An Overview of U.S. and Global Markets by Mike Dolan
The U.S. dollar has dipped to its lowest level of the year so far due to a mix of fluctuating U.S. Treasury yields and delays. Various factors are impacting macro markets this week, including two significant U.S. inflation reports, discussions about , threats of extensive tariffs, corporate earnings, and Treasury debt sales.
As trading starts on Friday, the dollar index has dropped to nearly a two-month low. This decline is partially driven by a positive outlook on January's U.S. data and a rally in the euro linked to Ukraine.
Despite President Donald Trump's talk of reciprocal tariffs, no immediate action has been taken. The dollar has weakened against the euro, yuan, Canadian dollar, and Mexican peso. Treasury yields have reversed after a spike following an inflation report due to differing details in the producer price report.
The Fed's favoured inflation gauge, the PCE, was analyzed following Chair Jerome Powell's comments. Expectations for a Fed rate cut have increased, potentially moving up the timing to September from October.
Wall Street saw a surge in stocks propelled by robust corporate earnings, with companies like Tesla, Nvidia, and Apple leading the gains. Traders are now anticipating U.S. retail sales and industrial production data.
Overseas, Chinese tech stocks saw a positive movement due to breakthroughs in AI technology. European and Asian stock markets also reflect positive trends, driven by various factors such as better valuations, interest rate changes, and geopolitical developments.
In Europe, corporate earnings have further boosted market sentiment, with luxury brands like recording strong sales. Economic growth in the euro zone was slightly higher than expected in the fourth quarter of 2024.
Crude oil prices briefly dropped this week, influenced by Ukraine-related news. Natural gas prices in Europe decreased from recent highs due to discussions about European gas storage targets.
Notable events expected to impact U.S. markets include January retail sales, industrial production data, and various corporate earnings announcements. Additionally, the Munich Security Conference is set to commence.