This is our weekly market update, where we start in the US, cross to Europe and Asia, and end in Australia, covering commodities and crypto along the way.
It was another complex week, with the interplay of tariffs, central bank non-decisions, and company reports plus the witching trades on Friday adding to the mix. Never-ending market disruptions are upending investment blueprints everywhere in 2025, while hitting sentiment across US stocks. This week the Fed, Bank of England and Bank of Japan left interest rates unchanged as they assessed the economic impact of U.S. President Donald Trump’s trade tariffs against global trading partners. Many of the world’s major central banks sent a strong message this week that the uncertainty caused by U.S. President Donald Trump’s trade wars is weighing on growth, stoking inflation, and dramatically reducing visibility on the interest rate outlook.
For the week the MSCI global index was 0.7% higher, but still down nearly 4% lower over the past month and flat year to date. Compare that to the European STOXX 600 which is up more than 8% year to date, while the SP500 is down 3.64% from 1 Jan, and the ASX 200 is down 2.79%.
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This is our weekly market update, where we start in the US, cross to Europe and Asia and end in Australia, covering commodities and crypto along the way. This week we saw more volatility, but with the MSCI global index up 2.56%, and up for the year to date, and 18% for the past year. The US dollar continues to hold at high levels, while bond yields eased back from recent highs. The US Volatility index slide to 15.97 ahead of the arrival of Trump 2.0 on Monday.
No doubt, investors will closely monitor stock markets on Tuesday, the day after Donald Trump is inaugurated for his second term in the White House, to see if U.S. equities can continue their recent trend of posting gains after a president is sworn in. While historically, the benchmark S&P 500 stock index has not performed well on average on inauguration day, or the day after if the inauguration falls on a market holiday, the last three inaugurations have all resulted in market gains. Total S&P 500 returns in the first year in office for Barack Obama, Trump and Joe Biden topped 20 per cent. Actually, Trump broke the cycle in 2017, making him the first Republican to take over from a Democrat and not have a recession in the first year of his presidency since Harding in 1921. Let’s see if he can make it two consecutive times.
It’s critical to distinguish market from overall economic impacts; the two shouldn’t be conflated. The U.S. economy is a net importer, as it imports more than it exports (hence the trade deficit). But the S&P 500 is a net exporter. Leading exports from these companies include agricultural products, machinery, finished vehicles, technology, electronic equipment, minerals, fuels and oils around the globe, primarily to Canada, Mexico, China, Japan and the United Kingdom.
European shares ended on a positive note on Friday, benefiting from a broad-based rally which was fuelled by declining government bond yields and encouraging economic data from China, with the STOXX 600 logging its fourth straight weekly rise. The benchmark index, which rose by 0.7%, recorded a more than 2% gain over the week, achieving its fourth consecutive week of advances, its longest winning streak since Aug. 26 last year. Most STOXX sub-sectors were trading higher, with rate-sensitive sectors, like construction and industrials boosting the index, rising 1.6% and 1.5% respectively.
Most Asian stocks rose on Friday, buoyed by gains in Chinese stocks following robust economic data, while Japanese equities declined sharply on expectations of an interest rate hike next week. Gains were limited as regional markets were cautious ahead of the U.S. President-elect Donald Trump’s inauguration due next week.
China’s economy grew more than expected in the fourth quarter of 2024, gross domestic product data showed on Friday, as Beijing doled out a slew of stimulus measures aimed at supporting growth.
Australian shares edged lower on Friday as investors took profits in the banks ahead of US president-elect Donald Trump’s inauguration early next week. Hundreds of billions of dollars in Australian retirement savings are invested in American equities, benefiting from bullish market sentiment as traders hoped Mr Trump’s administration will boost company earnings. The lack of breadth has caused some fund managers to avoid US tech stocks altogether.
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This is our weekly market update, starting in the US, Europe, Asia and ending in Australia, covering crypto and commodities along the way.
