Global markets surge after cooling US core inflation & strong earnings; US retail sales next

Thursday, January 16

► European markets climbed, with the Stoxx 600 advancing over 0.6% as tech & cyclical/luxury stocks led gains. Richemont (+17%) surged after reporting a jump in jewelry sales, boosting optimism in the luxury sector. European semiconductor stocks followed Taiwan Semiconductor Manufacturing Co. (TSMC) higher, after the chip giant posted better-than-expected Q4 revenue (+37% YoY), reinforcing strong AI demand expectations. TSMC rose 3.8% in Taipei. Germany’s inflation rose to 2.6% in December, aligning with forecasts but remaining above the ECB’s 2% target. Italian inflation came in at 1.3% in-line with expectations. Meanwhile, the UK’s trade deficit widened to £10.8B, pressuring the GBP, which fell again against the USD.

► US futures are extending gains, with Nasdaq 100 futures up 0.3% and the S&P 500 up 0.25%, signaling continued gains after Wednesday’s 1.8% rally —the market’s best day since the November elections. Cooling US core CPI (+3.2% YoY, 0.2% MoM) reinforced expectations for a Fed rate cut by mid-year, fueling risk appetite. Treasury yields steadied at 4.665% (10-Y) after their biggest drop in months. Investors also digested strong bank earnings, with JPMorgan, Goldman Sachs, and Wells Fargo beating expectations as trading revenues offset weaker net interest income. Bank of America (today) also beat expectations as predicted by our Chief Analyst, while UnitedHealth fell nearly 5% after revenue came in short of expectations. Attention now shifts to US retail sales and jobless claims data due later today (both 13:30 UTC+), which could further shape Fed rate-cut expectations.