‘Giddy’ Wall Street hits new highs, BOJ looms into view

Whatever doubts investors may have surrounding the longer-term economic damage of US President Donald Trump’s proposed tariff agenda, they are giving his deregulation, tech-friendly and AI-supportive policies a huge thumbs up. Stocks are flying.

With strong earnings from streaming giant Netflix providing an extra tailwind, Wall Street’s sizzling performance on Wednesday should fuel a strong rise in risk appetite across Asia on Thursday. It’s unlikely that a moderate rise in bond yields and the dollar will get in the way of that.

The S&P 500 leaped to a fresh peak of 6,100 points on Wednesday and lifted the Nasdaq above the 20,000-point barrier to within a whisker of December’s record high of 20,204 points.

The tech and artificial intelligence fervor is intensifying again after Trump announced a private sector investment of up to USD 500 billion to fund infrastructure for AI. Trump said that ChatGPT’s creator OpenAI, SoftBank and Oracle are planning a joint venture called Stargate, which will build data centers and create more than 100,000 jobs in the United States.

Billionaire investor Stanley Druckenmiller told CNBC this week that optimism surrounding the US market and business outlook is reaching “giddy” levels in boardrooms. Judging by Wall Street’s boom, that giddiness is being mirrored across trading floors.

Another reflection of investors’ bullishness and hunger for income is the record demand seen at French, Spanish and UK debt sales over the last 24 hours. Remarkably, bids for the roughly USD 37 billion worth of debt on offer totaled around USD 400 billion.

A large part of that is seasonal, as fixed income investors deploy their allocations for the year in January. But still.

These are the global forces on Thursday likely to drive Asian markets, where investors also have the first estimate of fourth-quarter and full-year South Korean GDP data, Japanese trade figures, the latest inflation reading from Singapore and industrial production numbers from Taiwan.

Thursday is also the last full trading day before the Bank of Japan’s policy decision. Financial markets are increasingly confident that the BOJ will raise its short-term policy rate on Friday by a quarter of a percentage point to 0.5%, a level last seen during the Global Financial Crisis.

Given its history, the BOJ could well couch any tightening of policy in cautious terms, making it clear that policy ‘normalization’ will be carried out carefully and gradually. If the Fed delivered a ‘hawkish cut’ last month, the BOJ may be poised to deliver a ‘dovish hike’ on Friday.

Dollar/Yen is trading towards the lower end of the 155.00-159.00 range it has been in for the past month, the two-year Japanese Government Bond yield is buoyant, and the Nikkei 225 index is hovering just below the 40,000-point mark.

Here are key developments that could provide more direction to markets on Thursday:

– South Korea GDP (Q4)

– Japan trade (December)

– World Economic Forum in Davos

(Reporting by Jamie McGeever)

Gold hits over 2-month high on Trump policy risks, weak dollar

Gold prices jumped to an over two-month peak on Tuesday, supported by a weaker dollar and as markets flocked to the safe-haven asset amid uncertainty surrounding US President Donald Trump’s potential tariffs.

Spot gold climbed 1.3% to USD 2,742.48 per ounce by 02:36 p.m. ET (1936 GMT), reaching its highest level since Nov. 6 and nearing the all-time high of USD 2,790.15 set in October.

US gold futures settled 0.4% higher at USD 2,759.20.

The dollar index slipped 1.2%, holding close to a two-week low hit in the previous session and making bullion less expensive for holders of other currencies.

“Today’s move has largely been about the threat of US blanket tariffs following Trump’s inauguration. The information with respect to potential tariffs has only come in at a trickle,” said Daniel Ghali, commodity strategist at TD Securities.

The newly elected president has not provided any specific details about the universal tariffs or extra surcharges on key trade partners, a key plank of his election campaign.

He has, however, hinted at the possibility of imposing duties on Canadian and Mexican goods as soon as Feb. 1.

During the first year of Trump’s first administration in 2017, bullion logged a 13% yearly gain, its best annual performance in seven.

Bullion is considered a safe investment during economic and geopolitical uncertainty, but Trump’s proposed policies are widely seen as inflationary, which could push the US Federal Reserve to maintain higher interest rates for a longer period to curb price pressures.

High rates hurt the non-yielding asset’s appeal.

