Market drivers and catalysts
Equities: U.S. and Europe climb on energy, banks and defence, while Hong Kong steadies as China data cools sentiment.
Volatility: VIX subdued, single-stock volatility rising, energy names in focus
Digital Assets: Bitcoin steady, ethereum firmer, IBIT leads ETF gains, ETHA strong, altcoins bid, crypto equities rally, risk-on tone, macro-sensitive
Fixed Income: US Treasuries quiet. 10-year Japanese Government Bond yield hits fresh multi-decade high.
Currencies: Monday’s USD rally reverses, JPY also weak while AUD, Scandies surge.
Commodities: Geopolitical tensions lift precious metals, oil rebounds with focus on US energy companies
Macro events: French and German flash December CPI
Macro headlines
The US ISM Manufacturing PMI fell to 47.9 in December, the lowest since October 2024, indicating faster contraction in manufacturing. Production and inventories declined, while price pressures remained high. New orders, backlog, and exports improved, and employment contracted less sharply.
UK mortgage approvals dropped to 64,500 in November 2025, the lowest in five months, due to tax changes and falling house prices. Remortgaging approvals rose to 36,600. The interest rate for new mortgages increased to 4.20%, and for existing mortgages to 3.90%.
Australia's Services PMI fell to 51.1 in December from 52.8 in November, indicating slower growth. New orders slowed, employment rose, and export demand softened. Business confidence peaked since June, while input and selling price inflation increased.
Fed's Kashkari noted the cooling job market and high inflation, warning of potential unemployment rate increases. He expects housing services inflation to decline and suggests rates are nearly neutral.
Macro calendar highlights (times in GMT)
0945 – France flash December CPI
1500 – Germany flash December CPI
0030 – Australia Nov. CPI
Earnings events
Wednesday: Constellation Brands
Thursday: Fast Retailing, Aeon, Seven and I Holdings
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: U.S. equities rally, with the Dow Jones Industrial Average up 1.2% to 48,977.18, the S&P 500 up 0.6% to 6,902.05, and the Nasdaq Composite up 0.7% to 23,395.82. Energy and financials lead after the U.S. said it had captured Venezuela’s President Nicolas Maduro, pushing oil headlines back on the front page. Chevron jumps 5.1% on talk of expanded Venezuela operations, while Goldman Sachs rises 3.7%, Citigroup adds 3.9%, and Bank of New York Mellon gains 3.4% as rate-cut hopes support bank shares. Attention now turns to Friday’s December jobs report (January 9).
Europe: European stocks extend their early-year run, with the STOXX Europe 600 up 0.9% to a record 601.76 and the Euro STOXX 50 up 1.3% to 5,923.69. Defence and technology lead as weekend events in Venezuela lift geopolitical risk, and investors keep betting that European defence budgets stay structurally higher. Rheinmetall jumps 9.4% as the sector catches a bid, while ASML climbs 6.8% after Bernstein upgrades the stock and lifts its price target. Next up, markets watch this week’s euro area data and central bank messaging for clues on rate cuts.
Asia: Hong Kong pauses after a strong start to the year, with the Hang Seng Index up 0.03% at 26,347.24 as early gains fade. A private survey showing China’s services growth slows to a six-month low keeps traders cautious, even as producer prices fall for a 38th straight month. Kuaishou jumps roughly 11% as interest in its Kling AI product spikes after fresh updates and promotion, while SMIC rises 1.6% after China’s main chip fund increases its stake. Investors now look for the next batch of China activity data and any policy hints that can keep the rebound alive.
Volatility
Market volatility remains contained at the index level, but beneath the surface there is a clear pickup in single-stock volatility. The VIX ended Monday at 14.9, modestly higher, even as US equities advanced, reflecting a market that is calm overall but more selective in how it prices risk. The bigger signal is in individual stocks: measures of single-stock volatility rose more sharply than index volatility last week, suggesting investors are increasingly positioning around company-specific and sector-specific outcomes, rather than broad market stress.
Energy stocks stand out following the Venezuela developments. Options activity in Chevron surged after the weekend news, with heavy demand for short-dated options and a sharp jump in implied volatility, pointing to heightened uncertainty around future oil supply dynamics. Similar volatility interest appeared across parts of the US energy complex, reinforcing the idea that geopolitical risk is being priced locally, not across the entire market.
Spx expected move (options-implied): about ±24 points (0.35%) for today, and ±77 points (around 1.1%) into Friday 9 January. Skew check (today’s expiry): downside protection remains slightly more expensive than upside, indicating investors still prefer insurance despite the calm index backdrop.
Digital Assets
Crypto is mixed but resilient: bitcoin is near $93.7k (slightly lower on the day), while ethereum is around $3.24k (slightly higher). Major altcoins are mostly firmer, with xrp (~$2.38) and solana (~$138.8) up on the day.
The standout for investors is how strongly the “crypto in equity wrappers” are behaving: IBIT is up about 5% and ETHA about 4%, mirroring improved risk appetite across broader markets. Crypto-linked equities also moved sharply higher (notably coin and mstr), which is supportive for sentiment, but it can also mean price action is being driven by risk-on equity flows as much as by crypto fundamentals.
Near-term, crypto remains sensitive to macro mood shifts and headline risk.
Fixed Income
Japan’s government bonds were mixed, with a slight drop in yields at the front end of the curve, with the 2-year JGB benchmark yield easing one basis point lower to 1.19% after the highest yield in decades posted yesterday at 1.20%, while longer yields nudged to new multi-decade highs – the 10-year benchmark JGB yield trading 2.137% in late trading Tuesday in Tokyo.
US treasury yields were largely unchanged from yesterday’s levels, as the 10-year benchmark treasury yield rebounded slightly after a dip Monday to 4.15%, trading 4.185% in late Asian trading Tuesday.
Commodities
Oil steadied after reversing early losses on Monday as traders balanced Venezuela-related geopolitical risk against persistent concerns about a global supply glut. Brent rebounded from below USD 60 to around USD 61.50 following the weekend capture of Venezuela’s president by U.S. forces. U.S. energy equities led the gains, with oil majors, refiners and oilfield service companies rising on expectations that American firms could eventually be involved in rebuilding Venezuela’s oil industry. That said, the market remains mindful that any meaningful recovery in Venezuelan production would be a slow, multi-year process
The BCOM precious metals index has gained 5.5% in the first days of the year, recovering from a modest end-2025 correction. Geopolitical tensions have added to existing concerns about currency debasement, the sustainability of fiscal debt creation, a weaker dollar and lower funding costs. Silver has gained around 11% while gold trades up 3% with both trading near their December record highs.
US natural gas futures slumped to the lowest since October as the short-term forecasts shows above-average temperatures across U.S., signaling muted demand for the heating fuel. The front month contract has slumped to USD 3.44 from a multi-year high last month at USD 5.29, a 35% collapse.
Currencies
The US dollar rally reversed late Monday and in Asia’s Tuesday’s session, with the notable exception of USDJPY, as the Japanese yen was nearly as weak. EURUSD rallied back above 1.1700 after testing well below on Monday, trading 1.1735 in early European hours on Tuesday.
The Australian dollar rose to its highest level versus the greenback since late 2024, with AUDUSD clearing the 0.6707 high from last September. Australia reports its November CPI data early Wednesday in Asia.
The Scandies firmed further on top of recent gains, with EURSEK hitting its lowest level since last April, trading below 10.75 in early trading in Europe, while EURNOK likewise pushed lower to near 11.75 and the lowest level since early December.
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