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At the end of Thursday, the Dow Jones Index (US30) was up 0.38%. The S&P 500 Index (US500) added 0.53%. The Nasdaq Technology Index (US100) rose by 0.25%. The US stocks closed higher after a choppy Thursday amid mixed earnings results, while Fed policy bets remained unchanged following the release of key economic data. Meta rose by 1.6% after beating earnings expectations and signaling an ambitious investment in open-source AI, while Tesla jumped 2.9% after announcing earnings despite missing expectations. Meanwhile, Oracle and Broadcom rose by 5.2% and 4.5%, respectively. Microsoft, on the other hand, was down more than 6.2% as its revenue estimates fell short, reflecting some pessimism about the company’s big bet on Azure.

According to BEA’s preliminary estimate, the US economy is expected to grow at an annualized rate of 2.3% in Q4 2024, the slowest pace in three quarters, down from 3.1% in Q3 and projections of 2.6%.

On Thursday, Trump confirmed plans to impose 25% tariffs on Canada and Mexico starting February 1, but did not give a firm date on China, though he noted that tariffs on Chinese goods would be imposed soon.

Mexico’s Q4 2024 GDP contracted by 0.6% quarter-on-quarter, canceling out the 1.1% increase in the previous quarter and falling short of market expectations of a softer 0.2% decline. It’s the first cut since Q3 2021, coinciding with Central Bank signals that more rate cuts may be needed this year, especially if the US follows through on its tariff threats.

Equity markets in Europe traded flat yesterday. Germany’s DAX (DE40) rose by 0.41%, France’s CAC 40 (FR 40) closed up 0.88%, Spain’s IBEX 35 (ES35) gained 1.08%, and the UK’s FTSE 100 (UK100) closed positive 1.04%. After the ECB cut its key deposit rate by 25 bps, as expected, and signaled the possibility of further cuts, the DAX Index set a new record. Meanwhile, the Eurozone economy unexpectedly stalled in Q4 2024, posting its weakest performance in a year. The two largest economies saw an unexpected contraction, with Germany’s GDP declining by 0.2% and France’s by 0.1%. Italy stagnated for the second consecutive quarter, Ireland’s GDP fell by 1.3%, and Austria’s economy was flat. On the other hand, strong growth was recorded in Spain (+0.8%), Portugal (+1.5%) and Lithuania (+0.9%).

WTI crude prices climbed to $73 per barrel on Thursday, trying to rebound from four-week lows as weaker-than-expected economic growth in the US put pressure on the dollar and fueled speculation of a Fed rate cut in March. A weaker dollar made oil more attractive to buyers in other currencies. Meanwhile, investors assessed Trump’s new tariff threats against Canada and Mexico, major suppliers of oil to the US. The White House has confirmed plans to impose 25% tariffs if those countries don’t curb the fentanyl trade. Markets are also keeping an eye on the upcoming OPEC+ meeting on February 3 as Trump pressures the group, particularly Saudi Arabia, to lower oil prices.

The US natural gas prices fell nearly 2% to $3.11/MMBtu, the lowest level since early December, as projections point to milder weather and lower demand next week. Meanwhile, the EIA reported massive gas withdrawals due to last week’s extreme cold weather. The US utilities withdrew 321 billion cubic feet (bcf) from storage in the week ended January 24, well above last year’s 234 bcf and the five-year average of 189 bcf.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) was up 0.25%, China’s FTSE China A50 (CHA50) and Hong Kong’s Hang Seng (HK50) were not trading due to holidays, while Australia’s ASX 200 (AU200) was positive 0.55%.

The benchmark Consumer Price Index in Tokyo, Japan rose 2.5% year-on-year in January 2025, up from 2.4% in the previous month to the highest level since February last year. The January figure was also in line with market expectations, signaling increased price pressures and providing further justification for the latest interest rate hike. At its January meeting, the Bank of Japan raised its discount rate to 0.5% from 0.25% and revised upward its inflation prognoses, signaling the possibility of further rate hikes.

The Australian dollar stabilized near $0.622 on Friday, but was still on track for a sharp weekly decline amid growing expectations that the Reserve Bank of Australia will start cutting interest rates in February. Data released earlier this week showed Australia’s annual inflation slowed to 2.4% in Q4, down from 2.8% in Q3 and slightly below the estimates of 2.5%. Producer inflation also fell to 3.7% in Q4, down from 3.9% in Q3. Markets are pricing in a 95% probability of a 25 basis point cut in the cash rate to 4.35% at the Central Bank’s February 18 meeting.

• S&P 500 (US500) 6,071.17 +31.86 (+0.53%)
• Dow Jones (US30) 44,882.13 +168.61 (+0.38%)
• DAX (DE40) 21,727.20 +89.67 (+0.41%)
• FTSE 100 (UK100) 8,646.88 +89.07 (+1.04%)
• USD Index 108.13 +0.13 (+0.12%)

News feed for: 2025.01.31

• Japan Tokyo Core CPI (m/m) at 01:30 (GMT+2);
• Japan Unemployment Rate (m/m) at 01:30 (GMT+2);
• Japan Retail Sales (m/m) at 01:50 (GMT+2);
• German Retail Sales (m/m) at 09:30 (GMT+2);
• Switzerland Retail Sales (m/m) at 09:30 (GMT+2);
• German Unemployment Rate (m/m) at 10:55 (GMT+2);
• German Consumer Price Index (m/m) at 15:00 (GMT+2);
• Canada GDP (m/m) at 15:30 (GMT+2);
• US Core PCE Price Index (m/m) at 15:30 (GMT+2);
• US Chicago PMI (m/m) at 16:45 (GMT+2).

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