US stock futures saw modest gains, with S&P 500 futures rising by 0.2%, while Euro Stoxx 50 contracts remained steady. The US dollar strengthened against all major Group-of-10 currencies, despite being on track for its first weekly decline since November. Meanwhile, Asian equities, represented by the MSCI Asia Pacific Index, ended a three-day winning streak as investors reacted cautiously to China’s impressive economic growth figures.
China’s economy met the government’s 2024 growth target, thanks to a late surge in exports and stimulus measures. However, uncertainties loom as potential US tariffs could jeopardise this momentum. Jacqueline Rong, Chief China Economist at BNP Paribas SA, highlighted exports as a key driver of last year’s growth, cautioning that US tariff policies could pose significant challenges in 2025.
Charu Chanana, Chief Investment Strategist at Saxo Markets, noted that while China’s recent growth indicates the effectiveness of 2024 stimulus measures, structural headwinds and tariff risks remain significant concerns for long-term market performance.
Despite the day’s decline, Asian equities are poised for weekly gains, fueled by expectations of potential Federal Reserve interest rate cuts. Japanese stocks slipped, with the Topic index down 0.3%. The yen maintained its over 1% weekly gain against the dollar amid speculation of a Bank of Japan rate hike at its upcoming meeting on January 23-24, with market bets on the hike reaching 99%.
In Taiwan, shares of Taiwan Semiconductor Manufacturing Co. climbed after the company’s positive forecasts for 2025 exceeded analyst expectations. Conversely, Nintendo Co. shares dropped sharply following the lukewarm reception of its next-generation Switch 2 console. In Australia, Rio Tinto Group shares fell after reports of early-stage merger talks with Glencore Plc.
Nomura Holdings Inc. and T. Rowe Price anticipate a potential rise in 10-year Treasury yields to 6% in 2025. While yields hit their highest levels since late 2023 earlier this week, cooling inflation data has reignited expectations for further Federal Reserve rate cuts.
In commodities, oil prices are on track for a fourth consecutive weekly increase. Brent Crude approached $82 per barrel, and West Texas Intermediate (WTI) climbed near $79. Gold extended its rally for the third straight week, driven by heightened demand amid economic uncertainties.
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The current market trends, including the rise in US stock futures, strengthening of the dollar, and cautious reactions in Asia, underscore the complexity of the global financial landscape. These dynamics highlight the interconnectedness of economic policies, market responses, and geopolitical factors.
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