📆 Wednesday, January 8
► Futures for European stocks traded slightly higher, with the Euro Stoxx 600 gaining 0.2% despite yesterday's losses in New York. France reported an improvement in its still weak trade balance for November to -€7.1bn, driven by higher energy exports, while Germany reported retail sales growth of 2.5% year-on-year in November – but retail sales showed significant weakness month-on-month (-0.6% vs. +0.5% expected). Additionally, new orders in German industry fell by 5.4% (!) MoM, reflecting the ongoing weakness in the manufacturing sector. European equities are benefiting from a weaker EUR and the continued expectation of further rate cuts by the ECB, with inflation in the Eurozone also showing little sign of dramatic acceleration amid economic weakness. Sentiment among consumers and in industry in the Eurozone has deteriorated further, indicating continued pessimism regarding a short-term economic improvement.
► US futures gained slightly, recovering from declines from the previous session that were lead from sharp profit taking in some of the recent outperformers – in particular Nvidia. The S&P 500 fell by over 1.0% on Tuesday, with the Nasdaq dropping 2.0%, as economic data showed inflationary pressures mounting in the services sector as well as signs of tightening labor market. Currently, the Nasdaq and S&P 500 are trading 0.3% and 0.25% higher, respectively. Traders have pushed back expectations for Federal Reserve rate cuts to the second half of the year. Job openings rose to a six-month high, signaling a tight labor market that complicates the Fed's inflation fight. Treasury yields remained elevated, with the 10-year yield near its highest levels since April, reflecting persistent expectations of high credit costs.
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