Evolution of the international financial markets and evaluation of the main events and economic indicators of the previous day session. Available in English.
With investor focus on the tech sector, equity markets moved lower during the session. US stock indices posted modest losses, with tech stocks under pressure as investors continued to digest Q4 earnings results. European indices were weighed by losses in business software companies amid concerns over the potential disruptive impact of AI on their business models.
As expected, the Federal Reserve maintained its policy rate in the 3.50%-3.75% range. Fed Chair Jerome Powell struck a somewhat hawkish tone, highlighting activity strength, labor market stabilization and elevated inflation. Treasury yields ended the session flat and the dollar rebounded from its sharp decline since last Friday, gaining against the euro and the yen.
With the focus on today’s Fed policy rate decision, widely expected to keep interest rates unchanged, euro area government bond yields ended yesterday's session flat, while the US yield curve slightly steepened. Investors will be attentive to any hints given in the FOMC press conference for future rate paths.
During yesterday's session, the Japanese equity index Nikkei-225 fell nearly 2% amid concerns over a potential currency intervention. Global stocks advanced modestly, as investors traded cautiously ahead of a heavy earnings calendar, with major tech firms reporting later this week (up to 33% of the S&P 500 capitalization reports this week).
On Friday, the Japanese yen strengthened sharply after the Bank of Japan left its policy rate at 0.75% and signaled a hawkish stance. Speculation around potential currency intervention intensified after New York Fed officials reportedly sought information on the yen’s exchange rate, and Prime Minister Takaichi warned of action against “abnormal” market moves.
Risk-on dominated markets for a second day as Trump’s Greenland spat faded. US short-term Treasury yields slipped after upbeat macro data: Q3 GDP was revised to 4.4% SAAR, November consumer spending stayed firm, while initial jobless claims ticked higher in the week ended January 17.
Investor risk appetite improved after Trump ruled out using force to acquire Greenland and signaled a NATO framework for a potential deal over it, abandoning earlier tariff threats on Europe. This supported most US financial assets during the session and made implied volatility fell markedly across asset classes.
Markets turned risk-off on Tuesday as Trump renewed tariff threats against Europe linked to his controversial Greenland acquisition proposal. Equity indices fell on both sides of the Atlantic, with the tech-heavy Nasdaq leading losses. Implied volatility rose, pushing the VIX higher.
European investors began the week with a risk-off tone, as US markets were closed for the Martin Luther King holiday. Sentiment deteriorated after Trump announced plans to impose new tariffs on European countries siding with Denmark in the Greenland dispute and the EU hinted at possible retaliation.
Financial markets ended Friday on a mixed note ahead of a long weekend in the US, where markets are closed today for Martin Luther King Day. US Treasury yields moved higher following mixed macro data: industrial production rose, while the NAHB Index signaled continued weakness in housing construction. European sovereign yields also edged up, with the French spread widening after PM Lecornu announced it will amend again the budget draft to secure parliamentary approval.
Risk sentiment improved during yesterday’s session. US Treasury yields edged higher after weekly unemployment benefit claims declined, reinforcing expectations that the Fed will keep interest rates on hold in January. Equities advanced, supported by renewed optimism around artificial intelligence following strong results from Taiwanese semiconductors.
Risk-off session as geopolitical risks remained in focus. Oil prices climbed for a fifth consecutive session, with Brent crude gaining more than 10% over the past five days to trade around $66/barrel. Gold reached fresh record highs above $4,600/ounce. On both sides of the Atlantic, sovereign yields edged lower, while equities modestly retreated.
Markets showed limited reaction to the release of US December inflation data, which confirmed headline and core inflation unchanged at 2.7% and 2.6% yoy, respectively. US Treasury yields ended the session broadly flat, equities edged lower, and the US dollar was little changed against most major peers. Futures markets continue to price in the first Fed rate cut in June.