Stock Markets

Major stock indexes fell across the board over the trading week. The 30-stock Dow Jones Industrial Average (DJIA) dipped by 0.54% while the Total Stock Market Index corrected by 0.24%. The broad S&P 500 Index lost by 0.24% and the technology-heavy Nasdaq Stock Market Composite withdrew by 0.53%. Bucking the trend is the NYSE Composite that ticked up by 0.20%. The investor risk perception indicator, the CBOE Volatility Index (VIX) moved up by 0.67%.

The week opened with a sharp decline in reaction to the announcement on the preceding Friday that President Donald Trump intends to impose 25% tariffs on imports from Mexico and Canada, and an additional 10% levy on Chinese imports effective February 1. By the end of Monday, however, President Trump announced that Mexico and Canada agreed to postpone the measure for 30 days. This provided some relief and enabled the markets to recover earlier losses by the week’s end.

U.S. Economy

Driving market activity this week were earnings-related headlines that captured investors’ attention and sentiment. More than 75% of S&P 500 Index companies that have released their fourth-quarter results through Friday have posted better-than-expected earnings with an average growth rate of 16.4%. This outshines the 11.9% earnings growth estimates according to consensus.  Of the companies that have reported so far, 63% have exceeded sales expectations.

Other than company reports macroeconomic data provided some impetus to the markets. The Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI), a measure of factory activity in the U.S., recorded expansion in January for the first time since 2022. However, optimism was somewhat quelled by the prospects that potential tariffs could pose a “huge threat” to a sustained recovery in the U.S. manufacturing sector, according to ISM Manufacturing Business Survey Chair Timothy Fiore on a call with reporters after the PMI-ISM release. Later in the week, the ISM Services PMI for January reported a 52.8 reading, and although it declined from December, it remained solidly in expansion territory.

Topping the week’s economic news was Friday’s much anticipated nonfarm payrolls report. According to the Labor Department, the U.S. economy added 143,000 jobs in January, lower than both an upwardly revised 307,000 in December and the consensus estimate of 170,000. The unemployment rate declined unexpectedly, from 4.1% in December to 4.0% in January.

Metals and Mining

The bulls are dominating in the gold market as the metal did more than hold its support at $2,800 per ounce, it rallied to a series of new record highs to ultimately touch $2,900 on Friday. The renewed momentum has once more attracted new buyers, prompting many observers to once more eye $3,000 as an attainable target. The more bullish are starting to regard $3,000 as a mere stepping stone, arguing that the market has sufficient strength to go even higher. Gold’s inflation-adjusted all-time high is approximately $3,420. The record was set in January 1980 when prices hit $875 per ounce, at the end of a four-year rally that commenced in August 1976. According to analysts, many of the factors that drove gold’s rally five decades ago are once again at play today, making the all-time inflation-adjusted record seem once more attainable. Additionally, the geopolitical uncertainties regarding global wars and trade continue to compel investors to seek security in safe-haven assets such as gold.

The spot prices of precious metals were mixed for this week. Gold rose by 2.24% from last week’s closing price of $2,798.41 to end the week at $2,861.07 per troy ounce. Silver climbed by 1.66% from its close last week at $31.30 to close at $31.82 per troy ounce. Platinum, which closed last week at $982.56, ended this week at $978.49 per troy ounce for a loss of 0.41%. Palladium closed last week at $1,016.35 and this week at $971.20 per troy ounce for a decline of 4.44%. The three-month LME prices of industrial metals were mostly higher this week. Copper jumped by 3.97% from last week’s close at $9,048.00 to this week’s close at $9,407.50 per metric ton. Aluminum edged higher by 1.31% from its close last week at $2,594.00 to end this week at $2,628.00 per metric ton. Zinc came from its close last week at $2,742.00 to its close this week at $2,840.00 per metric ton, an increase of 3.57%.  Tin was priced last week at $30,102.00 and this week at $31,109.00 per metric ton for an appreciation of 3.35%.

Energy and Oil

After global concerns of a possible US-China trade war became the main talking point of the markets, Brent futures have reversed all their 2025 gains and plunged back to precisely where they began this year. In a meeting among U.S. oil executives in Houston this week, the impact of Donald Trump’s “drill baby drill” policy has been played down by these executives who warned the industry that oil production from the prolific U.S. Permian Basin would slow down by at least 25% this year. Production will rise by some 250,000 barrels per day (b/d) after a 380,000 b/d increase in 2024. In any event, the U.S. President’s enthusiasm for increasing U.S. production adds one more bearish note to the prevailing market sentiment. This backdrop sets the stage for a $2-per-barrel week-over-week decline. In the first week of February, ICT Brent is seen to settle slightly below $75 per barrel.

Natural Gas

For this report week beginning Wednesday, January 29, and ending Wednesday, February 5, 2025, the Henry Hub spot price fell by $0.07 from $3.29 per million British thermal units (MMBtu) to $3.22/MMBtu. Concerning Henry Hub futures, the March 2025 NYMEX contract price increased to $3.360/MMBtu, up by $0.19 for the week. The price of the 12-month strip averaging March 2025 through February 2026 futures contracts rose by $0.09 to $3.905/MMBtu. Natural gas spot prices fell at most locations this report week. Price changes ranged from a decrease of $3.32 at Algonquin Citygate to an increase of $0.25 at Eastern Gas South.

International natural gas futures prices increased this report week. Weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia rose by $0.32 to a weekly average of $14.40/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, increased by $1.00 to a weekly average of $16.08/MMBtu. The weekly average TTF price has been above the weekly average East Asia price since January 13 of this year. In the week last year corresponding to this report week (beginning January 31 to February 7, 2025), the prices were $9.46/MMBtu in East Asia and $9.07/MMBtu at the TTF.

World Markets

The pan-Europea STOXX 600 Index ended 0.60% higher and just off a recent record level, despite concerns about U.S. trade policy and stalling economic growth. Major stock indexes climbed for the week. Germany’s DAX gained by 0.25%, France’s CAC 40 Index added 0.29%, and Italy’s FTSE MIB rose by 1.60%. The UK’s FTSE 100 Index advanced by 0.31%. In January, annual price growth in the eurozone remained above the European Capital Bank’s (ECB’s) target for a third consecutive month, accelerating to 2.5% from December’s 2.4%.  Excluding food, energy, alcohol, and tobacco prices, core inflation held at 2.7%. Services price inflation, a closely monitored indicator by policymakers, came in at 3.9%. In the UK, the Bank of England (BoE) reduced its benchmark interest rate by a quarter point to 4.5%, the third interest rate cut since August. The Monetary Policy Committee voted 7-2 in favor of the move, citing that it had made sufficient progress on controlling inflation and wage growth. Two members supported a half-point reduction due to a sharper-than-expected economic slowdown. The BoE modified its forecast for the UK’s 2025 economic growth by half to 0.75%.  In Germany, factory orders jumped by 6.9% in December, rebounding from a 5.4% drop the previous month and exceeding consensus expectations for an increase of 2.0%.

Over the week, Japanese stock markets fell. The Nikkei 225 Index dropped by 2.0% while the broader TOPIX Index lost by 1.8%. Recent hawkish comments by the Bank of Japan (BoJ) caused the yen to strengthen to rise from JPY 155.2 to the USD at the end of the previous week to the high end of the JPY 151 against the U.S. dollar range. The stronger yen weighed on the profit outlooks of the country’s export-heavy industries. On expectations of further interest rate increases by the BoJ this year, the yield on the 10-year Japanese government bond rose from the prior week’s 1.23% to 1.28%. If the economy and prices (as well as wages) develop in line with its forecasts, the bank expects to raise interest rates. The likelihood that more rate hikes will happen is supported by data showing that nominal wages rose sharply in December and the second consecutive month of positive growth in real wages (wages adjusted for inflation), although the surges were mostly due to a significant rise in companies’ winter bonuses. Separate data showed that in December, household spending rebounded by more than expected. According to the BoJ, real wages need to rise so that private consumption can follow an uptrend.

