- Stock markets in Europe have had a strong start to the week. Not only are the most major indices on the continent trading near their historical highs, but they are also widening the already significant gap in returns compared to U.S. indices. Wall Street remained closed today due to a public holiday (President's Day)
- Germany’s DAX index (+1.37%) surged to another record high, now boasting a 14% gain year-to-date. Poland’s WIG20 is not lagging behind, having added 17.5% over the same period and gaining nearly 0.8% today alone.
- On the corporate front, Rheinmetall stood out, with shares soaring 8% today. Investors gained confidence in accelerating defense investments among NATO countries following statements from European politicians. Shares of BAE Systems (UK), Leonardo (Italy), Kongsberg Gruppen (Norway), and Dassault (France) also climbed between 5% and 8%.
- In the afternoon, reports emerged regarding Taiwan’s planned multibillion-dollar purchases of U.S. weaponry, which could spark a rebound in the American defense sector tomorrow.
- In the broader Forex market, the Japanese yen is currently the strongest performer, while the Swiss franc and the euro remain under pressure. Statements from Fed officials Michelle Bowman and Patrick Harker suggest a cautious approach to U.S. monetary policy, but waning concerns over Trump’s trade policies are making a rate cut this year increasingly likely.
- The euphoria surrounding the JPY today stems from Japan’s GDP data, which far exceeded market expectations. Indicators of Japan’s economic strength suggest further monetary tightening ahead, while the U.S. dollar has exhibited notable weakness in recent days.
- Japan’s GDP grew by 2.8% YoY in Q4 2024, significantly above the 1% forecast and up from 1.7% in Q3 2024. Seasonally adjusted, the economy expanded 1.2% YoY, compared to 0.6% expected.
- Gold has climbed back to $2,900 per ounce, fueled by a weaker dollar, extending its rebound following last Friday’s release of the weakest U.S. retail sales data since 2020 for January.
- Natural gas futures are down nearly 3.5% today, after new weather forecasts pointed to rising temperatures in the U.S.. Higher temperatures could reduce demand for gas-fired power generation, which in turn diminishes the impact of a larger-than-expected inventory drawdown on prices.
- Sentiment in the cryptocurrency market remains weak. Bitcoin is down 1.5%, falling to $95,000, while Solana is losing 6%, and the TRUMP token is retreating nearly 10%.
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