Morning wrap (13.01.2025)

Indices from the Asia-Pacific region are trading in a weaker mood, reacting to Friday’s declines on the US stock market following strong employment data — NFP.

Indices from China are the only market not registering major changes during the session. CH50cash, CHN.cash, and HK.cash are trading around 0.0%.

The Japanese stock market is seeing declines. The JP225 index is down 0.95% to 38,420 points. Singapore’s SG20cash is losing 0.22%, and Australia’s AU200cash is off by 0.59%.

Futures on European indices also point to a lower open of the cash session. Germany’s DAX is down 0.30%, the UK100 is trading 0.20% lower, and Europe’s EU50 is down 0.40%.

Pressure on the stock market continues to come from the strengthening dollar, which is gaining another 0.20% today to 109.693. This is the highest level since the beginning of November 2022. The pressure is also being increased by the yields on US Treasury bonds. Today, 10-year yields are rising to 4.76%, the highest level since October 2023.

As a result, US index futures are deepening last week’s losses in the first part of the day.

Philip Lane, Chief Economist and member of the Executive Board of the European Central Bank (ECB), said that the ECB expects an economic recovery in Europe and an improvement in consumption in 2025. He also added that further monetary easing by the Bank is likely.

It is precisely this divergence in the monetary policies of the ECB and the Fed that is maintaining further declines in EURUSD, which is losing 0.30% today to 1.02171. The euro remains one of the weaker currencies today, while the dollar is one of the stronger ones.

The most important report this week will be the US CPI report on Wednesday. Currently, analysts’ expectations point to continued increases compared to the November report. A higher inflation reading could be another catalyst for maintaining the current market situation.

Goldman Sachs believes that tightened US and UK sanctions on Russian oil could push the price above USD 85. Oil rose after Friday’s announcement of tighter sanctions, gaining another 2.00% today to USD 81.33 per barrel.

Before the strong US jobs report at the end of last week, investors were pricing in the first interest rate cut in June of this year and, in total, even the possibility of two 25 bp cuts in 2025. At present, futures contracts show only ~26 basis points of rate cuts this year, and the Fed would not make such a decision until Q4 2025.

Bitcoin tried to hold around USD 95,000 over the weekend. However, once the new week started, the weaker sentiment also affected its price. Currently, Bitcoin is down 0.65% to USD 93,800.