In a shortened trading week, Chinese stocks rose as evidence of strong consumer spending over the Lunar New Year holiday overcame the impact of U.S. President Trump’s decision to impose a 10% tariff on Chinese imports. The onshore benchmark CSI 300 Index rose by 1.98% and the Shanghai Composite Index gained by 1.63% from Wednesday to Friday. The mainland stock markets were closed from January 28 to February 4 for the nationwide holiday marking the Lunar New Year. The Hong Kong benchmark Hang Seng Index advanced by 4.49%. Driven by gains in technology companies, the rally was the market’s best weekly performance in four months. Over the Lunar New Year holiday, a key consumption period for China, travel and retail spending pointed to improved domestic demand. Citing data from ticketing site Maoyan, Bloomberg reported that box office receipts over the eight-day holiday jumped to $1.3 billion over last year’s holiday. According to China’s Ministry of Culture and Tourism, the volume of domestic trips rose during the holidays by a record 501 million, 5.9% higher than last year. However, although holiday sales data was solid, other data indicated weakness in the broader economy. The Caixin China General Services Purchasing Managers’ Index (PMI) dipped to 51 in January from 52.2 in December (above 50 signifies expansion, below 50 contraction). This meant that the pace of expansion in business activity and new orders both slowed to their lowest level in four months.

The Week Ahead

The CPI and PPI inflation data, retail sales data, and a host of talks by top Fed officials are among the events to look forward to in the coming week.

Key Topics to Watch

• NFIB optimism index for Jan.
• Cleveland Fed President Beth Hammack speaks (Feb. 11)
• Fed Chairman Jerome Powell testifies to Congress (Feb. 11)
• San Francisco Fed President Daly speaks (Feb. 11)
• New York Fed President Williams speaks (Feb. 11)
• Fed Governor Michelle Bowman speaks (Feb. 11)
• Consumer price index for Jan.
• CPI year over year
• Core CPI for Jan.
• Core CPI year over year
• Fed Chairman Jerome Powell testifies to Congress (Feb. 12)
• New York Fed President Williams speaks (Feb. 12)
• Atlanta Fed President Bostic speaks (Feb. 12)
• Monthly U.S. federal budget for Jan.
• Fed Governor Christopher Waller speaks (Feb. 12)
• Initial jobless claims for Feb. 8
• Producer price index for Jan.
• Core PPI for Jan.
• PPI year over year
• Core PPI year over year
• Import price index for Jan.
• Import price index minus fuel for Jan.
• U.S. retail sales for Jan.
• Retail sales minus autos for Jan.
• Industrial production for Jan.
• Capacity utilization for Jan.
• Business inventories for Dec.
• Dallas Fed President Lorie Logan speaks (Feb. 14)

Markets Index Wrap-Up

Stock Markets

The 30-stock Dow Jones Industrial Average (DJIA) was up 0.27% for the week, although the broader stock indexes were generally down week-on-week. The Total Stock Market Index fell by 0.95%, while the broad S&P 500 Index slumped by 1.00%. The technology-heavy Nasdaq Stock Market Composite dropped by 1.64%, although the NYSE Composite ticked up by 0.01%.  The CBOE Volatility Index (VIX), the indicator of investor risk perception, rose by 10.64%.  The DJIA’s modest rise has garnered its third straight week of gains.

The Nasdaq Composite took a particularly deep plunge on Monday due to a sell-off in tech stocks in response to the rise of DeepSeek, a Chinese artificial intelligence (AI) developer. According to reports, DeepSeek released a new open-source large language model that requires much less energy and processing power than the other leading AI applications. This has led to competitive concerns among the established leaders in the AI industry. As a result, shares of NVIDIA dropped by almost 17% on Monday,

The earnings season also proceeded with companies comprising about 40% of the S&P 500 Index’s market capitalization reporting results during the week. Several positive earnings surprises appeared to be a tailwind for stocks late in the week and helped most of the major indexes recover some of the losses encountered at the beginning of the week. Most of these stocks that reported stellar and upbeat forward guidance were some notable large-cap tech companies, including Meta Platforms and Apple.

U.S. Economy

Fourth-quarter GDP appears to indicate that the U.S. economy remains on solid footing. Although the economy grew by 2.3% annualized, this is still slightly below the forecasts called for 2.4%. The main driver of the expansion was consumer spending, which accounts for about 68% of the economy. It rose by a 4.2% annualized rate, which was the highest reading since the first quarter of 2023. The primary detractors were downturns in investment and exports which contributed to a decline in real GDP growth from the prior quarter. For 2024, real GDP grew by 2.8%, down from 2,9% in 2023.

With the unemployment rate at 4.1% and job openings exceeding unemployment, it is likely that a healthy labor market could keep wage gains above inflation to provide positive real wages. Furthermore, the U.S. manufacturing sector showed signs of stabilizing this month despite remaining in contraction for most of the past two years. A healthy labor market and positive real wages may be expected to support consumer spending. Together with the stabilizing manufacturing sector, these factors should continue to sustain the economy’s momentum for 2025. A recession is unlikely although growth could cool in the first semester of this year as consumers, especially those in the lower income bracket, potentially pull back on discretionary spending. The latter half of the year has the potential for growth to resume acceleration due to Fed interest-rate cuts, together with deregulation, tax cuts, and other pro-growth policies.

Metals and Mining

As the world braces for a new trade war in less than 24 hours, it is not surprising that gold has surged to record highs above $2,800 per ounce. Donald Trump announced that on February 1, he would impose 25% tariffs on goods from Canada and Mexico and 10% on goods from China. Canada and Mexico have responded by preparing a list of retaliatory tariffs on American goods. Some provinces in Canada have threatened to halt energy exports to the U.S. A global trade war would heighten geopolitical uncertainty, in addition to driving inflation higher and weakening global economic growth. Investors recognize this as an ideal environment for gold, which carries no third-party risk and serves as a hedge against inflation.

The spot prices of precious metals mostly gained for the week. Gold climbed by 1.00% from its close last week at $2,770.58 to end this week at $2,798.41 per troy ounce. Silver added 2.32% to last week’s closing price of $30.59 to close at $31.30 per troy ounce, Platinum rose by 3.27% from its last weekly price of $951.45 to settle at $982.56 per troy ounce. Palladium ascended by 2.88% from its close last week at $987.93 to settle this week at $1,016.35 per troy ounce. The three-month LME prices of industrial metals were generally down. Copper dipped by 2.46% from its close the prior week at $ 9,276.00 to close at $9,048.00 per metric ton. Aluminum dropped by 1.78% from its price last week at $2,641.00 to end at $2,594.00 per metric ton. Zinc, which ended last week at $2,827.50, closed this week at $2,742.00 per metric ton for a loss of 3.02%. Tin closed last week at $30,156.00 and this week at $30,102.00 for a slide of 0.18%.

Energy and Oil

This week, oil prices finished this week about $2 per barrel lower than last week. The January ICE Brent futures contract was set to expire just below $77 per barrel. While this is the second straight week the price of oil declined, there is every reason to believe that oil prices may spike next week. Donald Trump has set February 1 as the deadline for the imposition of 25% trade tariffs for Canada and Mexico. Should this threat materialize, the oil bulls will likely drive Brent prices back above the $80 per barrel level.  In the meantime, the new U.S. Transportation Secretary Dean Duffy directed U.S. regulators to rescind the Biden-era fuel economy standards, raising CAFÉ requirements for light-duty vehicles to 50.4 miles per gallon by 2031 from the present 39.1 miles per gallon.

