Friday's Markets Update (January 10, 2025)

11 Jan 2025 by rate3

On Friday, stocks fell sharply, prompted by a lower-than-expected unemployment rate (4.1% vs. 4.2%), which reinforced concerns about the Fed keeping interest rates higher for longer. This was compounded by inflationary expectations surging to an 8-month high. The S&P, Nasdaq, and Dow closed this week in deep red. The dollar continued to rise, pressuring other currencies such as the yen, which remains at a 6-month low against the dollar. Oil surged due to new sanctions. Spanish industrial production, which was uniquely growing among the largest EU economies, declined for the first time in 3 months. BTC and ETH attempted to rise against the current market sentiment, reaching 95K and 3.3K, respectively.

Details

The unemployment rate fell to 4.1% in December, below expectations. Employment increased by 478K, while the labor force participation rate remained unchanged. 1Y trend: "Up (BLS)
The University of Michigan consumer sentiment index fell to 73.2 in January. Expectations for the future declined, while current conditions improved. Year-ahead inflation expectations surged to 3.3%, the highest in eight months. 1Y trend: "Up (Umich)

World Markets

Spanish industrial production fell by 0.4% YoY in November, marking the first decline in three months. Weaker output in capital and energy goods contributed to the decline. On a monthly basis, industrial output shrank by 0.8%. 1Y trend: "Up.(ES)
Net foreign direct investment (FDI) in the Philippines surged by 50.2% YoY to USD 1.02B in October (largest since Feb). This increase was driven by higher debt instruments and equity capital, with investments primarily from Japan, the US, and Singapore. 1Y trend: "Down. (PH)

Currencies

The Japanese yen traded near 6-month lows. Uncertainty surrounding the timing of the Bank of Japan's interest rate hikes. Household spending in Japan declined in November and ministerial bureaucrats said that they want to overcome "the public's deflationary mindset'. 1Y trend: "Up, Depreciating.

Commodities

WTI crude oil futures jumped 4% to $77, reaching a 3-month high. This surge was driven by reports of new sanctions on Russian oil, targeting key firms, vessels, and insurers, which could disrupt oil exports to major buyers like India and China. 1Y trend: "Side".

Week 3 is the beginning of the earnings season (Q4 banks reports). Also, traders will watch key inflation data (CPI and PPI). China will release Q4 GDP growth figures. Additionally, the ECB will publish minutes from its recent meeting and inflation figures.