“The market is probably also looking ahead to next week’s FOMC meeting and Personal Consumption Expenditure (PCE) data, particularly the inflation read,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.

“I don’t think anybody is expecting the Fed to do anything next week, but certainly the policy statement will be looked at very closely for hints about the remainder of the year.”

Spot silver rose 0.9% to USD 30.77 per ounce. Palladium gained 1.1% to USD 955.50 and platinum was little changed at USD 942.40.

(Reporting by Anjana Anil in Bengaluru; Editing by Tasim Zahid and Mohammed Safi Shamsi)

Whipsawed dollar and fog of uncertainty? Get used to it

Day two of the second Donald Trump administration, and exchange rates are in the global market crosshairs as investors nervously try to figure out how to trade the immediate fog shrouding the USD president’s trade policy.

That Trump will impose tariffs on imports from many of America’s major trading partners seems almost certain. On what products and countries, and to what degree, are unknown right now, leaving the dollar and other currencies vulnerable to choppy and volatile trading.

The same applies to other asset classes too, although the immediate impact is being felt more acutely in FX. Implied volatility across G10 currencies as measured by Deutsche Bank’s ‘DBCVIX’ index remains relatively high, although it did pull back late on Tuesday.

Investors will be relieved that Trump chose not to hit major trading partners with tariffs on his first day in office. They will be hoping his approach to tariffs follows the path SocGen analysts sketched out last week – “talk tough, aim high, but act gradually.”

But the president’s off-the-cuff remarks to reporters late on Monday that some tariffs could come on Feb. 1 triggered an immediate reversal in the dollar, and served a timely reminder of how difficult the market terrain will be for investors to navigate in the coming weeks and months.

The dollar looks stretched on positioning, sentiment, and valuation metrics – hedge funds last week held the biggest net long dollar position in nine years; ‘long dollar’ is one of investors’ most crowded trades, according to Bank of America’s latest fund manager survey; and Citi analysts reckon the currency is overvalued by 3%.

But that doesn’t mean it can’t go even higher, which is likely if Trump follows through with his more extreme protectionist measures and fiscal policies, Citi analysts warn. Rising Treasury yields and term premiums have tended to be dollar-positive in recent years, they note.

Meanwhile, the outlook for markets in Asia on Wednesday is fairly positive following a day of calm on global FX markets, falling Treasury yields and solid gains on Wall Street. Nikkei futures are pointing to a rise of around 0.75% for Japanese stocks at the open in Tokyo.

China’s markets will be under scrutiny following their decent start to the week on the back of Trump’s initial ‘go slow’ signals on tariffs. The yuan on Tuesday rose the most since early November, as per the central bank’s daily fixing, and on Monday registered its best day in spot market trading since August.

The main economic events in Asia on Wednesday are the release of New Zealand’s latest consumer inflation figures and an interest rate decision and guidance from Malaysia’s central bank.

Here are key developments that could provide more direction to markets on Wednesday:

– New Zealand inflation (December)

– Malaysia interest rate decision

– World Economic Forum in Davos

(Reporting by Jamie McGeever; Editing by Deepa Babington)

South Korea aims to make stock market more attractive with tighter listing rules

SEOUL – South Korea will tighten regulations on stock market listings to improve the quality and competitiveness, the financial regulator said on Tuesday, in the latest move by authorities aimed at making the domestic stock market more attractive to investors.

The Financial Services Commission said in a statement that while the number of listed companies and market capitalization had increased on the market the quality had fallen short.

“When it comes to qualitative aspects of corporate value and growth potential, our stock market growth has been assessed to be comparably weak,” the commission said.

In February 2024, the government announced capital market reforms under the “Corporate Value-up Program“, mirroring Japan’s efforts that brought the Nikkei to an all-time high, to resolve the so-called “Korea Discount“, a tendency for the benchmark KOSPI’s undervaluation due to low dividend payouts and opaque corporate governance structures.

However, the South Korean push, which was one of the signature policy drives of now impeached President Yoon Suk Yeol, has fallen short of market expectations, with the KOSPI dropping nearly 10% in 2024 to rank the worst performer among major Asian markets.

In the statement, the Commission said the initial public offering (IPO) market should be more driven by corporate value-based investment decisions rather than short-term profit considerations.

