Daily Game Plan

by Contributor
on January 2, 2025

TODAY’S GAME PLAN:  from the trading
desk, this is not research

TODAY’S ECONOMIC DATA:  7:00 a.m: US MBA Mortgage Applications, 8:30 a.m: US Initial Jobless
Claims, 9:45 a.m: US December S&P Global Manufacturing PMI

 

*US JOBLESS CLAIMS 211,000 IN DEC. 28 WEEK; EST. 221K

 

Happy New Year!

 

Highlights and News:  

  • Chinese stocks posted their worst start to a year in nearly a decade due to weaker manufacturing data and anticipated tariff hikes.
  • A Tesla Cybertruck that exploded outside the Trump Towers in Las Vegas early Wednesday, killing one person in the vehicle, is being
    investigated as a possible act of terrorism, according to law enforcement.
  • Sugar Bowl postponed until Thursday due to terror attack in French Quarter
  • New Orleans: local authorities say they believe ‘multiple people are involved’ in attack.

 

Global stocks were mixed on Thursday after a shaky finish to 2024. US equity futures are set to rebound on the first trading day of 2025, with S&P 500 futures up
0.8% and Nasdaq 100 futures up 1%, signaling an end to the four-day slump that closed out 2024. The positive sentiment is driven by optimism in tech stocks, particularly the Magnificent Seven, which have propelled the S&P 500 to over 50% gains since the start
of 2023. European markets show mixed performance, with energy stocks outperforming due to rising natural gas prices following the expiration of a Russia-Ukraine transit deal. Meanwhile in Asia, sentiment was subdued, with Chinese equities leading declines
as data pointed to a slowing economy and traders looked ahead to potentially higher tariffs.

 

EQUITIES:  

US stock-index futures rose on the first trading day of 2025, signaling a positive start after a four-day decline, with the S&P 500 up 0.7%. Cryptocurrency-exposed stocks also gained
as Bitcoin advanced, with MicroStrategy, Hive Blockchain, Hut 8, Bitfarms, and others rising between 3% and 5%. Topgolf Callaway shares jumped 8% following Jefferies upgrade to buy, while Unity Software rose 9.8% after a significant block trade. The Magnificent
Seven tech stocks showed gains of 0.7% to 1.5%. Notable movers included Digimarc (+55.9%), Graphjet Technology (+23.3%), and Autozi Internet Technology Global (+20.2%), while Baird Medical Investment (-35.5%) and Solidion Technology (-11%) were among the biggest
decliners. Investors are closely monitoring economic indicators and potential policy shifts under the incoming Trump administration, which could influence market dynamics in the months ahead.

Futures ahead of the bell: E-Mini S&P +0.7%, Nasdaq +0.9%, Russell 2000 +0.8%, DJI +0.6%.

European stocks recovered from earlier losses, with the Stoxx Europe 600 Index having been down nearly 0.3% earlier as weak economic data from China impacted automakers
and luxury goods, sectors that heavily rely on Chinese sales. The decline followed a late-year selloff amid concerns over high valuations and potential US trade tariffs. France’s CAC 40 dropped 1.2%, while energy stocks gained due to rising gas prices following
the expiration of a transit deal between Russia and Ukraine. Despite these challenges, some analysts remain optimistic about European equities, citing a weak euro and low bond yields as potential supports for future growth. Stoxx 600 +0.02%, CAC -0.5%, FTSE
100 +0.3%.

Asian stocks declined, nearly the most in nearly two weeks as key markets reopened after the New Year holiday. MSCI Asia Pacific index declining as much as 0.6% due to weak economic data
from China. The CSI 300 index suffered its worst start to the year since 2016, closing 2.9% lower amid concerns over slowing manufacturing activity. Major contributors to the decline included TSMC, China Construction Bank, and ICBC. Stock benchmarks also fell
in Taiwan and Hong Kong, while Australia’s market gained. Investors are increasingly pessimistic for the start of 2025, citing risks such as Donald Trump’s pledge to boost tariffs and a stronger dollar. Notably, Chinese bank stocks fell, while property stocks
showed signs of stabilization following government stimulus measures. Macau casino stocks dropped due to disappointing gaming revenue, while South Korean robotics companies surged on news of Samsung’s investment in Rainbow Robotics. Topix -0.6%,Hang Seng -2.18%,
China’s CSI 300 -2.9%, ASX +0.5%, Nikkei 225 -0.9%, Kospi -0.02%.

FIXED INCOME: 
 

Treasury yields declined across the curve on the first trading day of 2025, with the 10-year yield falling 4 basis points to 4.53%. The move aligns with similar trends
in European rates ahead of the release of U.S. weekly jobless claims data. Market focus is on an expected surge in corporate bond issuance in January, with estimates ranging from $175 billion to $200 billion, potentially surpassing the January 2024 record
of $190 billion. The economic calendar includes jobless claims, manufacturing PMI, and construction spending data, while Treasury auctions are set to resume next week with 3-, 10-, and 30-year note offerings.

 

 

METALS: 

 

Gold advanced after its strongest annual performance since 2010, climbing 0.8% as traders focused on the US interest rate path. Investors are now closely watching
upcoming US economic data, including jobless claims and manufacturing reports, for insights into the Federal Reserve’s potential rate-cutting trajectory. Gold +0.8%, Silver +1.8%. 

 

 

ENERGY:   

 

Oil prices rose with Brent climbing above $75 a barrel and WTI exceeding $72. The increase was driven by a report from the American Petroleum Institute showing a
1.4-million-barrel decrease in US crude inventories last week, potentially marking the sixth consecutive draw. Both benchmarks closed above their 100-day moving averages on Tuesday for the first time since October. Despite the gains, analysts remain cautious
about the outlook for 2025, citing ample supply, rising non-OPEC+ production, and high spare capacity as factors that could limit price increases. Uncertainty surrounding China’s economic recovery and the growing adoption of electric vehicles also contribute
to a complex market landscape. WTI +1.4%, Brent +1.4%, Nat Gas +2.2%.

 

CURRENCIES: 

In currency markets, the US dollar index inched higher ahead of US economic data, with mixed performance among G-10 currencies. USD/JPY rose 0.1% despite investor
speculation about a potential Bank of Japan rate hike in January. The euro has weakened to a two-year low against the dollar, reflecting concerns about European growth and expectations of more aggressive ECB rate cuts compared to the Fed.US$ Index +0.2%, GBPUSD
-0.1%, EURUSD -0.28%, USDJPY +0.13%, AUDUSD +0.35%, NZDUSD +0.25%, USDCHF +0.02%.

 

 

Bitcoin +2.0%, Ethereum 3.3%

 

Colors within the report:
Green is always the 200 period (day, week).
Red is always 21,
Blue = 50,
Brown =
100 *Stars have added importance 

 

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

Dan Forsythe

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