Netflix stock surges, Treasury yields stable
Bank trends; 500B investment in AI; Netflix adds 18.9M users, stocks up 14%; S&P 500 hits 6,000; EU stocks lead with 6% year-to-date gain.
U.S. Economic and Bank Trends
President Donald Trump announced a $500 billion private-sector investment in artificial intelligence (AI), with OpenAI, Soft Bank, and Oracle launching a joint venture called Stargate. This project, focusing on data centers and job creation, boosted Oracle’s stock by 9% and Soft Bank’s by over 10%. Meanwhile, Netflix surged 14% in premarket trading after adding 18.9 million subscribers during the holiday quarter and announcing price hikes. The S&P 500 climbed above 6,000, nearing record highs, with a 0.5% gain in early trading. The Nasdaq rose 1%, driven by excitement around AI and robust corporate earnings.
U.S. corporate earnings showed resilience, with 10% of S&P 500 firms reporting annual profit growth of almost 11%. Procter & Gamble reported a 3.4% rise, supported by better-than-expected profit and revenue. United Airlines saw a 3.2% jump as demand for premium and international travel surged. Nvidia gained 2.7%, cementing its dominance as a key AI-chip provider.
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European Markets and Bank Movements
European stocks shrugged off Trump’s tariff threats, with the STOXX 600 hitting record highs and Germany’s DAX buoyed by a 6% rise in Adidas. European stocks have gained nearly 6% in 2024, double the S&P 500’s performance in dollar terms. Bank of America’s global fund manager survey revealed the largest allocation to European equities in 25 years.
The euro strengthened to its highest levels in 2024, despite European Central Bank (ECB) officials signaling more rate cuts. Implied volatility in currency markets has subsided, with three-month dollar/yen volatility at its lowest since July. The dollar index fell to a two-week low, influenced by declining Treasury yields and stable oil prices.
Asian Markets and Bank Uncertainty
Chinese equities fell approximately 1% amid renewed U.S.-China trade tensions, with Trump threatening a 10% tariff on Chinese imports. The yuan also weakened. Despite earlier talks between Trump and Chinese President Xi Jinping, market sentiment remains cautious.
In Japan, the Bank of Japan’s anticipated interest rate hike kept three-month yen volatility low. Asian markets reflected mixed reactions, with softer performances compared to Europe and the U.S.
Oil, Commodities, and Fixed Income
Oil prices dipped 0.2%, with West Texas Intermediate crude trading at $75.69 per barrel. This decline followed Trump’s announcement of increased domestic drilling. Gold rose 0.3% to $2,754.17 per ounce.
Treasury yields stabilized, with the 10-year yield at 4.57%, supported by lower oil prices and easing inflation concerns. Canada reported a significant drop in monthly consumer prices, keeping annual inflation below the Bank of Canada’s 2% target. In the U.K., bond yields fell as a decline in hiring offset higher public borrowing, bringing yields back to early-year levels.
Cryptocurrency Market
Bitcoin held above $104,000 after reaching a record $109,000 earlier in the week, driven by expectations of regulatory leniency from the Trump administration. Ether fell 0.8% to $3,304.66.
Upcoming Events
Key events include U.S. jobless claims, the Bank of Japan policy meeting, and manufacturing and services PMIs for both the U.S. and the Eurozone. Major corporate earnings from Halliburton, Procter & Gamble, and others are expected to provide additional market direction.
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