Natural Gas

For the report week from Wednesday, January 22, to Wednesday, January 29, 2025, the Henry Hub spot price fell by $0.60 and from $3.89 per million British thermal units (MMBtu) to $3.29/MMBtu. Regarding Henry Hub futures, the February 2025 NYMEX contract expired by the week’s end at $3.535/MMBtu, down by $0.43 from the start of the report week. The March 2025 NYME contract price dropped to $3.170/MMBtu, down by $0.34 through the report week. The price of the 12-month strip averaging March 2025 through February 2026 contracts decreased by $0.25 to $3.813/MMBtu. As for select regional spot prices, natural gas spot prices fell at all major pricing locations. Price drops ranged from $3.97 at Transco Zone 6 NY to $0.03 at PG&E Citygate.

International gas futures prices rose for this report week. Weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased by $0.06 to a weekly average of $14.08/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands increased by $0.52 to a weekly average of $15.08/MMBtu. For the week last year corresponding to this week (beginning January 24 and ending January 31, 2024), the prices were $9.42/MMBtu in East Asia and $9.13/MMBtu at the TTF.

World Markets

The pan-European STOXX Europe 600 Index reached a record high this week when it rose by 1.78% in local currency terms. The stellar performance was driven by strong earnings results and the European Central Bank’s (ECB’s) decision to cut interest rates which boosted investor sentiment. France’s CAC 40 Index added 0.28% and Italy’s FTSE MIB rose by 0.78%. Germany’s DAX outperformed, climbing by 1.58% and hitting a new intraday peak during the week. The UK’s FTSE 100 Index surged by 2.02% as the pound sterling depreciated against the U.S. dollar. The currency adjustment helped to support the index, which includes many multinational companies that are generating overseas revenues. As the market expected, the ECB reduced its key deposit rate by 25 basis points to 2.75%. The disinflation process was “well on track” and the decision was unanimous, according to ECB President Christine Lagarde. She did not indicate, however, how long the ECB might keep cutting rates. On the economic front, the eurozone economy stalled in the final three months of last year relative to the third quarter of 2024. Germany and France, the bloc’s largest economies, contracted in comparison to the third quarter. Spain, on the other hand, had a GDP growth of 0.8%. Italy’s GDP was flat, neither expanding nor contracting. The EU-harmonized 12-month inflation rate for January registered at 1.8% in Spain, remained at 2.8% in Germany, and accelerated to 2.9% in Spain.

Over the week, Japan’s stock markets demonstrated mixed performance. The Nikkei 225 Index dropped by 0.9%. The broader TOPIX Index, on the other hand, gained 1.37%. Weighing on the share prices of Japanese chip companies was a sell-off in major technology stocks early in the week in response to the emergence of Chinese company DeepSeek. The firm is a potential challenger to what has hitherto been seen as U.S. artificial intelligence dominance. DeepSeek caught the market off-guard and created downward pressure on the share prices of American and Japanese chip companies. Domestic stocks also reacted to the hawkish position of the Bank of Japan (BoJ) which raised interest rates for the third time within a year and revised its inflation forecast upward in its monetary policy meeting held on January 23-24. The yen strengthened to the high end of JPY 154 against the U.S. dollar from JPY 156 at the end of the week preceding. Regarding economics, the Tokyo-area core consumer price index, a leading indicator of nationwide trends, rose by 2.5% year-on-year in January, up from 2.4% in December and in line with expectations. The trend reinforced a hawkish outlook for BoJ monetary policy, although a relatively weak growth backdrop remains a downside risk and supports a gradual hiking pace.

Markets on the mainland will remain closed from January 28 to February 4 for the Lunar New Year holiday and will resume trading on February 5. During this holiday-shortened week, Chinese stock markets edged lower. The onshore benchmark CSI 300 Index and the Shanghai Composite Index on Monday, the last trading day preceding the nationwide holiday. The Hong Kong benchmark Hang Seng Index registered slight gains on Monday and a half-day session on Tuesday before the markets suspended trading for the rest of the week. On Monday, government data released showed that China’s economy launched 2025 on a weak footing. According to the country’s statistics bureau, the official manufacturing Purchasing Manager’s Index (PMI) surprisingly fell to 49.1 in January. The nonmanufacturing PMI (a measure of construction and services activity) dipped to 50.2 from 52.2 in December. Index readings above 50 signal expansion while those below 50 indicate contraction. Because millions of workers return to their hometowns for the Lunar New Year, it is typical for China’s manufacturing PMI to weaken in January. Other data released on Monday, however, pointed to weakness in China’s economy at the end of 2024. According to the statistics bureau, profits at large industrial companies descended by 3.3% in 2024. This marks the third consecutive year of declines. The fall in industrial profits is seen by economists to reflect the deflationary pressures on China’s economy. Domestic demand appears to have been curbed by the three straight years of economy-wide declines amid a yearslong real estate downturn.

The Week Ahead

The ISM Manufacturing PMI, the ISM services report, and the employment and nonfarm payrolls report are some of the important economic releases scheduled for the coming week.

Key Topics to Watch

• S&P final U.S. manufacturing PMI for Jan.
• Construction spending for Dec.
• ISM manufacturing for Jan.
• Atlanta Fed President Raphael Bostic speaks (Feb. 3)
• Auto sales for Jan.
• Job openings for Dec.
• Factory orders for Dec.
• Atlanta Fed President Raphael Bostic speaks on housing (Feb. 4)
• San Francisco Fed President Daly speaks (Feb. 4)
• Federal Reserve Vice Chairman Philip Jefferson speaks (Feb. 4)
• ADP employment for Jan.
• U.S. trade deficit for Dec.
• Richmond Fed President Tom Barkin speaks (Feb. 5)
• S&P final U.S. services PMI for Jan.
• ISM services for Jan.
• Chicago Fed President Goolsbee speaks (Feb. 5)
• Fed Governor Michelle Bowman speaks (Feb.5)
• Fed Vice Chairman Philip Jefferson speaks (Feb 5)
• Initial jobless claims for Feb. 1
• U.S. productivity for Q4
• Fed Governor Christopher Waller speaks (Feb. 6)
• Dallas Fed President Lorie Logan speaks (Feb. 6)
• U.S. employment report for Jan.
• U.S. unemployment rate for Jan.
• U.S. hourly wages for Jan.
• Hourly wages year over year
• Fed Governor Michelle Bowman speaks (Feb, 7)
• Wholesale inventories for Dec.
• Consumer sentiment (prelim) for Jan.
• Consumer credit for Dec.

Markets Index Wrap-Up

Stock Markets

The week began with the inauguration of the 47^th U.S. President, Donald Trump. On his first day in office, Trump signed a record 26 executive orders that, from a macroeconomic perspective, focused on four key areas, namely energy, immigration reform, tariffs, and technology. The new policy proposals were in general more measured and less severe than initially expected, which the market welcomed, although it does not dispel the likelihood of market volatility ahead as policy updates are released.

Major stock indexes were up for the week. The 30-stock Dow Jones Industrial Average (DJIA) advanced by 2.15% while the Total Stock Market Index added 1.72%. The broad S&P 500 Index gained by 1.74% and notched a new record high intraweek. The technology-heavy Nasdaq Stock Market Composite gained 1.65%, and the NYSE Composite also added 1.99%. For the first time this year, growth stocks outperformed value shares as measured by the Russell indexes. The CBOE Volatility Index, which measures investor risk perception, fell by 7.01%.

On Tuesday, President Trump announced a new joint venture between Softbank, Open AI, Oracle, and Stargate, which will inject $500 billion towards the development of an AI-supportive infrastructure. This spurred a rally among AI-related stocks in anticipation of a potential jump in spending. As the first 100 days of this new administration play out, strong fundamentals underlie the investing environment supported by a healthy consumer and positive economic and earnings growth. This should prevail and even improve as new policies are rolled out since most of the uncertainty is already resolved.

