Gold hitting all time highs, Asia markets mixed
Markets hit record, then dip 0.2%. Dow falls 0.5%. Treasury yields steady at 4.56%. Gold hits $2,946.75. Bitcoin up 1.1% to $96K.
U.S. Markets and Economy
The S&P 500 reached a new all-time high on Tuesday but edged down by 0.2% on Wednesday. The Dow Jones Industrial Average fell 0.5% (163 points), and the Nasdaq Composite declined 0.2%. The S&P 500 futures remained stable. Investor focus shifted towards global markets, particularly European equities and Chinese tech.
Economic surprise indexes revealed contrasting trends: the U.S. index slipped into negative territory, while the Eurozone index reached its highest level in eight months. Treasury yields showed slight movement, with the 10-year yield ticking up to 4.56% from 4.55% on Tuesday, having fluctuated between 3.70% and 4.80% in recent months. Mortgage rates remained high, despite the Federal Reserve beginning rate cuts in September 2024. The Federal Open Market Committee’s (FOMC) January meeting minutes, set for release, may provide further insight into future rate moves.
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Corporate Earnings and Movers of Markets
Celanese dropped 20% despite beating profit expectations due to warnings of continued demand deterioration. Nikola Corp. plunged 45.4% after filing for Chapter 11 bankruptcy. Toll Brothers fell 6.8% after reporting weaker-than-expected earnings, citing affordability constraints in the housing market. Meanwhile, Tesla rose 1% amid shifts in the EV sector. Other corporate highlights include:
Etsy’s weak Q4 earnings and poor outlook
Chemical firm Celanese citing “persistently weak global demand”
Bumble forecasting weaker-than-expected growth
Elliott Investment Management pushing for changes at Phillips 66
AngloGold Ashanti posting a $1 billion profit due to record gold prices
Tariffs and Trade Concerns
President Trump reiterated threats to impose 25% tariffs on autos, drugs, and semiconductor imports. The proposed tariffs spurred volatility in markets and strengthened the U.S. dollar. The euro fell 0.1% to $1.0434, and the British pound declined 0.2% to $1.2590. The Bloomberg Dollar Spot Index remained stable.
Eurozone and UK Economic Trends
European markets saw increased investor interest, catalyzed by Ukraine peace talks and Germany’s upcoming elections. The Stoxx Europe 600 dropped 1.1%, with benchmark German bund yields rising and Italy’s 10-year bond spread narrowing to its lowest in 3.5 years.
The UK’s inflation rate surged to 3%, a 10-month high, pressuring the Bank of England to reconsider rate cuts. Sterling strengthened, while UK gilt yields rose to 4.60%.
Asian Markets and Central Bank Actions
Asian markets were mixed: South Korea’s Kospi surged 1.7%, while Japan’s Nikkei 225 dipped 0.3%. The Reserve Bank of New Zealand cut its benchmark rate by 50 basis points to 3.75%, signaling further cuts amid moderating inflation. The New Zealand dollar held steady post-announcement.
Commodities and Cryptocurrencies
Gold reached an all-time high of $2,946.75/oz, driven by trade tensions and inflation concerns. Oil prices rose, with WTI crude up 1.4% to $72.89 per barrel.
Bitcoin gained 1.1% to $96,064.90, while Ethereum climbed 1.9% to $2,701.66, reflecting ongoing bullish sentiment in crypto markets.
Key Upcoming Economic Events
China’s loan prime rate decision (Thursday)
Eurozone consumer confidence data (Thursday)
U.S. initial jobless claims and Philadelphia Fed index (Thursday)
Eurozone and U.S. PMI data, U.S. existing home sales, and consumer sentiment index (Friday)
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