Friday's Markets Update (January 24, 2025)

24 Jan 2025 by rate3

On Friday, equities closed lower, with semiconductor stocks weighing on tech indices. This decline was compounded by the PMI registering its weakest expansion in 9 months as consumer sentiment eased. Despite the declines, all indices posted weekly gains. Gold jumped to ATH after Trump called for a lower Fed rate. EU business procurement activity ticked up slightly in services, although manufacturing remained down. Japan's central bank raised its rate to a 17-year high due to spiked inflation, despite slowing manufacturing activity in the country. BTC rose to near ATH on a weaker dollar, which dropped to a month low. ETH and SOL also saw increases following Trump’s prohibition of CBDCs.

Details

The S&P Global Flash US Composite PMI eased to 52.4 in January, signaling the weakest expansion in 9 months. Manufacturing sector growth resumed, while service sector growth slowed. Hiring accelerated, and business optimism remained high. However, inflationary pressures intensified. 1Y trend: "Up". (PMI)
The University of Michigan consumer sentiment index was revised lower in January. Both expectations and current conditions gauges declined. Inflation expectations for the year remained unchanged, while the 5-year outlook declined slightly. 1Y trend: "Down". (Umich)

Crypto

Trump’s executive order prohibits Central Bank Digital Currencies (CBDCs), potentially impacting global CBDC initiatives. While some celebrate this move in the crypto market, 134 countries are still exploring or testing digital currency projects, including G20 nations. (source)

World Markets

The HCOB Eurozone Composite PMI rose to 50.2 in January, marking the first expansion in private sector activity since August 2024. Services sector growth offset a contraction in manufacturing. New orders contracted, but at a slower pace. Employment fell, while input and output costs increased. 1Y trend: "Down". (PMI)
The Bank of Japan raised its key interest rate by 25 basis points to 0.5% - the highest in 17 years, citing rising inflation and wage growth. This marks the third rate hike since March 2024. The BoJ raised its inflation forecast and slightly lowered its GDP growth outlook. 1Y trend: "Up".(BOJ)
Japan's manufacturing PMI unexpectedly contracted sharply in January, driven by falling output and new orders. However, employment increased, and business sentiment remained positive. 1Y trend: "Up". (SP)
Japan's annual inflation rate surged to 3.6% from 2.9% in December 2024, driven by higher food, energy, and housing costs. Core inflation also reached a 16-month high of 3.0%. Monthly inflation increased by 0.6%, the highest in 14 months. 1Y trend: "Up".
The HSBC India Composite PMI declined in January, with service sector growth slowing. Factory activity strengthened, but new orders eased. Employment hit a record high, while input and output costs rose. Business sentiment improved. 1Y trend: "Down". (PMI)

Currencies

The DXY fell to a one-month low, as the dollar weakened against major currencies. Trump reiterated plans to boost energy output and deregulate businesses, but softened his stance on tariffs. Rising unemployment claims and lower manufacturing further pressured the dollar. 1Y trend: "Up".

Commodities

Gold prices rose to a 4-month high, driven by a weaker dollar and safe-haven demand. Trump called for lower interest rates in his Davos speech, further supporting gold prices. Concerns over trade policies and uncertainty surrounding global central bank decisions also contributed to the gold rally. 1Y trend: "Up".

On Week 12, investors will focus on Fed and other central banks rate decisions. Powell is expected to hold rates steady at January 29 (Wed), while the ECB and BoC are likely to cut rates. Key economic data releases include GDP figures for major economies and PCE data. China will be closed for the Lunar New Year. Several tech megacaps, including Microsoft, Meta, Tesla, and Apple, are scheduled to report earnings.