U.S. Economy

On Friday morning, S&P Global released its first estimate of January economic activity. The report states that growth in business activity slowed month-on-month in January but remained expansionary. For the first time in six months, the report indicated that business activity was supported by a return to growth in the manufacturing sector. Services activity continued to grow during the month, although the pace of growth was slower.

On Friday, the National Association of Realtors also reported existing home sales for the month of December. According to the report, sales rose by 2.2% during the month to a seasonally adjusted annual rate of 4.24 million, the highest reading in ten months. The report also noted, however, that despite the upside surprise at the year’s end, amid elevated mortgage rates and record-high home prices existing home sales for the full year dropped to the lowest level in almost 30 years.

In January, the University of Michigan’s Index of Consumer Sentiment declined for the first time in six months from, 74.0 in December to 71.1. The drop is largely attributed to rising inflation expectations and concerns regarding unemployment.

Metals and Mining

For gold investors, the inauguration of Donald Trump as the 47^th President of the United States marked an auspicious start. Gold prices have closed the week near $2,800 per ounce, close to their record highs from late October. Global uncertainties and mounting concerns about inflation are the factors that have caused gold to thrive presently. Before Trump’s inauguration, several market experts and economists warned that his policies, particularly regarding tariffs, tend to push inflation higher and may compromise global economic growth. For now, gold’s outlook appears robust although some volatility may develop along the way. The uptrend of gold prices may be sustained although further volatility may be driven by geopolitical and economic uncertainty.

The spot market for precious metals gained ground this week. Gold closed last week at $2,703.25 and gained 2.49% to end this week at $2,770.58 per troy ounce. Silver ended last week at $30.37 and increased by 0.72% to settle this week at $30.59 per troy ounce. Platinum, with a closing price last week at $944.40, rose by 0.75% to close at $951.45 per troy ounce. Palladium, formerly at $951.50, ascended by 3.83% to settle this week at $987.93 per troy ounce. The three-month LME prices of industrial metals were mixed. Copper closed the week at $9,276.00 per metric ton, 0.94% higher than last week’s close at $9,190.00. Aluminum ended this week at $2,641.00 per metric ton, lower by 1.62% from the last weekly close of $2,684.50. Zinc closed this week at $2,827.50, lower by 3.89% from last week’s close at $2,942.00. Tin ended this week at $30,156.00 per metric ton for a gain of 1.28% over last week’s close at $29,775.00

Energy and Oil

The key theme throughout the week revolved around uncertainty regarding Trump’s tariff threats on Canada and Mexico. Oil markets continued to await February 1 to discern whether the talk about tariffs is part of a negotiation tactic or something more. As ICE Brent ticked lower to $79 per barrel, US President Donald Trump also called on OPEC to immediately increase oil production in order to lower oil prices, raising another contentious issue between the cartel and the White House. President Trump further announced that his administration would cease buying crude oil from Venezuela. If this pushes through it will potentially rescind the 2022 Chevron waiver that allowed the U.S. major to ramp up production to 200,000 barrels per day across the country.

Natural Gas

For the report week beginning Wednesday, January 15, and ending Wednesday, January 22, 2025, the Henry Hub spot price fell by $0.54 from $4.43 per million British thermal units (MMBtu) to $3.89/MMBtu. The Henry Hub reached an intraweek high on Friday, January 17 of $10.07/MMBtu, its highest price since January 2024. Regarding Henry Hub futures, the price of the February 2025 NYMEX contract decreased by $0.12, from $4.083/MMBtu at the start of the report week to $3.960/MMBtu at the week’s end. The price of the 12-month strip averaging February 2025 through January 2026 futures contracts rose by $0.04 to $4.011/MMBtu. Natural gas spot prices fell at most locations this report week. Price changes ranged from a decrease of $0.97 at PG&E Citygate to an increase of $11.04 at Transco Zone 6 NY.

International natural gas futures price changes were mixed this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia decreased by $0.14 to a weekly average of $14.01/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, increased by $0.57 to a weekly average of $14.57/MMBtu. In the week last year corresponding to this report week (beginning January 17 and ending January 24, 2024), the prices were $9.49/MMBtu in East Asia and $8.92/MMBtu at the TTF.

World Markets

European stocks climbed this week after U.S. President Trump did not announce new tariffs in his first week in office. The pan-European STOXX Europe 600 Index ended 1.23% higher in local currency terms. Also driving stocks higher is the growing expectation that the European Central Bank (ECB) could consider further cutting interest rates. Germany’s DAX rose by 2.35% and France’s CAC 40 Index ascended by 2.83%. Falling by 0.18%, however, was Italy’s FTSE MIB. The UK’s FTSE 100 Index was hardly changed. In the Eurozone, business activity increased slightly in January, according to purchasing managers’ surveys compiled by S&P Global. Demand, however, continued to be weak. The composite output index registered 50.2, up from 49.6 – an optimistic reading, since levels above 50 denote expansion. For the second consecutive month, activity in the services sector increased modestly. Manufacturing remains contractionary but companies expect that output will increase one year forward. In France, business activity also remains contractionary; in Germany, however, the condition has stabilized after six straight months of declines. In the rest of the European bloc, activity expanded modestly for the 13^th consecutive month. In the UK, wage growth, excluding bonuses, climbed to a six-month high of 6.0% in the three months through November. This is in line with expectations. The unemployment rate, however, unexpectedly rose to 4.4% at the same time the payroll numbers experienced its sharpest drop since November 2020. There was also a further fall in job openings.

Japan’s stock markets gained over the week over the hopes that Japanese exporters would further be boosted by the decision of U.S. President Trump to refrain from imposing new tariffs on his first day in office. The Nikkei 225 Index rose by 3.85% and the broader TOPIX Index climbed by 2.67% for the week. A stronger currency has posed a modest headwind. The yen appreciated from the low JPY 156 range at the end of the previous week to the high end of the JPY 155 range versus the US dollar. Comments by Japan’s finance minister suggesting that the government may be prepared to take appropriate action to support the yen underpinned the gains of the yen. In a hawkish move, the Bank of Japan (BoJ) raised its policy rate for the third time in a year. The 0.25 percentage point increase brought the policy rate to about 0.5%. This is its highest level since the 2008 global financial crisis. From the prior week’s 1.20%, the yield on the 10-year Japanese government bond rose to 1.23%. Provided that the BoJ’s outlook for economic activity and prices is realized, the central bank will accordingly continue to raise the policy interest rate and adjust the degree of monetary accommodation. Further monetary policy normalization by the BoJ is supported by the latest consumer inflation data. Recent reports showed that price growth was well above the central bank’s 2% target. In December 2024, Japan’s core consumer price index rose by 3.0% year-on-year, up from November’s 2.7% year-on-year and matching expectations.

The Shanghai Composite Index added 0.33% this week while the blue-chip CSI 300 gained 0.54%. The Hong Kong benchmark Hang Seng Index added 2.46%.  Chinese stocks rose amid news that President Trump may be taking a softer stance on China tariffs. Banks’ one- and five-year loan prime rates were left unchanged at 3.1% and 3.6%, respectively. In October, Chinese lenders cut the benchmark lending rates by 25 basis points, a higher-than-expected level, to revive the economy. Analysts foresee that the central bank will continue to ease monetary policy in 2025, and even potentially cut the reserve requirement ratio and interest rates. In the meantime, Beijing intensified efforts to ease market uncertainty caused by the new U.S. administration. On the economic front, China’s youth unemployment rate fell for the fourth straight month since reaching its recent highest level in August 2024. Excluding students, the December jobless rate for 16- to 24-year-olds declined to 15.7% from November’s 16.1%. In the prior week, data released showed the nationwide jobless rate edged up to 5.1% in December from 5% in November.

