Tuesday's Markets Update (January 7, 2025)

08 Jan 2025 by rate3

On Tuesday, equities were deep in the red, led by tech, as job openings continued to rise along with business activity, pushing treasury yields to an 8-month high. Imports jumped to the second highest level in recorded history as companies increased overseas shipments ahead of Trump's tariffs. EU inflation is rising, driven by energy prices, while the unemployment rate remains at a record low, forcing businesses to pay increasingly higher salaries, which leads to higher costs and cyclical price increases. At the same time, EU manufacturing activities continue to shrink, including the construction industry, which is nearing its third year of contraction. All of this sets Europe on a path to prolonged stagflation. China’s foreign reserves reached an 8-month low as the CBC has been trying to soften the yen's decline over the past year. The Indian economy is slowing significantly, with GDP growth falling to 4-year low. BTC and ETH have dropped to their December levels, wiping out all growth in 2025 as traders react knee-jerk to the massive sell-off in stocks.

Details

Job openings increased by 259K in November, exceeding expectations. Job openings rose in several sectors, while hires and separations remained relatively unchanged. Quits decreased, while layoffs and discharges remained stable. 1Y trend: "Down" (BLS)
The ISM Services Business Activity Index rose to 58.2% in December (6-month of expansion), indicating continued expansion in the service sector. (ISM)
The Logistics Manager's Index fell to 57.3 to lowest in 4-month in December, driven by a decline in inventory levels. While upstream inventories rose, downstream retailers experienced a significant decline. Transportation prices increased sharply. 1Y trend: "Up" (LMI)

Crypto

The Governor of the Czech National Bank has proposed investing a small amount of central bank funds in BTC as a diversification strategy. While the proposal has been discussed, it has not yet been approved. (source)

World Markets

Euro Area inflation accelerated to 2.4% in December, driven by higher energy and service prices. Core inflation remained steady at 2.7%. 1Y trend: "Side". The Euro Area unemployment rate remained unchanged at 6.30% in November. This is the lowest level on record, following a record high of 12.20% in January 2013. 1Y trend: "Down" (EUStat)
The HCOB Eurozone Construction PMI edged up slightly in December, but remained in contraction territory for the 32nd consecutive month. New orders and employment declined sharply. Housebuilding was the weakest segment. Price pressures rose, and business confidence remained pessimistic. 1Y trend: "Side" (PMI)
China's foreign exchange reserves fell to $3.2T in December, the lowest in eight months, amid a stronger US dollar. Gold reserves increased slightly in volume but declined in value due to lower gold prices. 1Y trend: "Up" (CN)
India's economic growth is projected to slow to 6.4% in the 2024/25 fiscal year, down from 8.2% in the previous year. Weaker growth in investment, inventories, and manufacturing contributed to the slowdown. (IN)