seaborne exports reached their lowest since August 2023, even before the latest U.S. sanctions. Brent BRN1! increased by $1.19 to $80.94 a barrel, while U.S. crude CL1! rose by $1.27 to $77.84 per barrel. BRN1! | CL1! | GOLD | HG1! | KC1! | RC1! | CC1!
In agricultural commodities, wheat futures value increased, yet prices remain close to four-year lows due to weak demand and a strong U.S. dollar, which has made U.S. crops less competitive globally. The most active corn contract on the Chicago Board of Trade (CBOT) ZC1! rose 0.7% to $4.73-3/4 a bushel, and CBOT soybeans ZS1! increased 0.8% to $10.33-3/4 a bushel. Wheat ZW1! climbed 0.8% to $5.34-3/4 a bushel. Corn prices have reached their highest since May, and soybeans are at their peak since November. Both have risen more than 3% since the USDA released its estimate on Friday.
Looking forward refer to the economic calendar below to see the upcoming events scheduled for today and the rest of the week.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team