The Week Ahead

The FOMC meeting, durable goods orders for December, and the first preliminary estimate for the fourth quarter GDP are among the important economic releases scheduled for the coming week.

Key Topics to Watch

• New home sales for Dec.
• Durable-goods orders for Dec.
• Durable-goods minus transportation for Dec.
• S&P Case-Shiller home price index (20 cities) for Nov.
• Consumer confidence for Jan.
• Advanced U.S. trade balance in goods for Dec.
• Advanced retail inventories for Dec.
• Advanced wholesale inventories for Dec.
• FOMC interest-rate decision
• Fed Chair Powell press conference (Jan. 29)
• GDP for Q1
• Initial jobless claims for Jan. 25
• Pending home sales for Dec.
• Fed Gov. Michelle Bowman speaks (Jan. 31)
• Employment cost index for Q4
• Personal income (nominal) for Dec.
• Personal spending (nominal) for Dec.
• PCE index for Dec.
• PCE (year-over-year)
• Core PCE index for Dec.
• Core PCE (year-over-year)
• Chicago Business Barometer (PMI) for Jan.

Markets Index Wrap-Up

Stock Markets

All major stock indexes ended in positive territory this week, rebounding from the sharp sell-off last week and erasing the losses of the prior week. The 30-stock Dow Jones Industrial Average (DJIA) surged by 3.69%, slightly better than the Total Stock Market weekly gain of 3.12%. The broad S&P 500 climbed by 2.91% while the technology-heavy Nasdaq Stock Market Composite went up by 2.45%. The NYSE Composite gained 3.40%. The investor risk perception indicator, the CBOE Volatility Index (VIX) dropped by 18.27%.

The Russell 1000 shares indicate that value stocks outperformed growth shares by the widest weekly margin since September. This was partly driven by outperformance in the energy sector amid higher oil prices. There was also some profit-taking in large-cap technology stocks. The financial sector also posted strong weekly gains after the banking giants reported strong rises in profits during the fourth quarter.

U.S. Economy

The week’s economic high point came on Wednesday with the release of the Labor Department’s December inflation report. The headline inflation signaled an acceleration from November. However, core inflation – which excludes food and energy – rose by 0.2% in December, a tick lower than the prior month and the smallest increase since July. The year-over-year core inflation figure likewise slowed from 3.3% in November to 3.2% in December.

On Thursday, the jobless claims data for the week ending January 11 was released. New applications for unemployment rose from 203,000 in the prior week to 217,000 during the current week, exceeding consensus estimates. The four-week average of claims, however, dropped modestly. Continuing claims also dropped from 1.88 million in the previous week to 1.86 million in the current week.

Metals and Mining

The spot market for precious metals remains in breakout mode. Gold holds above the former critical resistance, now support, level of $2,700 and ended this week at $2,703.25 per troy ounce, 0.50% above last week’s close at $2,689.76. Silver settled this week at $30.37 per troy ounce, 0.13% lower than last week’s close at $30.41. Platinum corrected to end the week at $944.40 per troy ounce, 2.22% lower than last week’s closing price of $965.80. Palladium ended the week at $951.50 per troy ounce, higher by 0.03% from last week’s close at $951.17. The three-month LME prices of industrial metals were mostly up. Copper came from its previous weekly close at $9,091.50 and ended the week at $9,190.00 per metric ton for a rise of 1.08%. Aluminum, which ended last week at $2,571.50, closed this week at $2,684.50 per metric ton for a 4.39% gain.  Zinc ended at $2,942.00 per metric ton this week, 2.58% higher than last week’s close at $2,868.00. Tin closed at $29,775.00 per metric ton, 0.37% lower than last week’s close at $29,886.00.

The gold market previously struggled since the November 5 election under President-elect Donald Trump’s push toward a world trade war. It appears, however, that this conjecture is likely to dissipate as the effects of the America First policies become clearer. Gold has broken out of the $2,700 resistance level and continues to remain above it, despite the solid momentum of the US dollar. The currency is trading at or near its highest level in more than two years. Analysts warned that a global trade war may keep consumer prices high and arrest global growth. Geopolitical worries also were expected to weigh on the economic environment even as the government debt levels weighed on bond markets. The anticipated challenges, however, have failed to hold back investor sentiment. Gold remains the singular global asset that has a low correlation to risk assets, no third-party or geopolitical risks, relatively low volatility, and a deep and liquid market. Gold may continue to test higher critical resistance levels.

Energy and Oil

Backwardation continues to expand in both Brent and Dubai futures despite the relentless oil price rally that pushed Brent to break the $82-per-barrel resistance level. Lower prices from next week onwards could be brought about by a potential de-escalation of hostilities between Israel and Hamas, leading to the Houthis ending their maritime warfare in the Red Sea. This week, however, remains firmly in bullish territory. In other stories, the head of Libya’s National Oil Corporation Farhat Bengdara has resigned his post after three years at the helm of the state oil firm. His stewardship was marred by repeated shutdowns, militia interference, and haggling over revenue allocation.

Natural Gas

For the week beginning Wednesday, January 8, and ending Wednesday, January 15, 2025, the Henry Hub spot price rose by $0.67 from $3.76 per million British thermal units (MMBtu) to $4.083/MMBtu. Regarding the Henry Hub futures, the price of the February 2025 NYMEX contract increased by $0.43, from $3.651/MMBtu to $4.083/MMBtu throughout the report week. The last time the front-month contract settled above $4.00/MMBtu was on January 4, 2023, when it settled at $4.172/MMBtu. The price of the 12-month strip averaging February 2025 through January 2026 futures contracts climbed by $0.29 to $3.967/MMBtu. Natural gas spot prices rose at most locations this report week. Price changes ranged from a decrease of $5.00 at Transco Zone 6 NY to an increase of $1.14 at PG&E Citygate.

International natural gas futures prices decreased this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia decreased by $0.15 to a weekly average of $14.15/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, decreased by $0.55 to a weekly average of $14.00/MMBtu. In the week last year corresponding to this report week (the week beginning January 10 and ending January 17, 2024), the prices were $10.51/MMBtu in East Asia and $9.62/MMBtu at the TTF.

World Markets

European equity trended higher this week. The pan-European STOXX Europe 600 Index settled 2.37% higher than last week as investor sentiments rose on slower-than-expected inflation on both sides of the Atlantic. Market participants’ hopes climbed that central banks could continue to cut interest rates this year. Major stock indexes jumped sharply. Italy’s FTSE MIB climbed by 3.36%, Germany’s DAX added 3.41%, and France’s CAC 40 Index gained 3.75%. The UK’s FTSE 100 Index surged by 3.11%. The European Central Bank (ECB) released the minutes of its December meeting. The ECB acknowledged that they need to lower interest rates cautiously and gradually as they reduced interest rates for the third time in a row. By the end of January, the market seems to expect another quarter-point reduction in the deposit rate to 2.75%.  Various ECG officials emphasized the outlook’s exceptional uncertainty due to geopolitical tensions, potential global trade frictions, and fiscal policy concerns in the region.

Japan’s stock markets declined during the week. The Nikkei 225 Index fell by 1.9% and the broader TOPIX Index gave up 1.3%. There were heightened expectations that the Bank of Japan (BoJ) could raise interest rates at its January 23-24 monetary policy meeting, based on hawkish comments from the central bank officials. This speculation provided support to the yen, which strengthened to around JPY 155.6 against the U.S. dollar, from around JPY 157.6 at the end of the week before. The profit outlook of Japan’s export-heavy industries was weighed down by the strength of the yen. The yield on the 10-year Japanese government bond climbed near its highest level during the week to as high as 1.25%, although it eventually settled at the 1.20% level. While the BoJ stressed that rates will be raised if economic and price conditions keep improving, recent concerns emerged around U.S. economic policies regarding tariffs and fiscal policy. Some investors believe that an increase in the policy rate will be delayed until March or April.

