📆 Thursday, January 2
► European markets started the year with modest gains but are now trading flat (Euro Stoxx 600 at -0.2%). Natural gas prices surged to their highest since October 2023. The increase followed the expiration of a Russian-Ukraine transit contract, leaving Europe bracing for winter without key gas flows. Manufacturing data showed divergence among countries: France’s PMI plunged to 41.9, the sharpest contraction since May 2020, reflecting deep industrial challenges. Economists cited political instability and a lack of fiscal discipline as key drags on French industry. In contrast, Spain recorded resilient manufacturing activity, with its PMI rising to 53.3, driven by growth in output and new orders. Spain’s relative independence from Chinese exports and broad energy supply contributed to its outperformance. UK manufacturing data worsened to 47.0 (Dec) down from 48.0 in November and also slowed more than expected (47.3).
► US markets showed signs of recovery following a four-day year-end slump. Nasdaq 100 futures rose 0.6%, and S&P 500 futures gained 0.4%, signaling returned optimism among investors. Tech stocks, which drove much of the market's 2023-24 gains due to advances in artificial intelligence, continued to attract investor interest. Analysts noted that the “Magnificent Seven” tech companies could sustain growth in 2025 as AI adoption broadens across sectors. Treasury yields edged higher, reflecting a cautious risk-on tone, while the USD weakened against its G10 peers, with notable declines against the AUD. This is a reversal of the USD strength of recent months, as traders are bracing themselves for a potentially less hawkish Federal Reserve in 2025.
► Asian markets reflected mixed sentiment. China’s SHCOMP fell 2.6%, dragged down by disappointing manufacturing data, with the Caixin PMI slipping to 50.5, missing expectations. Slower output and shrinking foreign orders highlighted the limited impact of Beijing’s stimulus measures. Hong Kong’s Hang Seng Index dropped 2.18% amid steep losses across all sectors, reflecting concerns over tariffs and geopolitical tensions. On a brighter note, India’s SENSEX rose 0.87%, buoyed by gains in auto, tech, and financial services stocks, hitting a two-week high. Australia’s ASX 200 climbed 0.52%, supported by stronger commodity prices, while Japan remained closed for the holiday.
► Commodities saw gains, with oil prices climbing as U.S. crude inventories fell for the sixth consecutive week. The American Petroleum Institute reported a 1.4-million-barrel drop, signaling tighter supply as global energy demand stabilizes. WTI crude oil rose to $72.5/barrel (+1.2 %), with oil prices also being boosted by a surge natural gas prices (+2.0 %). Gold also rose above $2,635/oz, supported by a weaker USD and also as traders hedge against possible macroeconomic risks in 2025 and the medium to long-term attractiveness of gold.
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