2024 ended up as an eventful year for markets, as many stock indices recorded sizeable double-digit gains, though with significant volatility. But the start of 2025 could well mark a shift in tone, with the MSCI global index down 2.08% over the past week. US stock indices were slightly in the red at the start of the new year too, encapsulating the overall market uncertainty about the short-term outlook. Inflows into U.S. equity funds fell sharply in the week through Jan. 1 hit by rising Treasury yields and year-end profit- taking, along with concerns about a slower pace of Federal Reserve rate reductions this year. U.S. equity funds received just $490 million worth of investments during the week, significantly smaller than the $20.46 billion in net purchases in the week before.
But on Friday The Dow Jones Industrial Average rose 0.80%, to 42,732.13, the S&P 500 gained 1.26%, to 5,942.47 and the Nasdaq Composite gained 1.77%, to 19,621.68. Even so, all three indexes posted modest declines for the week, with the S&P 500 logging its third weekly loss in four.
Australian shares shrugged off a decline on Wall Street to close higher on Friday, buoyed by a rally in energy stocks. The S&P/ASX 200 closed at 8250.50 up 0.6 per cent. The All Ordinaries index closed at 8511.9. On Thursday and Friday, the benchmark pared back earlier losses in the holiday-shortened week for a flat four-day return.
Australian investors looking to the US for better returns, with Wall Street focused exchange-traded funds reportedly pulling in at least $5 billion from Australian investors in 2024, eclipsing the record of $2.5 billion set in 2021, according to preliminary flows data compiled by ETF provider Global X. The billions of investor capital flooding into the world’s No.1 market represents a bet that US equities will continue to outpace their global peers – including Australia – for the second year running, capping a 23 per cent gain in 2024 atop a 24 per cent rise a year earlier.
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Digital Finance Analytics (DFA) Blog
Uncertainty Rules As Markets Face A Wicked New Year!
Speculation about Japanese rate hikes drove a rebound for the yen, which ended with the biggest weekly gain vs the USD since July. The dollar fell 1.18% on the day to 149.76 yen, under pressure after Japan’s government finalised a stimulus budget and inflation in Tokyo came in hotter than economists forecast.
ASX property stocks were the worst performing, sliding 0,7 per cent. Goodman Group shares dropped 0.8 per cent to $37.91 and Westfield parent Scentre was down 1.1 per cent to $3.68.
The falls come as economists from three Australian banks – ANZ, AMP and Bank of Queensland – push out their forecast for a first cut from the Reserve Bank of Australia to May, from February previously.
In cryptocurrencies, Bitcoin briefly traded above $US98,600 btu was last at $96,534. Regardless of the current price level, some predict significant growth is possible with growth through the remaining days of 2024 to hit a high of $200,000. This is of course the point, markets can hope, but Bitcoin and the markets more widely continue to be driven on hopium. Just don’t look down.
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Digital Finance Analytics (DFA) Blog
Vertigo: Markets Still Grinding Higher (Just Don’t Look Down!)
This is our weekly market update, where we start in the US, cross to Europe and Asia, and end in New Zealand and Australia, covering crypto and commodities along the way. This is data heavy, so strap in.
Global stocks registered a strong weekly gain on Friday while U.S. Treasury yields slipped as markets eyed President-elect Donald Trump’s likely policies and their impact on the U.S. economy, even as bitcoin traded near the $100,000 threshold as bets that Trump’s administration will take a lighter-touch approach to regulation as chairman Gary Gensler plans to step down on January 20, the day Trump is inaugurated.
MSCI’s gauge of stocks across the globe rose 0.33% to 854.13 and gained about 1.4% for the week. Europe’s Stoxx 600 share index ended the week 1% higher, snapping four straight weeks of losses.
All three Wall Street indexes finished higher and each notched a weekly gain. Industrials, consumer discretionary, financials and consumer staples drove gains while communication services, utilities and technology equities were the biggest losers.
Nvidia (NASDAQ:NVDA), the world’s most valuable company, ended down 3.2% after the artificial intelligence chipmaker reported strong quarterly results but issued lacklustre sales forecasts having hit a prior record high.