Despite persistent deflationary pressures, Chinese equities rose as the economy improved. The Shanghai Composite Index added 2.31% while the blue-chip CSI 300 gained by 2.14%. The Hong Kong benchmark Hang Seng Index rose by 2.73%. China’s GDP expanded by a better-than-expected 5.4% year-on-year in the fourth quarter. The economy grew by a quarterly 1.6%, up from a revised 1.3% gain in the preceding quarter. The GDP for the year reached 5%, attaining Beijing’s target for the year. Other data supported China’s recovery. Industrial production rose by 6.2% exceeding forecasts, up from the 5.4% increase in November. This is attributed partly to higher auto, computer, and solar cell sales. In December, retail sales grew by 3.7% from a year earlier, up from November’s 3% increase. In the January to December period, fixed asset investment was 3.2% from a year ago, slightly down from a 3.3% rise in the month preceding. Property investment declines deepened to 10.6% year-on-year. The unemployment rate moved up to 5.1%.

The Week Ahead

The Conference Board’s leading economic index and S&P Global PMI data are among the important economic releases scheduled for the coming week.

Key Topics to Watch

• U.S. leading economic indicators for Dec.
• Initial jobless claims for Jan. 18
• Existing home sales for Dec.
• Consumer sentiment (final) for Jan.
• S&P flash U.S. services PMI for Jan.
• S&P flash U.S. manufacturing PMI for Jan.

Markets Index Wrap-Up

 

Stock Markets

Major U.S. indexes are down for the shortened trading week due to market closure on Thursday in honor of the recently deceased former US President Jimmy Carter. The 30-stock Dow Jones Industrial Average (DJIA) dropped by 1.07% although the Total Stock Market Index dipped by only 0.72%. The broad S&P 500 Index fared a bit worse than the total stock market, declining by 0.71%. The technology-tracking Nasdaq Stock Market Composite lost by 0.62%, and the NYSE Composite Index gave up 0.69%. Investor risk perception, as indicated by the CBOE Volatility Index (VIX), rose by 8.98% over last week.

The week began on a positive note, as most indexes were up on Monday on reports that the incoming Trump administration will pursue a softer stance on tariffs than previously indicated. The initial optimism faded during the week after the president-elect refuted those reports and some economic data were released that resurrected concerns about stubborn inflation. The markets could remain choppy over the coming weeks as investors receive upcoming corporate earnings releases, Federal Reserve outlook updates, and the policy proposals of the incoming administration.

U.S. Economy

In the first US jobs report in 2025, the nonfarm payrolls for December amounted to 256,000 which is well above the 165,000 expected level. The unemployment rate dropped from 4.2% to 4.1%. Signaling some modest potential easing in services inflation as well, the average hourly wage growth rose 3.9% year-over-year which is slightly below the forecasted 4.0% wage growth. Other economic data releases on Tuesday noted that the Institute for Supply Management (ISM) Services Purchasing Managers’ Index (PMI) came in at 54.1 for December, two percentage points higher than its November level. The ISM-PMI is a measure of economic activity in the services sector, and readings above 50 indicate expansion while those lower than 50 denote contraction.

Fears that progress on reducing inflation has stalled and that interest rates could remain “higher for longer” were stoked when the component of the index that measures prices paid by service organizations for materials and services increased by 6.2 percentage points to 64.4. Further fueling these fears was Fed Governor Michelle Bowman’s observation that inflation has held “uncomfortably above” the Fed’s 2% long-term target and that there remained upside risks to inflation even though the Fed made significant progress since 2023 to control inflation. While the data capped off a resilient year for the economy, the labor market in particular still faces several headwinds and appears to provide the Fed with another data point that favors moderating the pace of rate cuts.

Metals and Mining

For 2024, gold closed the year with a 26% gain, however, it ended December disappointing investors as a Santa Claus rally failed to materialize in the gold market for the first time in seven years. The new year brings fresh hope, nevertheless, as new opportunities push gold to test its critical resistance level near $2,700, and likewise defy critical headwinds from rising bond yields and the surging bullishness of the U.S. dollar. Analysts note that the delinking of gold from its traditional relationship with currency and bond yields may be due to investors paying less attention to the higher opportunity costs of holding gold while they hedge against growing inflation risks, geopolitical turmoil, and economic uncertainty.

The spot prices of precious metals registered gains for the week. Gold climbed from $2,640.22 last week to $2,689.76 per troy ounce this week for a gain of 1.88%. Silver came from last week’s close of $29.62 to this week’s close of $30.41 per troy ounce for an appreciation of 2.67%. Platinum closed last week at $939.51 and this week at $965.80 per troy ounce for a gain of 2.80%. Palladium ended last week at $925.64 and this week at $951.17 per troy ounce to register a gain of 2.76%. The three-month LME prices of industrial minerals, on the other hand, ended mixed. Copper closed this week at $9,091.50 per metric ton, 3.28% higher than last week’s close at $8,802.50. Aluminum closed this week at 1.68% higher than last week’s closing price of $2,529.00, ending this week at $2,571.50 per metric ton. Zinc lost 2.02% from the last weekly close of $2,927.00 to settle this week at $2,868.00 per metric ton. Tin gained 4.65% above last week’s closing price of $28,557.00 to end this week at $29,886.00 per metric ton.

Energy and Oil

Oil prices began the year noticeably bullish, as Brent broke $80 per barrel for the first time since October 7, 2024. The rally’s momentum may be traced to several reasons, including the eleventh-hour sanctions the Biden Administration imposed on Russia, continued concerns that inflation may once more rise, cold temperatures across the Atlantic Basin, and widening backwardation in all crude futures. The bullishness in the oil market has once more been felt for the first time in months. In other news, Chinese consumers have nominated 43.5 million barrels of Saudi crude next month shortly after Saudi Aramco hiked formula prices for Asian term buyers by $0.50 to $0.60 for February. This is down by 2.5 million barrels from January.

Natural Gas

For the report week beginning Wednesday, January 1, and ending Wednesday, January 8, 2025, the Henry Hub spot price rose by $0.37 from $3.39 per million British thermal units (MMBtu) to $3.76/MMBtu. Regarding Henry Hub futures, the January 2025 contract expired on Friday, December 27, at $3.514/MMBtu. The price of the February 2025 NYMEX contract decreased by $0.009 for the report week, from $3.660/MMBtu to $3.651/MMBtu. The price of the 12-month strip averaging February 2025 through January 2026 futures contracts increased by $0.03 to $3.678/MMBtu. Natural gas spot prices increased at all major pricing locations this report week. Price increases ranged from $0.29 at Eastern Gas South to $11.69 at Algonquin Citygate.

International natural gas futures prices increased this report week. Weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased by $0.14 to a weekly average of $14.30/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands increased by $0.06 to a weekly average of $14.55/MMBtu. In the week last year corresponding to this report week (from January 3 to January 10, 2024), the prices were $11.44/MMBtu in East Asia and $10.35/MMBtu at the TTF.

World Markets

European stock markets rose this week as the pan-European 600 Index closed 0.65% higher in local currency terms. Despite an uptick in the inflation rate, investors continue to expect the European Central Bank to cut interest rates in January. Germany’s DAX climbed by 1.55%, France’s CAC 40 Index ascended by 2.04%, and Italy’s FTSE MIB added 2.82%. The UK’s FTSE 100 Index gained by 0.30%. Various data painted a varying picture of the eurozone economy. Driven by higher energy prices and service costs, December’s year-over-year inflation speeded up to 2.4% from November’s 2.2%. The core rate (excluding energy, food, alcohol, and tobacco prices) remained unchanged at 2.7%. After falling in October, retail sales barely grew in November. In the meantime, the jobless rate stayed at a record low of 6.3% in November. In its latest Economic Bulletin, the European Central Bank (ECB) said that the disinflation process was well on track and that most indicators underlying inflation suggested that inflation will sustainably settle at the bank’s 2% medium-term target. The Italian newspaper, Corriere della Sera, quoted policymaker Piero Cipollone as saying that the ECB “shouldn’t try to guard excessively against possible future inflation shocks” and that “running the economy below potential weakens it and reduces the scope to react to shocks when they occur.” This and other individual comments by other policymakers encourage investors to believe that future monetary policy would contribute to a stronger economic outlook.