To achieve that, the Commission said it would introduce preferential treatments for institutional investors that pledge to hold shares for locked-in periods, restrict bidding participation by small firms for reasonable share pricing and strengthen the role and responsibility of the book runner.

The regulator also plans to make de-listing easier, by tightening the criteria for listed companies to stay in the market, such as market capitalization and revenue requirements, and shortening probation periods.

In the last five years, Morgan Stanley Capital International’s Korea index rose 3.8%, while the global index provider’s U.S. index rose 83%, the Japan index rose 65% and Taiwan rose 110%. The number of listed companies rose 18% in Korea to 2,478, compared with increases of 3.5% in the United States, 6.8% in Japan and 8.7% in Taiwan.

The regulatory changes will take effect in stages, from as early as the first quarter, after amendments and preparations are completed for each of them, the Commission said.

(Reporting by Jihoon Lee
Editing by Ed Davies)

US crude futures down on Trump plan to boost fossil fuel output

BEIJING – U.S oil prices were down by more than USD 1 a barrel in early Asian trading on Tuesday from Friday’s close after President Donald Trump took office and announced a plan to maximize U.S. oil and gas production by declaring a national emergency.

The most actively traded WTI crude March contract CLc2 fell by USD 1.02 to USD 76.37 a barrel by 2356 GMT on Monday.

There was no settlement in the U.S. market for Jan 20 due to the Martin Luther King public holiday.

(Reporting by Colleen Howe; Editing by Jamie Freed and Sonali Paul)

Dollar drops, European stocks jump on Trump tariff delay

LONDON – The dollar fell broadly on Monday, while European stocks jumped, after an official for the incoming US administration said President-elect Donald Trump would stop short of imposing tariffs at his inauguration, which takes place later in the day.

European equity markets were firmly in positive territory in afternoon trading after the Wall Street Journal reported Trump would not impose import tariffs immediately after he’s sworn in later on Monday.

The pan-European STOXX 600 rose 0.3%, with the region’s main indices all up roughly 0.5%. MSCI’s All-World index was last up 0.4%.

The dollar tumbled by as much as 1.3% at one point, falling particularly hard against the currencies of the United States’ largest trading partners, such as the Canadian dollar, the Mexican peso, the euro and China’s yuan.

Trump takes the oath of office at noon Eastern Time (1700 GMT), and promised a “brand new day of American strength” at a rally on Sunday.

He has stoked expectations of an immediate slew of executive orders and, in a reminder of his unpredictability, launched a digital token on Friday, which soared above USD 70 before sliding to around USD 50 as traders turned uneasy.

Monday is a U.S. holiday, so the first responses to his inauguration in financial markets may be felt in foreign exchange and then during Asian trade on Tuesday.

Euro zone bond yields steadied by 1518 GMT.

“In the last two weeks we have seen two conflicting views from the new administration – the hard-liners on tariffs and those who favour a more market-friendly approach,” Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management, said.

“So, this perception that the door is open to negotiations is important. But it doesn’t tell us where we will end and I will be waiting for details on the scope of tariffs, which sectors will be impacted,” he said, adding: “The fact that he might be choosing a gradual approach is an encouraging sign.”

The dollar fell 1.15% against the Canadian dollar to CAD 1.4319 and dropped 1.4% against the Mexican peso.

Trump has threatened tariffs of as much as 10% on global imports and 60% on Chinese goods, plus a 25% import surcharge on Canadian and Mexican products, duties that trade experts say would upend trade flows, raise costs and draw retaliation.

The yuan itself strengthened sharply in the offshore market, leaving the dollar down almost 1% on the day at 7.274.

The Australian dollar, which can serve as a more liquid proxy for the Chinese currency, rose 1.2% on the day. The euro, meanwhile rose 1.3% on the day, set for one of its largest one-day rally since late 2023.

Bitcoin hit an all-time high of USD 109,071.86 in early European trading before falling back to trade around USD 106,030.10, still a 1.2% gain for the day. The world’s largest cryptocurrency has surged more than 10% so far this month.

Trump’s new cryptocurrency launched on Friday – known as $TRUMP – soared to nearly USD 12 billion in market value, drawing billions in trading volume. First Lady Melania Trump’s cryptocurrency launched on Sunday hit a market cap of USD 1.9 billion.

