Friday's Markets Update (January 17, 2025)

17 Jan 2025 by rate3

On Friday, stocks advanced, housing starts surged, while manufacturing stalled. EU inflation accelerated due to rising energy prices, while China's GDP growth exceeded expectations thanks to CCP stimulus. However, foreign investments in China dropped to a record low, and the population has been decreasing for the third straight year. BTC (106K) attempted to reach to ATH, while ETH (3.5K), followed with much less vigor.

Details

Housing starts surged by 15.8% (the most since March 2021) to a 8-month high in December, driven by a significant increase in multi-family housing starts. Single-family housing starts also edged higher. Starts increased in most regions, with the Northeast and Midwest seeing the largest gains. 1Y trend: "Side" (Census)

World Markets

The IMF projects global growth of 3.3% for 2025 (3.2% - previous) and 2026 (unchanged). The America's (2.7% v.s. 2.2%) and China's (4.6% vs 4.5%) outlooks were upgraded , while the Euro Area forecast was downgraded (1% vs. 1.2%). India's GDP growth maintained at 6.5%. Global inflation is expected to ease gradually to 4.2% (vs. 4.3%) in 2025 and 3.5% in 2026.
Euro Area annual inflation accelerated to 2.4% in December, driven by base effects and rising energy prices. Core inflation remained steady at 2.7%. While inflation increased in some countries, it slowed in others. The ECB expects inflation to return to the 2% target by year-end. 1Y trend: "Down" (EU)
China's Q4 GDP grew by 5.4% (4.6% in Q3) - strongest in 18 months, exceeding expectations. Industrial production (+6.2%) and retail sales (+3.7%) also grew faster than expected. New home prices continued to decline but at a slower pace. Unemployment rose slightly (5.1%). These figures suggest that recent stimulus measures have been effective in supporting economic recovery. At the same time, foreign direct investment into China plummeted by 27.1% in 2024, reaching a record low. This decline was driven by weak consumption growth, falling housing prices, and rising economic risks. Increased government control and regulatory uncertainty also discouraged foreign investors. 1Y trend: "Down" (CN) China's population declined for the third consecutive year in 2024 (to 1.408B). This marks a significant demographic shift for China, following decades of restrictive family planning policies. (SCH)

On Week 4, focus shifts to inauguration and an earnings season (Netflix, P&G, and J&J). Key releases: S&P Global PMIs, home sales. Internationally, the Bank of Japan might raise rates (25 basis points), also rate decisions are expected in Norway, Turkey, and Malaysia. Other data includes: PMIs in several countries, Germany's ZEW, UK jobs and wages, South Korea's and Taiwan's GDPs.