Over the week, Japanese equities lost ground, as the Nikkei 225 Index slid by 1.8% and the broader TOPIX Index dropped by 2.5%. The timing of Bank of Japan’s (BoJ’s) next interest rate hike remained the most speculated topic among market observers. Japan’s currency weakened over the week from around JPY 157.3 per USD at the end of last week, to about JPY 158.1 at the end of this week. The yen’s weakness was due to the uncertainty of the pace of further monetary policy normalization by the BoJ, as well as the pressure from a recent widening of the U.S.-Japan interest rate differential. The authorities have expressed their readiness to take appropriate action against excessively speculative, one-sided moves in the currency market. In the past, Japan’s monetary authorities have intervened in the foreign exchange markets to prop up the yen, most recently in July 2024. The central bank maintained its tightening bias, and its Governor Kazuo Ueda reiterated that if economic and price conditions keep improving, rates will be raised. Investors believe that it is unlikely that the BoJ will raise rates soon, and instead expect the policy rate hike will be delayed until March or April. Japan’s real (inflation-adjusted) wage growth, a closely watched indicator of consumers’ purchasing power, fell by 0.3% year-on-year in November. This is the fourth consecutive month of negative real wage growth. The BoJ’s case is that if the economy, prices, and wage growth develop in line with its projections, interest rates will rise.

Chinese stock markets receded after data released showed that the economy remained in deflation territory. The Shanghai Composite Index lost 1.34%, and the blue-chip CSI 300 slid by 1.13%. The Hong Kong benchmark Hang Seng Index plunged by 3.52%. On Thursday, inflation data released indicated that China is still struggling with deflationary pressures. The consumer price index (CPI) rose by 0.1% in December from one year ago. This is in line with estimates and down by 0,2% in November due to lower food and fuel prices. Excluding volatile food and energy costs, core inflation ticked up to 0.4% from November’s 0.3% growth. The producer price index (PPI) fell by 2.3% year-on-year, slowing from the 2.5% decline of the previous month and extending the deflation in factory gate prices for the 27th straight month. In other developments, the private Caixin S&P Global survey of services activity climbed to 52.2 in December, a better-than-expected result and the highest level since May. This matches the official data released in the previous week indicating that nonmanufacturing activity rose to 52.2 in December, the highest level in six months after Beijing introduced a broad stimulus package in late September. Furthermore, the People’s Bank of China (PBOC) announced after its quarterly policy meeting that to support economic growth, it will implement a moderately loose monetary policy this year. The PBOC vowed to increase financial support directed at the technology, emissions, pensions, and digital sectors. It likewise declared that, when appropriate, it would reduce the reserve requirement ratio and interest rates in order to boost consumption.

The Week Ahead

The CPI and PPI inflation for December, retail sales data, and industrial production data are among the macroeconomic reports scheduled for release in the coming week.

Key Topics to Watch

• Monthly U.S. federal budget for Dec.
• NFIB optimism index for Dec.
• Producer price index for Dec.
• Core PPI for Dec.
• PPI year over year
• Core PPI year over year
• Kansas City Fed President Jeffrey Schmid speaks (Jan. 14)
• Fed Beige Book
• New York Fed President Williams delivers opening remarks (Jan. 14)
• Consumer price index for Dec.
• CPI year over year
• Core CPI for Dec.
• Core CPI year over year
• Empire State manufacturing survey for Jan.
• Richmond Fed President Barkin speaks (Jan. 15)
• New York Fed President Williams speaks (Jan. 15)
• Chicago Fed President Goolsbee speaks (Jan. 15)
• Initial jobless claims for Jan. 11
• U.S. retail sales for Dec.
• Retail sales minus autos for Dec.
• Import price index for Dec.
• Import price index minus fuel for Dec.
• Philadelphia Fed manufacturing survey for Jan.
• Business inventories for Nov.
• Home builder confidence index for Jan.
• Housing starts for Dec.
• Building permits for Dec.
• Industrial production for Dec.
• Capacity utilization for Dec.

Markets Index Wrap-Up

Stock Markets

Major U.S. indexes are down for the shortened trading week due to market closure on Thursday in honor of the recently deceased former US President Jimmy Carter. The 30-stock Dow Jones Industrial Average (DJIA) dropped by 1.07% although the Total Stock Market Index dipped by only 0.72%. The broad S&P 500 Index fared a bit worse than the total stock market, declining by 0.71%. The technology-tracking Nasdaq Stock Market Composite lost by 0.62%, and the NYSE Composite Index gave up 0.69%. Investor risk perception, as indicated by the CBOE Volatility Index (VIX), rose by 8.98% over last week.

The week began on a positive note, as most indexes were up on Monday on reports that the incoming Trump administration will pursue a softer stance on tariffs than previously indicated. The initial optimism faded during the week after the president-elect refuted those reports and some economic data were released that resurrected concerns about stubborn inflation. The markets could remain choppy over the coming weeks as investors receive upcoming corporate earnings releases, Federal Reserve outlook updates, and the policy proposals of the incoming administration.

U.S. Economy

In the first US jobs report in 2025, the nonfarm payrolls for December amounted to 256,000 which is well above the 165,000 expected level. The unemployment rate dropped from 4.2% to 4.1%. Signaling some modest potential easing in services inflation as well, the average hourly wage growth rose 3.9% year-over-year which is slightly below the forecasted 4.0% wage growth. Other economic data releases on Tuesday noted that the Institute for Supply Management (ISM) Services Purchasing Managers’ Index (PMI) came in at 54.1 for December, two percentage points higher than its November level. The ISM-PMI is a measure of economic activity in the services sector, and readings above 50 indicate expansion while those lower than 50 denote contraction.

Fears that progress on reducing inflation has stalled and that interest rates could remain “higher for longer” were stoked when the component of the index that measures prices paid by service organizations for materials and services increased by 6.2 percentage points to 64.4. Further fueling these fears was Fed Governor Michelle Bowman’s observation that inflation has held “uncomfortably above” the Fed’s 2% long-term target and that there remained upside risks to inflation even though the Fed made significant progress since 2023 to control inflation. While the data capped off a resilient year for the economy, the labor market in particular still faces several headwinds and appears to provide the Fed with another data point that favors moderating the pace of rate cuts.

Metals and Mining

For 2024, gold closed the year with a 26% gain, however, it ended December disappointing investors as a Santa Claus rally failed to materialize in the gold market for the first time in seven years. The new year brings fresh hope, nevertheless, as new opportunities push gold to test its critical resistance level near $2,700, and likewise defy critical headwinds from rising bond yields and the surging bullishness of the U.S. dollar. Analysts note that the delinking of gold from its traditional relationship with currency and bond yields may be due to investors paying less attention to the higher opportunity costs of holding gold while they hedge against growing inflation risks, geopolitical turmoil, and economic uncertainty.

