📆 Tuesday, January 16
► Global financial markets experienced varied movements today, largely driven by economic data releases and central bank commentary. Investors are balancing the impacts of the latest employment, inflation, and producer price data from the UK, Germany, and Japan, alongside anticipations of central bank policies. Japan remains strong, while Europe remains on a downward trend. Robert Lindner, SmartTrader Chief Analyst, still sees a lot of upside potential for Japanese companies.
►In Europe, the Stoxx 600 dropped by 0.55%. This downtrend was influenced by comments from ECB officials, who pushed back against early rate cut expectations. The UK's unemployment rate held steady at 4.2% in November, while wages witnessed a significant increase of 6.50% year-over-year, highlighting the ongoing tightness in the labor market. The rapid rise in UK wages accelerate inflation making immediate rate cuts by the BoE less likely according to our Chief Analyst Robert Lindner. German consumer prices experienced a marginal rise of 0.1% month-over-month in December, aligning with market expectations and showing signs of stabilization after a drop in November. The harmonized inflation rate in Germany increased to 0.2% month-over-month, recovering from a -0.7% in November. The low inflation in Germany is also triggered by weakening consumer demand.
► US markets, which will reopen following a holiday, are expected to focus on the upcoming retail sales data and further remarks from Federal Reserve officials. Futures indicated a cautious opening, with Dow, S&P 500, and Nasdaq all declining. US Treasury yields rose across the curve, with significant movements in the ten-year and two-year bonds, driven partly by the hawkish ECB remarks and expectations of future monetary policy directions. The USD reached a one-month high. Traders are awaiting further clarity from Federal Reserve Governor Christopher Waller’s upcoming speech, particularly regarding rate cuts.
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