Markets are riding a wave of optimism fueled by slower-than-expected US retail sales, strong earnings from banks and TSM, and hawkish comments from Fed's Christopher Waller hinting at earlier rate cuts if inflation continues its downward trend. Yet, US inflation metrics show core services inflation remains stubbornly high, while energy prices face upward pressure from geopolitical risks like Trump’s tariff threats and sanctions on oil producers.
In China, upbeat Q4 data helped the CSI 300 index and yuan, though deflation and weak retail sales signal the recovery isn’t complete. Meanwhile, US and European yields dipped amid dovish central bank remarks and technical corrections, giving equities a mixed boost.
Luxury stocks in Europe surged on Richemont's record sales, while Nvidia and the Magnificent 7 faltered on chip curb concerns. With banks outperforming and yields stabilizing, the stage is set for continued rotation toward lower-valuation sectors. Where will markets head next? Watch...