European equity markets closed higher on Friday, despite investors digesting weak economic data as well as the intensifying conflict between Russia and Ukraine. Data released earlier Friday vividly illustrated the economic woes that Europe is currently suffering, pointing to further interest rate cuts by both the European Central Bank and the Bank of England. Germany’s DAX rose 1% and the UK’s FTSE 100 gained 1.4%, while France’s CAC 40 climbed 0.6%. The pan-European STOXX 600 jumped 1.2%, its best daily performance in nearly two months.
Most Asian stocks rose on Friday, buoyed by strength in chipmaking and cyclical stocks, which helped markets weather heightened tensions over the Russia-Ukraine war.
A rally in oil prices on fears of an escalation in the Ukraine-Russia conflict pushed energy stocks higher, sending the Australian sharemarket to a fresh closing high on Friday. Australia’s ASX 200 benefited from a shift into economically sensitive sectors despite Australian PMI data showing a contraction in both manufacturing and services activity.
The S&P/ASX 200 jumped 0.9 per cent to 8393.8 at the closing bell, resetting Tuesday’s record of 8374. The index climbed 1.3 per cent this week. The All Ords rose 0.8 per cent.
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Digital Finance Analytics (DFA) Blog
Markets Reach For The Stars Again, Even As The Ground Shifts Under Foot!
This is our weekly market update where we start in the US, cross to Europe and Asia and end in Australia, covering commodities and crypto on the way. To remind our loyal viewer, this is a data rich show, as I get the weeks developments into perspective.
Market trends are rarely linear for long, they naturally ebb and flow. Despite the flaring conflict in the middle east, and the US election just a month away now, MSCI’s global equities index rose on Friday, though for the week, it showed a roughly 0.7% decline, while the Dow closed at fresh record highs and the US dollar climbed to its highest level since mid-August as investors heaved a sigh of relief after a surprisingly strong U.S. labor market report.
Oil prices rose and settled with their biggest weekly gains in over a year on the mounting threat of a region-wide war in the Middle East, but gains were limited as U.S. President Joe Biden discouraged Israel from targeting Iranian oil facilities. Investors remained anxious about how Israel would respond after Iran fired missiles at it on Tuesday. Supreme Leader Ayatollah Ali Khamenei said earlier that Iran and its regional allies will not back down.
The Australian share-market snapped a three-week winning streak on Friday, as the escalating conflict in the Middle East sent traders fleeing equities and pulled shares down from record highs touched a week earlier. The S&P/ASX 200 ended Friday’s 0.7 per cent lower at 8150 points, dragging the score to a weekly loss of 0.8 per cent, its first since early September. Of the ASX’s 11 sectors, nine ended the session lower.
The IMF this week gave a mixed assessment of recent government budgets and whether Treasurer Jim Chalmers and his state counterparts were helping the RBA to tame Australia’s worst inflation outbreak in decades.
Finally, in crypto, Bitcoin (BTC) dropped over 5% this week as the escalating conflict in Gaza and Lebanon fuelled flows into safe-haven assets.
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Digital Finance Analytics (DFA) Blog
Walking The Uncertainty Tightrope Towards Who Knows What Next!
This is our weekly market update, designed to help me digest what is happening, starting in the US, probably the most consequential market in the world, then we move to Europe, Asia and end in Australia and also cover commodities and crypto on the way.
On Friday shares on Wall Street were mixed in a narrow range as investors continued to assess the outlook for US interest rates. Why 50 basis points, not 25, and was this a minor course correction, aimed at bringing a soft economic landing, or a sign the FED had left things too long and was trying to head off a lurking recession risk? And was there a hint of political here ahead of the US election? It’s really not clear. And as for that mythical R star – the level at which rate neither detract from, or add to growth, remains like the quest for the holy grail.
One top Federal Reserve policymaker signalled a willingness to cut rates at a fast pace. Federal Reserve governor Christopher Waller told CNBC that “inflation is running softer than I thought”. He’s now estimating that the Fed’s favoured gauge of inflation — the personal consumption expenditures price index — has risen over the last three months at an annualised rate of less than 1.8 per cent, which is below the Fed’s target of 2 per cent.
