Market drivers and catalysts
Equities: Wall Street nudges to new highs, Europe adds small gains, while China-led Asia rallies as deflation fears fade.
Volatility: VIX firmer at ~15, CPI risk lifts short-dated hedging, downside skew remains bid
Digital assets: Bitcoin and ethereum steady, IBIT and ETHA track macro tone, CPI and rates in focus
Currencies: USD firms again, JPY craters on rising anticipation of Japan snap election.
Commodities: Precious metals pause, corn slides on big crop, crude rallies on Iran tariff threat
Fixed income: Japan’s long yields blow out higher on rising anticipation of Japan snap election.
Macro events: US Dec. CPI
Macro headlines
President Trump imposed a 25% tariff on any country doing business with Iran, effective immediately, while weighing Iran’s offer for nuclear diplomacy even as he leans toward authorizing new military strikes.
Japan's bank lending grew by 4.4% in December, beating expectations and marking the fastest rise since April 2021. Total loans reached ¥660.6 trillion, with major banks leading the charge at 5.7%, regional banks at 4.1%, and shinkin banks at 1.4%, reflecting varied credit demand across sectors.
UK retail sales grew 1% year-on-year in December, the weakest in seven months due to persistent cost pressures, compared to 3.1% in the previous year but above a 0.6% forecast. Non-food sales declined 0.3%, while food sales increased 3.1%. BRC's Helen Dickinson described the season as “drab,” with slow sales growth offset by post-holiday discounts.
Switzerland’s consumer sentiment improved to -31 in January from -34, beating expectations. Economic and financial outlooks strengthened, inflation fears eased, though unemployment concerns rose slightly, marking the best reading since early 2025.
Australia’s Consumer Sentiment Index fell 1.7% to 92.9 in January, as one-year economic outlook dropped 6.5%. Household finances improved slightly, but unemployment concerns rose. Westpac’s Mathew Hassan cited growing caution and inflation fears.
Macro calendar highlights (times in GMT)
1315 – US Weekly ADP Employment Change
1330 – US Dec CPI
1500 – US Oct New Home Sales
1700 – EIA's Short-term Energy Outlook (STEO)
1800 – US 30-year Government Bond Auction (USD 22 billion)
Earnings events
Today: Delta Airlines, JPMorgan Chase, BNY Mellon
Wednesday: Citigroup, Bank of America, Wells Fargo
Thursday: TSMC, Morgan Stanley, Goldman Sachs, Blackrock
Friday: Reliance Industries
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: The S&P 500 rises 0.2% to 6,977.3, the Dow adds 0.2% to 49,590.2, and the Nasdaq gains 0.3% to 23,733.9, all ending at fresh highs. Stocks wobble early after reports the Justice Department threatens action against Federal Reserve (Fed) chair Jerome Powell, then recover as traders refocus on rates and earnings. Walmart jumps 3.0% on momentum from its Nasdaq 100 index inclusion and new artificial intelligence (AI) features, while Alphabet adds 1.0% after Apple agrees to use Gemini in Siri; Capital One drops 6.4% and Citigroup falls 3.0% on Trump’s proposed 10% credit-card rate cap. Next up, investors watch U.S. inflation data and the first big bank results for hints on the rate path.
Europe: The STOXX 600 rises 0.2% to 610.95 and the Euro STOXX 50 adds 0.3% to 6,016.3, while Germany’s DAX climbs 0.6% to 25,405.3 and the UK’s FTSE 100 edges up 0.2% to 10,140.7. Shares stay supported by hopes that growth cools without a recession, even as the Powell headlines keep some investors cautious. Prosus gains 3.7% as tech follows Wall Street, while Heineken drops 4.1% after its chief executive says he will step down. Barclays falls 2.4% as the U.S. credit-card rate-cap idea hits lenders. Focus now turns to U.S. inflation data and early earnings, which will test how much good news is already priced in.
Asia: Hong Kong’s Hang Seng jumps 1.4% to 26,608 and the Hang Seng Tech index rises 3.1% to 5,863, while China’s Shanghai Composite climbs 1.1% to 4,165.3, its highest close in about a decade. Sentiment improves as investors bet weaker deflation pressure and louder policy support can lift demand, ahead of China’s trade figures and fourth-quarter gross domestic product (GDP). Alibaba rises 5.3% and Meituan gains 6.6% as internet names lead the charge, while Tencent adds 2.0% as trading stays heavy. Next, markets will look for the data to match the optimism and for any fresh Beijing signals that keep the rally on the road.
