Daily Broad Market Recap – January 28, 2025

Volatility was the name of the game in the financial markets on Tuesday, as markets reacted to a fresh batch of tariffs plans and geopolitical tensions.

Here are the latest headlines and how asset classes fared:

Headlines:

• Protests have forced the shutdown of two crude oil export terminals in Libya
• U.S. Treasury Secretary Scott Bessent pushed for monthly 2.5% universal U.S. tariffs implemented gradually
• Australia NAB business confidence index improved from -3 to -2 in December
• Bank of Japan core CPI improved from 1.7% to 1.9% year-on-year in December
• Spain’s unemployment rate fell from 11.2% to 10.6% vs. 11.1% forecast in December
• U.S. headline durable goods orders in December: -2.2% m/m (+0.3% forecast, -1.2% previous); core durable goods orders: +0.3% m/m (+0.4% forecast, -0.2% previous)
• U.S. S&P/CS Composite-20 HPI in Nov: 4.3% y/y (4.2% forecast, 4.2% previous)
• U.S. HPI in Nov: 0.3% m/m (0.4% forecast, previous reading upgraded from 0.4% to 0.5%)
• U.S. Richmond manufacturing index in Jan: -4 (-13 forecast, -10 previous)
• U.S. CB consumer confidence index in Jan: 104.1 (105.7 forecast, previous reading upgraded from 104.7 to 109.5)

Broad Market Price Action:

Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView

Market volatility carried over from the previous day into Tuesday’s Asian trading hours, with risk sentiment gradually improving throughout the day.

Monday’s tech sector selloff, triggered by China’s AI breakthrough reports, began to reverse as markets reassessed the implications. This rebound, particularly in Nvidia shares, helped push U.S. equity indices higher, with the S&P 500 gaining 0.7% on the day.

Treasury yields edged higher, with the 10-year yield rising to 4.53% while traders reacted to Treasury Secretary Scott Bessent’s push to implement 2.5% tariffs hikes on a monthly basis, giving businesses time to adjust.

Crude oil prices showed mixed movement, initially finding support from reports of Libyan oil field closures due to protests. WTI crude settled up $0.53 at $77.61 per barrel, though gains were somewhat limited by lingering concerns over global demand and downbeat U.S. data.

Gold was off to a slow start but eventually resumed its upward trajectory, rising $2,764 as it took advantage of broader market uncertainty and positioning ahead of the FOMC decision. Bitcoin started off in the green and moved sideways for the most part of the day, before losing its footing and tumbling slightly below $101K.

FX Market Behavior: U.S. Dollar vs. Majors:

Overlay of USD vs. Major Currencies Chart by TradingView

The U.S. dollar started the day on strong footing, getting a fresh boost from Bessent’s proposal to implement higher tariffs gradually. Although the rallies were extended throughout the London session, some of the gains were soon reversed after seeing disappointing U.S. economic data releases.

Headline durable goods orders surprised with a 2.2% monthly slump in December instead of posting the estimated 0.3% uptick while the core version of the report came in slightly below estimates of a 0.4% gain. A few hours later, the CB consumer confidence index also fell below expectations at 104.1 versus 105.7, down from the earlier 109.5 figure.

Still, USD was able to end in the black across the board, most notably against JPY (0.72%) and AUD (0.65%) while holding in to a slight lead versus CAD (0.18%) and CHF (0.25%).

Upcoming Potential Catalysts on the Economic Calendar:

• Chinese markets closed for the Lunar New Year holiday
• Japanese consumer confidence index at 5:00 am GMT
• German GfK consumer confidence index at 7:00 am GMT
• Spanish flash GDP at 8:00 am GMT
• Swiss UBS Economic Expectations index at 9:00 am GMT
• BOE Governor Bailey’s speech at 2:15 pm GMT
• BOC monetary policy decision at 2:30 pm GMT
• BOC press conference at 3:30 pm GMT
• U.S. EIA crude oil inventories at 3:30 pm GMT
• FOMC monetary policy decision at 7:00 pm GMT
• FOMC press conference at 7:30 pm GMT

Market jitters could come in play ahead of a couple of major central bank decisions in today’s New York trading session, namely the Bank of Canada’s policy statement and the highly-anticipated FOMC announcement. 

Keep your eyes and ears peeled for any major changes in rhetoric and outlook, as these could shape expectations for future interest rate moves and overall market sentiment.

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