Key points
Equities: US mixed; S&P 500 flat, Nasdaq up; EU sees strong week; Hermès shines, DAX retreats; Asia mixed, China AI rally fades
Volatility: VIX -2.19% to 14.77; lighter earnings week; trade risks persist but market steady
Digital Assets: Bitcoin stable near $96K; mining jobs surge
Currencies: USD trades lower with US yields, especially versus strong Yen.
Commodities: Gold and silver rebound after weak Friday session
Fixed Income: US yields continued lower on weak US Jan. Retail Sales
Macro events: US Markets Closed, Australia RBA Announcement early Tuesday
Macro data and headlines
Chinese President Xi Jinping led a meeting of Alibaba co-founder Jack Ma and other noted Chinese entrepreneurs today that included the head of Xiaomi, Meituan, Huawei, which many see as a signal of official support of private sector companies after the government crackdown on the private sector in 2020 and the disappearance of Jack Ma from public view. The Hang Seng Index rose some 7% last week, with strong gains on Friday when the meeting was announced. The index posted new highs on Monday before retreating to trade slightly negative on the day.
US retail sales fell 0.9% in January 2025, the largest decline since March 2023, due to severe weather and LA fires. Sporting goods stores saw the biggest drop at -4.6%, while gasoline stations and food services rose by 0.9%. Sales used for GDP calculation fell by 0.8%.
Japan Q4 GDP grew 0.7% quarter-on-quarter, up from a revised 0.4% in Q3, surpassing market expectations of 0.3%, according to preliminary data. This marks the third consecutive quarterly increase.
China's current account surplus hit a record $180.7 billion in Q4 2024, up from $56.2 billion the previous year and $148 billion in Q3. The goods account surplus surged to $249.6 billion due to slowing domestic consumption and increased production capacity, leading manufacturers to depend on foreign consumers.
Macro calendar highlights (times in GMT)
US Markets are closed today to mark President’s Day
1315 – Canada Jan. Housing Starts
1430 – US Fed’s Waller to Speak on Economic Outlook
0330 – Australia RBA Announces Cash Rate Target (most expect 25-basis point cut).
Earnings events
Today: BHP Group
Tuesday: Arista Networks, Medtronic, Entergy, EQT, Intercontinental Hotels Group,
Wednesday: Rio Tinto, Analog Devices, HSBC, Carvana, Glencore, Vale, Garmin, Toast
Thursday: Walmart, Booking Holdings, Airbus, Schneider Electric, Mercedes Benz, Mercado Libre, Nu Holdings, Block, Lloyds, Cheniere, Targa Resources, Fortescue, Cameco, Sprouts Farmers Market
Friday: Constellation Energy, Standard Chartered
Equities
US Markets: US stocks ended mixed on Friday as investors assessed economic data and trade policy risks. The S&P 500 (-0.01%) was flat, while the Nasdaq (+0.41%) outperformed, and the Dow Jones (-0.37%) lagged. Retail sales fell 0.9% in January, the biggest drop in a year, raising concerns about consumer spending. Meanwhile, reciprocal tariff threats from the US kept investors cautious. Airbnb (+14.4%) surged on strong earnings, while Eli Lilly (-3%) and Moderna (+3.3%) reflected mixed healthcare sector sentiment. For the week, the S&P 500 gained 1.47%, the Nasdaq 2.58%, and the Dow 0.55%, as expectations for a Fed rate cut in June crept back to 51.3%.
European Markets: European equities edged lower on Friday but closed the week with strong gains. The STOXX 50 (-0.2%) and STOXX 600 (-0.3%) declined as insurers and healthcare stocks weighed on the market. However, Hermès (+1%) rose on strong Q4 sales, and luxury stocks broadly outperformed. The CAC 40 (+2.9% weekly) extended its rally, led by LVMH and Kering, while Sanofi and AXA lagged. The DAX (-0.62%) eased from record highs, pressured by Fresenius Medical (-5.47%) and Allianz (-2.6%). The Swiss Market Index fell 0.84%, as investors reacted to Trump’s tariff rhetoric, with the EU vowing immediate retaliation.
Asian Markets: Asian stocks had a mixed start to the week. The Hang Seng (+1.4%) hit a four-month high on tech strength, driven by enthusiasm around Chinese AI developments. However, the broader Asian rally faded as profit-taking set in. Tencent (+4.4%) and Alibaba (+4.3%) rose after Xi Jinping met with private sector leaders to boost confidence. Meanwhile, Japanese equities edged up after strong Q4 GDP growth (+0.7%), which fueled expectations of a BOJ rate hike. Investors remain cautious over rising US-EU trade tensions and the potential for escalating tariff wars.
Volatility
Volatility continued its downward trend, with the VIX closing at 14.77 (-2.19% daily, -10.77% weekly). Markets showed resilience despite trade uncertainty, helped by the anticipation of lighter earnings and economic data this week. The Philadelphia Fed Manufacturing Index (Thursday) and the S&P Global Services PMI (Friday) will be the key economic events to watch. Futures are slightly higher this morning, with S&P 500 futures at 6144.75 (+0.21%) and Nasdaq 100 futures at 22275.75 (+0.36%).
Digital Assets
Bitcoin traded in a tight range over the weekend, as bulls and bears awaited the next catalyst. It remains near $96,273 (-0.9%), while altcoins such as XRP (-1.74%) and Litecoin (-0.6%) showed mixed performance. Meanwhile, the Bitcoin mining industry has generated over 31,000 US jobs, as Trump continues to push for US dominance in crypto and AI infrastructure.
Fixed Income
US yields dropped sharply on the weak US Retail Sales data Friday, with the 10-year treasury benchmark yield back below the key 4.50% level and even trading below 4.45% at one point before rebounding toward 4.48%.
Japan’s government bond yields rose to new cycle highs as the 2-year traded above 81 basis points and the 10-year yield reaching 1.38% after strong Q4 GDP figures for Japan released overnight.
Commodities
Gold suffered a sharp correction Friday after testing the all-time highs of 2,942, dropping back as far as 2,877 Friday, but rebounding back above 2,900 into this morning
Silver pumped and dumped Friday, clearing a critical resistance area above 32.50 and trading all the way to 33.40 before retreating to close at 32.10. Overnight the price dipped below 32.00 briefly before rebounding to 32.35 in early European hours.
Crude oil prices continue to drag around in the lower part of the range with April Brent eyeing 74.00 support and April WTI eyeing 71.00.
Currencies
The US dollar fell with US yields on Friday, with AUDUSD following through higher well above 0.6300+ resistance ahead of tonight’s RBA meeting and USDJPY responding smartly to the drop in US treasury yields as it fell as far as 151.51 overnight, miles away from a spike to 154.80 last week.
The euro and Swiss franc are the weaklings of the G10 currencies as the market considers the geopolitical implications for the EU and Europe if the Ukraine War ends and Europe must foot the bill for its own defence as the US risks withdrawing its security umbrella commitments to the region.
