CPI lifts markets to new highs 16/01/2025

HOT stories for today

Stocks on the move:       

• Quantum computing stocks surged after Microsoft (MSFT) unveiled a quantum-ready plan to help businesses prepare for the adoption of quantum computing, and Nvidia (NVDA) announced a "Quantum Day" at its annual GTC conference. Rigetti Computing (RGTI) gained 22.2%, D-Wave Quantum (QBTS) jumped 22.4%, and IonQ (IONQ) soared 33.5%.Wells Fargo (WFC) shares climbed 6.7% after the bank reported stronger-than-expected adjusted earnings and provided robust guidance for 2025 net interest income.
• JPMorgan Chase (JPM) rose 2% as its fourth-quarter results exceeded expectations, driven by strong performances in fixed income and investment banking.
•  Vertical Aerospace (EVTL) +30%: The company announced that Dómhnal Slattery has returned as Chairman of the board of directors. Slattery, who previously held the role from January 2022 to August 2023, brings over three decades of global aviation expertise.
• Wolfspeed (WOLF) +39%: The chipmaker surged after completing its at-the-market (ATM) stock offering, raising approximately $200 million in gross proceeds.
• Intuitive Surgical (ISRG) +8%: Shares reached a new all-time high following preliminary fourth-quarter and full-year 2024 results that exceeded Wall Street forecasts.

 
 
Today’s action

• Asia-Pacific markets mostly rose on Thursday, buoyed by Wall Street’s rally following an unexpected decline in core inflation for December and strong bank earnings. South Korea’s central bank surprised markets by holding its benchmark interest rate steady at 3%, defying expectations for a 25 basis point cut, according to a Reuters poll. In Europe, markets retreated from earlier gains spurred by U.S. inflation data and are set for a mixed open.
• U.S. stock futures were flat early Thursday after the S&P 500 recorded its best performance since November. Investors are bracing for the December retail sales report, expected to show a 0.5% increase, down from 0.7% in November, along with weekly jobless claims data. Dow Jones Industrial Average futures rose 17 points (0.03%), while S&P 500 and Nasdaq 100 futures hovered near the flatline. Morgan Stanley (MS) and Bank of America (BAC) are scheduled to report earnings Thursday, concluding this week’s major bank results. On the political front, Scott Bessent, President-elect Donald Trump’s Treasury Secretary nominee, will testify before the Senate Finance Committee. Markets will closely watch the hearing for insights into potential tariffs and other policy moves under the incoming administration.

​​​​​​​Wahtclist: UNH, MS, TSM, NVDA, BAC, INFY, PNC, USB

Bitcoin

• Bitcoin’s price has soared above $98,500 after the release of the US Consumer Price Index (CPI) data for December. The reported figures revealed a 2.9% rise in the CPI, aligning with market expectations. Meanwhile, the Core CPI, which omits more volatile categories such as food and energy, came in slightly below projections at 3.2%. The December increase marked the largest in eight months and exceeded November’s growth, prompting a swift positive reaction in cryptocurrency markets.
• BTC hovered just below $97,000 ahead of the CPI announcement but surged past $98,500 immediately following the news—reaching its highest level in over a week. This movement highlights the growing connection between bitcoin and US tech stocks, with the correlation hitting a two-year peak. Data from Bloomberg indicates that the 30-day correlation coefficient between bitcoin and the Nasdaq 100 Index stands at around 0.70. This significant figure demonstrates a strong alignment in the price movements of these assets, with a value of 1 indicating perfect synchronization and -1 representing complete opposition.
  Watchlist: Bitcoin: 89 000-108 000, Ethereum: 3000-3800, Solana: 160-220
   

Forex

• The EUR/USD pair remains under pressure, extending losses for a second consecutive session to trade around 1.0280 during Thursday’s Asian hours. The Euro struggles as European Central Bank (ECB) officials hint at potential additional policy easing to counter the Eurozone's weak economic outlook. Adding to the Euro’s woes, expectations of stronger US Retail Sales data—projected to rise by 0.6% month-over-month in December compared to November’s 0.7%—support the US Dollar. However, the greenback remains weighed down by speculation that the Federal Reserve could implement two interest rate cuts this year, capping EUR/USD’s losses for now.
• The Japanese Yen (JPY) continues to attract positive traction for the second straight day, buoyed by speculation that the Bank of Japan (BoJ) may consider a rate hike. This speculation, coupled with a narrowing US-Japan yield differential, lends support to the JPY. Despite the Yen’s gains, a modest uptick in the US Dollar helps the USD/JPY pair rebound from a multi-week low, lifting it back above the 156.00 mark during the European session on Thursday. However, the pair’s upside appears limited as the risk-on sentiment in broader financial markets keeps the JPY’s safe-haven appeal in check. Traders remain focused on potential monetary policy shifts and key economic indicators to gauge the pair’s trajectory.
  Watchlist: EUR/USD: 1.0200-1.0460, USD/JPY: 155-158.50

Basic Materials

• West Texas Intermediate (WTI) crude oil prices are trading around $78.85 during Thursday’s Asian session, losing ground as prospects of a ceasefire between Hamas and Israel ease geopolitical risks in the Middle East. An official announced an agreement between Israel and Hamas to halt fighting in Gaza, including an exchange of hostages for prisoners. If successfully implemented, the truce could lower regional tensions and reduce concerns over potential disruptions to crude oil supplies, putting downward pressure on WTI prices. Adding to the mix, the Energy Information Administration (EIA) reported a drawdown of 1.962 million barrels in US crude oil inventories last week. However, this has not been enough to offset the price impact of the anticipated de-escalation in the Middle East.
• Gold (XAU/USD) prices are pulling back after briefly surpassing a one-month peak earlier on Thursday. The metal struggled to maintain momentum above the $2,700 level, retreating amid renewed strength in the US Dollar (USD) and a shift towards a risk-on sentiment in financial markets. The rebound in the USD, supported by growing expectations that the Federal Reserve will pause its rate-cutting cycle later this month, has undermined gold’s appeal as a safe-haven asset. Meanwhile, concerns surrounding former President Trump’s proposed trade tariffs could act as a limiting factor for further losses in the precious metal. Market participants remain cautious, keeping a close watch on global economic developments and central bank policies as they navigate shifting dynamics in commodity prices.
  Watchlist: GOLD 2600-2750, US Oil: 70.00-78.00

The TEFS Analyst team wishes you a successful day!