๐ Market Report.
๐ Stocks in the United States rose on Tuesday as President Donald Trump paused tariffs on Mexico and Canada, allaying investors’ concerns. The S&P 500 increased by 0.72%, Dow Jones Industrial Average by 0.3%, and Nasdaq Composite by 1.35%. Europe’s Stoxx 600 index increased by 0.22%.
๐ The number of job vacancies in the United States fell to 7.6 million in December, the lowest level since September and below the Dow Jones expectation of 8 million, according to the Bureau of Labour Statistics’ monthly Job vacancies and Labour Turnover Survey.
๐ The news comes only a few days before the January nonfarm payrolls data is released. This is predicted to result in an increase of 169,000 jobs, with the unemployment rate remaining at 4.1%.
โ๏ธ The Fed faces a delicate balancing act in navigating the potential inflationary and growth impacts of the tariff dispute, with a lot of uncertainty around the ultimate policy implications. The historical record on the inflationary impact of tariffs is mixed, with the Smoot-Hawley tariffs in the 1930s actually proving to be deflationary and worsening the Great Depression. This time, it could have a greater impact on both inflation and growth, potentially forcing the Fed to stay on hold longer before pivoting to easing.
๐ President Trump’s turn to protectionist trade policies is creating significant risk to macroeconomic forecasts, resulting in rising hits to GDP and weighing on global growth, according to Fitch Ratings.
๐จ๐ณ๐บ๐ธ Trump said he is in no hurry to speak with Chinese President Xi Jinping to try to defuse the new trade war sparked by his 10% tariffs on all Chinese imports. China’s new tariffs, targeting about $20 billion in annual imports, have been calibrated to send a message to the U.S. rather than escalate the conflict. China announced export controls on some critical metals and a 10% tariff on electric trucks, which could impact Tesla’s Cybertruck sales in China. The trade war is in the early stages, and the likelihood of further tariffs is high, with Oxford Economics downgrading its China growth forecast.
๐ช๐บ The European Union is preparing for a potential transatlantic trade conflict with the US, aiming to resolve the issue through negotiation after President Trump’s delay of tariffs on Mexico and Canada. The EU is considering increasing its supply of LNG, fertilizers, and weapons to the US to improve bilateral relations and address issues like China’s overcapacity in the steel sector. The EU plans to extend the suspension of any retaliatory tariffs beyond the March deadline to maintain a positive approach.
๐ฏ๐ต The Bank of Japan (BOJ) official Kazuhiro Masaki said the central bank will continue to raise interest rates if underlying inflation accelerates toward its 2% target as projected. The government’s focus is on eradicating Japan’s deflationary mindset, including by taking measures to encourage firms to raise wages, which the BOJ sees as key to achieving its 2% inflation target.
๐ Alphabet (Google’s parent company) reported Q4 2024 results that missed revenue expectations, sending the stock down over 9% in after-hours trading. Growth in Google’s advertising revenue, search business, YouTube ads, and services unit all slowed compared to the prior year. The company’s cloud revenue of $11.96 billion missed the expected $12.19 billion, though it still grew 30% year-over-year. Alphabet cited strong demand for its AI products in Q4, leading to a tight supply-demand situation that constrained its cloud revenue.
๐ป AMD reported Q4 2024 results that beat Wall Street expectations for sales and earnings, but the stock fell 6% in extended trading as the company missed estimates in its key data center segment. AMD’s data center revenue, its most important unit, came in at $3.86 billion, up 69% year-over-year but below the expected $4.14 billion.
๐ Market View:
๐ US futures are losing strength in their recovery, outlining three possible bearish trends observed over the last few weeks. The Mini S&P 500 futures are managing to stay above 6,000 points, but are not managing to advance significantly, currently standing at 6,035 points.
๐ Meanwhile, Nasdaq 100 futures have also failed to consolidate above 21,600 points, currently falling back below 21,550 points.
๐ต The dollar is also weak, with the DXY index falling below 108 points, which has allowed the EUR/USD pair to approach the 1.04 level, where the neckline of the Head and Shoulders (H&S) pattern identified on Friday is found. This level acts as a key resistance and could be a potential area for new sales.
๐ In Europe, the DAX 40 is failing to break through 21,600 points and is currently falling back towards 21,520 points.
โฌ๏ธ Brent crude, which yesterday reached almost $77 a barrel, is now falling slightly to $76, remaining in a static range.
๐ฅ Gold, on the other hand, is breaking through resistance again and is approaching $2,900 an ounce, currently trading at $2,885.
๐ฐ Finally, Bitcoin failed to recover the $100,000 mark and has fallen back to $98,000 in the last few hours, reflecting a lack of momentum in the cryptomarket.
๐ Geopolitics:
๐บ๐ฆ President Trump has proposed a deal that would grant the U.S. access to Ukraine’s rare earth resources in exchange for continued military and economic aid to Kyiv. Ukrainian President Volodymyr Zelenskyy presented an outline of this “victory plan” to Trump in New York last September, which includes sharing Ukraine’s natural resources with Western partners. Control over these mineral resources has become a crucial part of the war.
๐ฎ๐ฑ CNN asked a question related with Gaza to Donald Trump, and He gave a puzzling response when asked about the future of Gazans, stating, “I envisionโฆ world people living there.” He proposed transforming Gaza into an “international, unbelievable place” where Palestinians and others would coexist.