Thursday's Market Update (January 16, 2025)

16 Jan 2025 by rate3

On Thursday, stocks were mixed at the opening but ended mostly in the red, despite weaker-than-expected retail sales and higher jobless claims data. Gold is at a 2-month high due to the Fed's perceived change of mind based on the latest data pointing to a slowing economy that requires lower rates. Meanwhile, the ECB hinted at further rate easing this month. BTC (100K) and ETH (3.3K) are fluctuating near the week's highs as traders look for drivers to set the market direction.

Details

Initial jobless claims rose sharply to 217K in the week ending January 11th, exceeding expectations. Despite the increase, claims remain below recent averages, indicating a strong labor market. Outstanding claims fell, and the four-week moving average also declined. 1Y trend: "Up" (DOL)
The Philadelphia Fed Manufacturing Index surged to 44.3 in January, its highest level in over two years. This significant increase was driven by sharp rises in new orders and shipments, which might be attributed to expected Trump's tariffs. Employment indicators also improved. Price indexes increased, and overall future activity expectations improved. 1Y trend: "Up" (PFed)
Retail sales increased 0.4% MoM in December, slower than the previous month. Sales increased in various sectors, including miscellaneous stores, sporting goods, and furniture. However, sales declined in building materials, food services, and health & personal care stores. 1Y trend: "Side" (Census)
The NAHB/Wells Fargo Housing Market Index increased to 47 in January, reaching a nine-month high. Current sales conditions and buyer traffic improved. However, sales expectations for the next six months declined, likely due to elevated interest rates. 1Y trend: "Side" (Nahab)

Crypto

Argentine companies, including Bitfarms (crypto mining firm, the largest holder, 870 BTC), Mercado Libre (a e-commerce leader in Latin America, 412 BTC), and Globant (an IT and software engineering firm, 15 BTC), collectively hold 1,397 BTC. Argentina is emerging as a key player in the crypto space, with analysts predicting increased crypto adoption following El Salvador's model. (source)

World Markets

The ECB minutes revealed a cautious approach to interest rate cuts, signaling that further easing is likely. Policymakers emphasized the need to gradually reduce restrictive policies as inflation trends align with projections. With weak economic growth, the focus has shifted to supporting economic activity. The ECB is expected to cut rates further, potentially reaching a neutral level by the end of 2025. 1Y trend: "Down"

Commodities

Gold prices surged to a 2-month high, reaching $2,715 per ounce, driven by growing expectations of Fed rate cuts. Weaker-than-expected retail sales and rising unemployment claims reinforced the view that the Fed may need to ease monetary policy to prevent a slowdown. The ceasefire agreement between Israel and Hamas also contributed to the decline in safe-haven demand. 1Y trend: "Up"