In commodities, gold rose 0.2% to USD 2,708 an ounce and Brent crude futures Fell 1.2% to USD 79.82, while US crude dropped 1.6% to USD 76.62, on expectations that Trump may ease curbs on Russia’s energy sector in return for a truce in Ukraine.

(Reporting by Nell Mackenzie and Dhara Ranasinghe; Editing by Amanda Cooper and Sharon Singleton)

Oil prices dip but post 4th straight weekly gain on US sanctions

HOUSTON – Oil prices settled lower on Friday but notched their fourth straight weekly gain, as the latest US sanctions on Russian energy trade added to worries about oil supply disruptions.

Brent crude futures dipped 50 cents, or 0.6%, at USD 80.79 per barrel, but gained 1.3% this week. US West Texas Intermediate crude futures lost 80 cents, or 1%, at USD 77.88 a barrel, having climbed 1.7% for the week.

“Sanctions on Russia are causing tightness of supply in Europe, India, and China,” said Phil Flynn, senior analyst with Price Futures Group.

The Biden administration unveiled broader sanctions last week targeting Russian oil producers and tankers.

Investors are also assessing the potential implications of President-elect Donald Trump’s return to the White House on Monday. Trump’s pick for Treasury secretary said he was ready to impose tougher sanctions on Russian oil.

Money managers raised their net long US crude futures and options positions in the week up to Jan. 14, data from the US Commodity Futures Trading Commission showed on Friday. Speculators raised combined futures and options positions in New York and London by 8,038 contracts to 215,193 over that period.

However, weighing on oil prices were expectations of a halt in attacks by Yemen’s Houthi militia on ships in the Red Sea following a Gaza ceasefire deal.

The Houthis’ attacks have disrupted global shipping, forcing ships to make longer and more expensive journeys around southern Africa for more than a year.

The Israeli security cabinet approved the ceasefire deal on Friday, paving the way for the return of the first hostages from Gaza as early as Sunday. The accord was still conditional on approval by the full cabinet, which was meeting on Friday afternoon.

Expectations for increased demand lent some support to the oil market earlier on Friday. Data this week showed inflation easing in the US, the world’s biggest economy, bolstering expectations of interest-rate cuts.

Traders are also assessing fresh data from China, the world’s top oil importer. Its economy fulfilled the government’s ambitions for 5% growth last year.

However, China’s oil refinery throughput in 2024 fell for the first time in more than two decades barring the pandemic year of 2022, government data showed on Friday, as plants tempered operations in response to stagnant fuel demand and depressed margins.

Meanwhile, the US oil rig count, an indicator of future output, fell by two to 478 this week, energy services firm Baker Hughes said.

A blast of Arctic air is set to cover much of the United States with temperatures below freezing starting on Friday and into next week, and is set to drive up heating oil demand and likely impact some productionoperations.

(Reporting by Enes Tunagur in London, Yuka Obayashi in Tokyo, and Siyi Liu in Singapore;
Editing by Clarence Fernandez, Jason Neely, Paul Simao, Frances Kerry, Rod Nickel, and David Gregorio)

Global equity funds see drop in demand on rising US Treasury yields

Demand for global equity funds declined sharply in the week through Jan. 15, as US Treasury yields rose and expectations for the Federal Reserve’s interest rate cuts fell following a robust jobs report.

Global equity funds witnessed just USD 37.79 million worth of net purchases during the week, the smallest weekly buying since Dec. 18, 2024, as per LSEG Lipper data.

Last week, investors pondered possibility that the Fed may have finished cutting rates as data from the Labor Department showed US job growth accelerated in December, while the unemployment rate fell to 4.1% from 4.2% in November.

The benchmark 10-year yield climbed to 4.805% following the report, its highest level since November 2023.

However, the core US inflation reading for December came in below expectations on Wednesday, reigniting hopes for further cuts.

During the week ended Jan. 15 , investors withdrew a net USD 8.23 billion from US equity funds, the largest outflow since December 18, 2024, while investing USD 5.07 billion and USD 1.62 billion in Asian and European funds, respectively.

Sectoral equity funds saw USD 447 million in inflows, driven by a USD 1.08 billion investment into the financial sector.

