- US stocks were marginally sold on the first trading session of 2025 with relative outperformance in the Russell but only slight upside, while sectors were predominantly lower with notable weakness in Consumer Discretionary, which was weighed on by Tesla's (TSLA) downside after it reported disappointing Q4 delivery numbers. Real Estate and Materials also lagged, while Energy, Utilities, and Communication Services outperformed with Energy stocks buoyed by upside in crude and nat gas prices.
- USD opened 2025 with broad-based gains, particularly against the EUR and GBP with newsflow behind the move higher relatively thin. In terms of the data, there was little reaction sparked in the dollar although weekly initial claims unexpectedly fell to 211k (exp. 222k, rev. 220k) and continued claims fell to 1.844mln beneath the 1.89mln expected (rev. 1.896mln). Furthermore, US Construction Spending was unchanged in December, resulting in the Atlanta Fed GDPNow (Q4) being revised down to 2.6% from 3.1%. Looking ahead, ISM Mfg is due on Friday, accompanied by Fed's Barkin (2027 Voter) later speaking at a Maryland Bankers event.
- Looking ahead, highlights include South Korean GDP & Singapore Retail Sales, Japanese Market Holiday.
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LOOKING AHEAD
- Highlights include South Korean GDP & Singapore Retail Sales, Japanese Market Holiday.
US TRADE
- US stocks were marginally sold on the first trading session of 2025 with relative outperformance in the Russell but only slight upside, while sectors were predominantly lower with notable weakness in Consumer Discretionary, which was weighed on by Tesla's (TSLA) downside after it reported disappointing Q4 delivery numbers. Real Estate and Materials also lagged, while Energy, Utilities, and Communication Services outperformed with Energy stocks buoyed by upside in crude and nat gas prices.
- SPX -0.22% at 5,869, NDX -0.17% at 20,976, DJIA -0.36% at 42,392, RUT +0.07% at 2,232.
- Click here for a detailed summary.
NOTABLE HEADLINES
- US House Speaker Johnson is reportedly not willing to negotiate on the rules package for the 119th Congress new House rule which stipulates that nine members of the majority have to band together to oust the speaker, according to Punchbowl.
- US dockworkers and port employers are poised to restart negotiations on January 7th, according to Bloomberg.
DATA RECAP
- US S&P Global Manufacturing PMI Final (Dec) 49.4 (Prev. 48.3)
- US Construction Spending MM (Nov) 0.0% vs. Exp. 0.3% (Prev. 0.4%, Rev. 0.5%)
- US Initial Jobless Claims w/e 211.0k vs. Exp. 222.0k (Prev. 219.0k, Rev. 220k)
- US Continued Jobless Claims w/e 1.844M vs. Exp. 1.89M (Prev. 1.91M, Rev. 1.896M)
FX
- USD opened 2025 with broad-based gains, particularly against the EUR and GBP with newsflow behind the move higher relatively thin. In terms of the data, there was little reaction sparked in the dollar although weekly initial claims unexpectedly fell to 211k (exp. 222k, rev. 220k) and continued claims fell to 1.844mln beneath the 1.89mln expected (rev. 1.896mln). Furthermore, US Construction Spending was unchanged in December, resulting in the Atlanta Fed GDPNow (Q4) being revised down to 2.6% from 3.1%. Looking ahead, ISM Mfg is due on Friday, accompanied by Fed's Barkin (2027 Voter) later speaking at a Maryland Bankers event.
- EUR began the year on the back foot and dipped beneath the 1.03 handle to levels last seen since late 2022 with no fresh driver behind the move and as uncertainty remains heightened within the region ahead of Trump's inauguration on January 20th. Nevertheless, the day saw a series of Mfg PMIs, to which France and Germany were as expected, while Spain and the Eurozone fell short of expectations, while there were comments from ECB's Stournaras who sees rates falling to about 2% around Autumn.
- GBP underperformed amid the stronger dollar and with the currency not helped after UK S&P Global PMI Mfg unexpectedly fell to 47.0 from 47.3 (exp. 47.3).
- JPY weakened as the firmer buck underpinned USD/JPY to back above the 157.00 level.
- Riksbank Minutes stated that Governor Thedeen’s conclusion is that it will soon be appropriate to wait and see before making any further changes to the policy rate, while Deputy Governor Jansson believes a 2025 cut needs to come quite early in the year, in January or possibly at the meeting after that in March.
FIXED INCOME
- T-notes settled little changed to start 2025 with attention turning to ISM PMI on Friday ahead of supply, ISM Services PMI, and NFP next week.