But separately, Federal Reserve governor Michelle Bowman said she was concerned this week’s 50-basis-point rate cut was “premature”, countering expectations of another similar move anytime soon. “I believe that moving at a measured pace toward a more neutral policy stance will ensure further progress in bringing inflation down to our 2 per cent target.” Bowman dissented at this week’s meeting, the sole policymaker to do so, voting for a quarter of a percentage point reduction instead.
We know the FED will continue to be data dependent and next week’s US data highlight will arrive on Friday with August’s PCE report.
Gold’s reaction to the most-dovish Fed decision in years proved lackluster. Futures were last at 2647.20, up 1.39% across the week. Plenty of traders thought gold would surge after an outsized rate cut birthing a new cutting cycle. And with top Fed officials projecting many more cuts, it is going to be big. Gold did rally initially on that revelation, but quickly reversed into a larger intraday loss. Fed rate cuts are bullish for gold, but speculators’ gold-futures positioning is overextended.
Australian shares scaled another record high on Friday, tracking a global wave of optimism that the US Federal Reserve will deliver a much-hoped-for soft landing for the world’s largest economy. The S&P/ASX 200 Index added 0.2 per cent to 8209.5, the highest closing level in its history. It climbed to an intraday peak of 8246.2 – setting a record for the sixth straight session. On the week, it gained 1.3 per cent.
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This is an edited version of a live discussion with Investment Manager Tony Locantro, as we kick over the current issues facing markets and households. Tony offers several financial services, such as investment management, financial planning, stock selection and fundraising. Tony has helped countless investors and organisations with strategic investment strategies over the last two decades.
His understanding of market psychology has ensured valued investment strategies in bull and bear markets. Because of his ability to understand the small cap market space, Tony has been featured in dozens of well known publications across Australia, such as Small Caps, Sky Business, Digital Finance Analytics, and many more.
Original stream and chat here: https://youtube.com/live/t8AcR69APfM
This is our weekly market update, where we start in the US, cross to Europe and Asia and end in Australia. And let me say this is a calm and methodical summary, not a shouty content light thing which might be all the rage on some social media, but which for me does not cut the mustard, as I use this to help me understand what is really going on.
Well riotous August ended with global stocks edging higher in choppy trading on Friday, making it the fourth consecutive month of gains. MSCI’s world share index rose 0.77%, for a 2.40% monthly gain. This despite some questions over AI leading to a broadening of interest in other sectors, a bout of heavy selling in early August, and more support for gold as a safe haven. All this despite U.S. economic data that helped the dollar snap a weeks-long losing streak. US markets will be closed on September 2 for the Labor Day holiday so we can expect rudderless trading on Monday.
The S&P 500 ended the final session of the week higher, with a late spike, as the latest batch of data pointed to an ever-resilient US consumer, potentially slowing the pace of rate cuts. The benchmark S&P 500 closed August with a 2.3 per cent gain for the month. It’s now up 18.4 per cent so far this year and is within 0.4 per cent of the all-time high it set in July.
In Europe the Stoxx index closed up 0.09% after touching a record intraday high while Britain’s FTSE index hit over a three-month high on Friday, clocking gains for the topsy-turvy month, with real estate shares in the lead as interest rate-cut hopes held firm, while energy shares tumbled on demand concerns, capping intra-day gains. It still registered its second straight monthly gain and third consecutive weekly advance.
In Asia, Asian stocks rose on Friday as technology stocks recovered from Nvidia-induced losses, while month-end bargain buying saw Chinese shares rebound from more-than six-month lows. But most regional markets were still headed for a loss in August, as they struggled to recover from debilitating losses clocked at the beginning of the month.
The Australian share market finished near a record high on Friday, as higher oil prices and a final flurry of better than expected results from earnings season helped secure the benchmark’s third straight week of gains.
But once again, more questions than answers.
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This is an edited version of a live discussion with Crypto evangelist Adam Stokes as we examine the recent changes in the market, as gold rockets to new highs, even as rate cuts and QT is under way. Where is the real value of money, and how does Crypto play into this?
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Digital Finance Analytics (DFA) Blog
DFA Live Q&A HD Replay: Asset Inflation, Rate Cuts & Crypto: With Adam Stokes
