📆 Tuesday, January 7
► Futures for the Euro Stoxx 600 are 0.1% higher after initially falling up to 0.4% following a cautious opening for European markets. Investors are exercising caution ahead of critical Eurozone inflation and US job openings data, due later today. France's annual (harmonized) inflation rate rose slightly in December to 1.8% (from 1.7% in Nov) but was below market expectations of 1.9%. Meanwhile, construction PMIs for December painted a mixed picture, with France dropping to 42.6 (from 43.7), Germany easing to 37.8 (from 38.0), and the Eurozone rising marginally to 42.9 (from 42.7). UK construction PMIs came in below expectations at 53.3 (and down from 55.2). Traders were particularly focused on inflation data after Germany's CPI reading exceeded expectations on Monday, raising concerns about the Eurozone's broader inflation outlook. However, market sentiment improved for now with also Eurozone inflation coming in at expectations at 2.4% YoY (but up from 2.2%). Core inflation remained steady at 2.7%. Semiconductor stocks remain a bright spot, following Nvidia's announcement of new AI products, which boosted sentiment across tech sectors globally.
► After gains earlier this week, US futures softened as investors brace for upcoming labor market data, including JOLTs job openings and Friday's Non-Farm Payrolls report. Treasury yields continue to climb, with the 30-year yield reaching its highest level in over a year at 4.85% / 10-Y US-T at 4.63% (up 1-2 bp). The USD pared earlier losses after former PresidentDonald Trump denied plans to moderate tariffs, raising concerns about continued trade tensions. The US government's inclusion of Tencent, Huawei, and CATL on a list of “Chinese military companies” has heightened trade tensions. These designations underscore growing frictions between the US and China, which could further pressure global markets.
► Performances were mixed across Asia. Japan's Nikkei 225 surged over 2%, buoyed by tech and semiconductor stocks, particularly those tied to Nvidia’s AI announcements. However, the JPY hit a five-month low before recovering slightly after Japanese Finance Minister Katsunobu Kato promised intervention to address “one-sided” currency moves. On the other hand, Hong Kong’s Hang Seng Index declined 1.2%, weighed down by consumer and tech stocks, including Tencent, which fell nearly 8% after being blacklisted by the US Defense Department.
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