COMMODITIES
- Oil prices were firmer but moved off intraday highs once Europe left with the benchmarks potentially aided by the rise in nat gas prices in the wake of the Ukraine/Gazprom transit deal expiring without a renewal, while some also noted commentary from Chinese President Xi who pledged to promote growth earlier in the week.
- US EIA Weekly Crude Stocks w/e -1.178M vs. Exp. -2.75M (Prev. -4.237M).
- US President Biden is reportedly planning to permanently ban new offshore oil and gas development in portions of the country's outer continental shelf during his final weeks in the White House, according to Bloomberg.
- Dallas Fed Survey noted US Southwest Oil and Gas activity edges higher as outlook brightens, but shale executives reported mixed views of oil and gas production in Q4.
- Slovak PM Fico said the Slovak coalition and government are to discuss in the coming days reciprocal measures for the end of the Ukraine gas transit and an alternative for Slovakia would be restarting gas transit through Ukraine, or compensation mechanisms, while the Slovak government delegation is to discuss the gas situation in Brussels on Tuesday.
GEOPOLITICAL
MIDDLE EAST
- Israeli military said it attacked and destroyed medium-range rocket launchers at a Hezbollah military site in southern Lebanon.
- Israeli PM Netanyahu approved of the delegation to resume ceasefire negotiations in Qatar's Doha, according to the PM’s office cited by Reuters.
- Israeli negotiators will travel to Doha on Friday for a last-ditch effort to reach a breakthrough in the negotiations over the Gaza hostage and ceasefire deal before Trump assumes office, according to Axios citing Israeli officials.
- Hostage negotiations are reportedly not stuck and there has been progress, via The Jerusalem Post citing sources familiar with the matter.
- Sky News Arabia correspondent reports huge explosions in Syria's Aleppo and news of Israeli raids.
- US President Biden reportedly discussed plans to strike Iran's nuclear sites if Tehran speeds towards a nuclear bomb, according to Axios. White House national security adviser Sullivan presented Biden with options for a potential US attack on Iran's nuclear facilities if the Iranians move towards a nuclear weapon before January 20 in a meeting several weeks ago that remained secret until now. Biden and his national security team discussed various options and scenarios during the meeting, which took place roughly one month ago, but the president did not make any final decision, while a US official with knowledge of the issue said the White House meeting was not prompted by new intelligence or intended to end in a yes or no decision from Biden. Instead, it was part of a discussion on "prudent scenario planning" of how the US should respond if Iran were to take steps like enriching Uranium to 90% purity before January 20. Furthermore, another source said "There are currently no active discussions inside the White House about possible military action against Iran's nuclear facilities".
OTHER
- Ukrainian President Zelensky said US President-elect Trump can be decisive in the war and can help Ukraine stop Russian President Putin.
- Ukraine's Military said it struck a Russian command post in the Kursk region.
ASIA-PAC
NOTABLE HEADLINES
- China's MOFCOM said it added 28 US entities to the list of export controls in which the firms on the list include Lockheed Martin (LMT), Raytheon Missiles & Defence (RTX), and General Dynamics (GD), while this bans exporting dual-use items to firms to safeguard China's national security and it also added 10 US firms to unreliable entity list for involvement in arms sales to Taiwan.
- China's MOFCOM proposed export restrictions on some technology used to make battery components and process critical minerals lithium and gallium, while it is seeking comments on proposed changes until February 1st.
- China’s securities regulator denied market rumours after stocks tumbled, while there had been some rumours circulating that China would lower the bar for re-lending encouraging share buybacks.
- Japan and the US are to start joint AI cyberattack research, according to Nikkei.
EU/UK
NOTABLE HEADLINES
- ECB's Stournaras sees rates falling to about 2% around Autumn, according to Greek radio Skai.
DATA RECAP
- UK S&P Global Manufacturing PMI (Dec) 47.0 vs. Exp. 47.3 (Prev. 47.3)
- German HCOB Manufacturing PMI (Dec) 42.5 vs. Exp. 42.5 (Prev. 42.5)
- French HCOB Manufacturing PMI (Dec) 41.9 vs. Exp. 41.9 (Prev. 41.9)
- Italian HCOB Manufacturing PMI (Dec) 46.2 vs. Exp. 44.8 (Prev. 44.5)
- Spanish HCOB Manufacturing PMI (Dec) 53.3 vs. Exp. 53.5 (Prev. 53.1)
- EU HCOB Manufacturing Final PMI (Dec) 45.1 vs. Exp. 45.2 (Prev. 45.2)