Volatility
Market volatility is ticking higher as investors position for a busy mix of macro data and political headlines. The VIX rose to 15.12 on Monday, up from last week’s lows, while very short-dated measures moved more sharply, with VIX1D at 9.57 and VIX9D at 11.94, signalling growing caution around immediate event risk. The main focus today is the US CPI release for December, which could influence expectations for rate cuts later this year. Political uncertainty has added to the risk premium after renewed scrutiny of Federal Reserve chair Jerome Powell raised questions about central bank independence.
SPX expected move: options pricing implies a move of roughly ±29 points (about 0.4%) for today's expiry.
Skew check (today’s expiry): downside protection remains in demand, with puts trading at notably higher implied volatility than calls, confirming that investors are paying up for insurance against short-term drawdowns rather than positioning for upside acceleration.
Digital Assets
Digital assets are trading in a holding pattern as investors wait for clarity from US inflation data. Bitcoin is hovering around $91.8k, while ethereum trades near $3.1k, with solana and xrp showing only modest moves. Listed crypto ETFs reflect the same cautious tone: IBIT and ETHA are slightly higher on the day, but flows remain sensitive to macro headlines rather than crypto-specific news.
- For investors, the message is that crypto is currently behaving less like an independent growth theme and more like a macro-linked risk asset, reacting primarily to interest-rate expectations, the US dollar, and broader sentiment rather than internal momentum.
Fixed Income
Japan’s Government long bond yields rose sharply amidst recent reports that PM Takaichi could call snap elections soon in an effort to capitalise on her political popularity and secure a parliamentary majority. The benchmark 2-year JGB yield rose a basis point to 1.165%, while the benchmark 10-year JGB yield soared 7.5 basis points by late trading in Tokyo to 2.17%, a new modern record since the 1990’s.
US treasury yields lifted slightly ahead of today’s US CPI data for December, with the 2-year benchmark treasury yield over a basis point higher and pushing on 3.55%, a high for 2026, while the 10-year benchmark yield was remains corralled just below the 4.21% range highs since last September, trading 4.20% in late Asian hours Tuesday after a deep sell-off in long Japanese government bonds.
Commodities
US corn futures slumped 4.2% on Tuesday to near a three-month low after USDA’s latest supply and demand report showed U.S. grain stocks swelling to a hefty 13.3 billion bushels, up from 12.1 billion a year ago, after the agency lifted both yield and production estimates to fresh records. Soybeans also traded lower on the back of stronger production and weaker export projections.
Oil pushed to its highest level since early December, extending a short-covering and momentum-driven squeeze after President Trump said he would impose a 25% tariff on goods from countries “doing business” with Iran. Among the biggest affected is China, which buys around 90% of Iran’s exports. Brent is trading above USD 64, with WTI nearing USD 60.
Gold steadied near USD 4,590 after Monday’s 2% surge, fuelled by concerns over Fed independence following the Trump administration’s threat of criminal indictments. Silver is meeting resistance around USD 86. Meanwhile, CME Group will shift margining for gold, silver, platinum and palladium futures to a percentage of notional value rather than a fixed dollar amount, after extreme price moves and volatility forced repeated margin changes.
Copper pared gains after surging close to a record high, supported by a weaker dollar, supply concerns, and the hoarding of copper in the U.S. ahead of a decision on import tariffs, which has left the rest of the world comparatively short of material. In the HG contract, some resistance has emerged around USD 6 per lb, just below the USD 6.11 record high from last week.
Currencies
The US dollar fought back from the sell-off inspired by concerns that the Trump administration is going after the Fed’s independence, with USDJPY leading the way higher on increasing noise that Japan’s PM will call snap elections. USDJPY traded as high as 158.97 in Tokyo by late Tuesday, while EURUSD had backed off to the 1.1650’s after threatening the 1.1700 level on Monday. The US CPI data is up in early US hours Tuesday.
Sweden’s krona has quietly rallied to multi-year highs versus the EUR as EURSEK closed below 10.70 on Monday for the first time since October of 2022.