Meanwhile, global bond funds attracted USD 8.88 billion, a sharp decline from the previous week’s USD 19.67 billion.

Short-term global bond funds received USD 5.02 billion and loan participation funds drew USD 1.39 billion, but government bond funds only saw USD 137 million in inflows, the lowest in three weeks.

Money market funds faced USD 94.13 billion in net sales, a reversal from the prior week’s USD 158.68 billion in purchases.

Precious metal funds ended a two-week selling streak with USD 327.55 million in purchases, while energy funds saw outflows for the sixth week, losing USD 54 million.

Emerging market data for 29,634 funds showed equities witnessed USD 4.06 billion worth of divestment, the largest weekly outflow in seven weeks. Bond funds, however, garnered a net USD 798 million worth of net purchases.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Varun H K)

Yen gets glimpse of choppy trading ahead

Friday’s price action could provide a glimpse of what to expect in USD/JPY trading in 2025.

The pair surged following reports of a phone conversation between US President-elect Donald Trump and Chinese President Xi Jinping. The discussion was described by Trump as “a very good one for both China and the USA.”

Markets are likely to focus on headlines after Trump’s inauguration on Monday, as key decisions will increasingly come from the top. This could result in choppy markets, though the expectation that agreements will eventually be reached might limit significant volatility and weaken the yen as risk tone improves.

Yen traders, in particular, may choose to capture moves in USD or CNH until US-Japan relations take center stage. Reports indicate that Japanese Prime Minister Shigeru Ishiba could visit the US as early as the first half of February, though a meeting with Trump has not been confirmed.

USD/JPY posted a session high of 156.20 following the Xi-Trump headline though modest turnover prevented a break of 156.53, relieving bearish pressure from a series of lower highs and lower lows. Large option expiries near 156.95-157.05 and concerns over potential intervention above 158 could also hinder further gains.If USD/JPY fails to extend higher, it risks falling back below the key 155 psychological level. Further declines could test the 38.2% Fibonacci retracement of its December to January rise at 154.97, the 55-day moving average at 154.66, the Dec. 19 low at 154.45, and an ascending trend line from the September low near 154.08.

(Robert Fullem is a Reuters market analyst. The views expressed are his own.)

Gold poised for third weekly gain as markets look to Trump inauguration

Gold prices were pressured by an uptick in the US dollar on Friday, but remained on track for a weekly gain as uncertainties around incoming President Donald Trump’s policies and renewed bets of further rate cuts lifted bullion above the key USD 2,700 level.

Spot gold eased 0.4% to USD 2,701.03 per ounce by 03:10 p.m. ET (2010 GMT), while US gold futures settled 0.1% lower to USD 2,748.70.

“The pullback today is not significant, but more of a profit-taking move than anything else, maybe helped by the dollar being a little higher in the day, adding some light pressure,” said David Meger, director of metals trading at High Ridge Futures.

Gold hit over one-month high on Thursday, USD 65.6 away from its all-time high of USD 2,790.15 hit in October. Prices have gained 0.5% so far for the week, their third straight weekly gain after softer-than-expected US core inflation figures on Wednesday intensified speculation of more than a single rate cut from the Fed.

Traders are pricing in two rate cuts by year-end, with Fed Governor Christopher Waller hinting at the possibility of more cuts should economic data weaken further.

Markets now keenly await Trump’s inauguration on Jan. 20, and his broad trade tariffs are expected to further ignite inflation and trigger trade wars, potentially increasing bullion’s safe-haven appeal.

“The uncertainty in regard to the policies that President Trump is going to put in place has been one of the supportive factors for gold,” Meger added.

Non-yielding gold, often seen as a hedge against inflation and political uncertainty, benefits from lower interest rates.

“There are question marks about the state of tariffs, how they’ll be implemented. Many investors are looking to gold as a way of hedging some of the downside risks, should these new policies be damaging to growth,” said Nitesh Shah, commodity strategist at WisdomTree.

Spot silver slipped 2% to USD 30.17 per ounce, palladium rose 1% to USD 949.99 while platinum added 0.9% to USD 940.28.

(Reporting by Anjana Anil, Daksh Grover, and Anushree Mukherjee in Bengaluru, additional reporting by Swati Verma; Editing by Shreya Biswas, Vijay Kishore, and Shailesh Kuber)

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