The spot prices of precious metals registered gains for the week. Gold climbed from $2,640.22 last week to $2,689.76 per troy ounce this week for a gain of 1.88%. Silver came from last week’s close of $29.62 to this week’s close of $30.41 per troy ounce for an appreciation of 2.67%. Platinum closed last week at $939.51 and this week at $965.80 per troy ounce for a gain of 2.80%. Palladium ended last week at $925.64 and this week at $951.17 per troy ounce to register a gain of 2.76%. The three-month LME prices of industrial minerals, on the other hand, ended mixed. Copper closed this week at $9,091.50 per metric ton, 3.28% higher than last week’s close at $8,802.50. Aluminum closed this week at 1.68% higher than last week’s closing price of $2,529.00, ending this week at $2,571.50 per metric ton. Zinc lost 2.02% from the last weekly close of $2,927.00 to settle this week at $2,868.00 per metric ton. Tin gained 4.65% above last week’s closing price of $28,557.00 to end this week at $29,886.00 per metric ton.

Energy and Oil

Oil prices began the year noticeably bullish, as Brent broke $80 per barrel for the first time since October 7, 2024. The rally’s momentum may be traced to several reasons, including the eleventh-hour sanctions the Biden Administration imposed on Russia, continued concerns that inflation may once more rise, cold temperatures across the Atlantic Basin, and widening backwardation in all crude futures. The bullishness in the oil market has once more been felt for the first time in months. In other news, Chinese consumers have nominated 43.5 million barrels of Saudi crude next month shortly after Saudi Aramco hiked formula prices for Asian term buyers by $0.50 to $0.60 for February. This is down by 2.5 million barrels from January.

Natural Gas

For the report week beginning Wednesday, January 1, and ending Wednesday, January 8, 2025, the Henry Hub spot price rose by $0.37 from $3.39 per million British thermal units (MMBtu) to $3.76/MMBtu. Regarding Henry Hub futures, the January 2025 contract expired on Friday, December 27, at $3.514/MMBtu. The price of the February 2025 NYMEX contract decreased by $0.009 for the report week, from $3.660/MMBtu to $3.651/MMBtu. The price of the 12-month strip averaging February 2025 through January 2026 futures contracts increased by $0.03 to $3.678/MMBtu. Natural gas spot prices increased at all major pricing locations this report week. Price increases ranged from $0.29 at Eastern Gas South to $11.69 at Algonquin Citygate.

International natural gas futures prices increased this report week. Weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased by $0.14 to a weekly average of $14.30/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands increased by $0.06 to a weekly average of $14.55/MMBtu. In the week last year corresponding to this report week (from January 3 to January 10, 2024), the prices were $11.44/MMBtu in East Asia and $10.35/MMBtu at the TTF.

World Markets

European stock markets rose this week as the pan-European 600 Index closed 0.65% higher in local currency terms. Despite an uptick in the inflation rate, investors continue to expect the European Central Bank to cut interest rates in January. Germany’s DAX climbed by 1.55%, France’s CAC 40 Index ascended by 2.04%, and Italy’s FTSE MIB added 2.82%. The UK’s FTSE 100 Index gained by 0.30%. Various data painted a varying picture of the eurozone economy. Driven by higher energy prices and service costs, December’s year-over-year inflation speeded up to 2.4% from November’s 2.2%. The core rate (excluding energy, food, alcohol, and tobacco prices) remained unchanged at 2.7%. After falling in October, retail sales barely grew in November. In the meantime, the jobless rate stayed at a record low of 6.3% in November. In its latest Economic Bulletin, the European Central Bank (ECB) said that the disinflation process was well on track and that most indicators underlying inflation suggested that inflation will sustainably settle at the bank’s 2% medium-term target. The Italian newspaper, Corriere della Sera, quoted policymaker Piero Cipollone as saying that the ECB “shouldn’t try to guard excessively against possible future inflation shocks” and that “running the economy below potential weakens it and reduces the scope to react to shocks when they occur.” This and other individual comments by other policymakers encourage investors to believe that future monetary policy would contribute to a stronger economic outlook.

Over the week, Japanese equities lost ground, as the Nikkei 225 Index slid by 1.8% and the broader TOPIX Index dropped by 2.5%. The timing of Bank of Japan’s (BoJ’s) next interest rate hike remained the most speculated topic among market observers. Japan’s currency weakened over the week from around JPY 157.3 per USD at the end of last week, to about JPY 158.1 at the end of this week. The yen’s weakness was due to the uncertainty of the pace of further monetary policy normalization by the BoJ, as well as the pressure from a recent widening of the U.S.-Japan interest rate differential. The authorities have expressed their readiness to take appropriate action against excessively speculative, one-sided moves in the currency market. In the past, Japan’s monetary authorities have intervened in the foreign exchange markets to prop up the yen, most recently in July 2024. The central bank maintained its tightening bias, and its Governor Kazuo Ueda reiterated that if economic and price conditions keep improving, rates will be raised. Investors believe that it is unlikely that the BoJ will raise rates soon, and instead expect the policy rate hike will be delayed until March or April. Japan’s real (inflation-adjusted) wage growth, a closely watched indicator of consumers’ purchasing power, fell by 0.3% year-on-year in November. This is the fourth consecutive month of negative real wage growth. The BoJ’s case is that if the economy, prices, and wage growth develop in line with its projections, interest rates will rise.

Chinese stock markets receded after data released showed that the economy remained in deflation territory. The Shanghai Composite Index lost 1.34%, and the blue-chip CSI 300 slid by 1.13%. The Hong Kong benchmark Hang Seng Index plunged by 3.52%. On Thursday, inflation data released indicated that China is still struggling with deflationary pressures. The consumer price index (CPI) rose by 0.1% in December from one year ago. This is in line with estimates and down by 0,2% in November due to lower food and fuel prices. Excluding volatile food and energy costs, core inflation ticked up to 0.4% from November’s 0.3% growth. The producer price index (PPI) fell by 2.3% year-on-year, slowing from the 2.5% decline of the previous month and extending the deflation in factory gate prices for the 27th straight month. In other developments, the private Caixin S&P Global survey of services activity climbed to 52.2 in December, a better-than-expected result and the highest level since May. This matches the official data released in the previous week indicating that nonmanufacturing activity rose to 52.2 in December, the highest level in six months after Beijing introduced a broad stimulus package in late September. Furthermore, the People’s Bank of China (PBOC) announced after its quarterly policy meeting that to support economic growth, it will implement a moderately loose monetary policy this year. The PBOC vowed to increase financial support directed at the technology, emissions, pensions, and digital sectors. It likewise declared that, when appropriate, it would reduce the reserve requirement ratio and interest rates in order to boost consumption.

The Week Ahead

The CPI and PPI inflation for December, retail sales data, and industrial production data are among the macroeconomic reports scheduled for release in the coming week.

Key Topics to Watch

• Monthly U.S. federal budget for Dec.
• NFIB optimism index for Dec.
• Producer price index for Dec.
• Core PPI for Dec.
• PPI year over year
• Core PPI year over year
• Kansas City Fed President Jeffrey Schmid speaks (Jan. 14)
• Fed Beige Book
• New York Fed President Williams delivers opening remarks (Jan. 14)
• Consumer price index for Dec.
• CPI year over year
• Core CPI for Dec.
• Core CPI year over year
• Empire State manufacturing survey for Jan.
• Richmond Fed President Barkin speaks (Jan. 15)
• New York Fed President Williams speaks (Jan. 15)
• Chicago Fed President Goolsbee speaks (Jan. 15)
• Initial jobless claims for Jan. 11
• U.S. retail sales for Dec.
• Retail sales minus autos for Dec.
• Import price index for Dec.
• Import price index minus fuel for Dec.
• Philadelphia Fed manufacturing survey for Jan.
• Business inventories for Nov.
• Home builder confidence index for Jan.
• Housing starts for Dec.
• Building permits for Dec.
• Industrial production for Dec.
• Capacity utilization for Dec.

Markets Index Wrap-Up

Stock Markets                                                    

The shortened New Year’s trading week provided little incentive for market activity, and most indexes were slightly down. The Dow Jones Industrial Average (DJIA) dropped 0.60% while the Total Stock Market came down by 0.30%. The S&P 500 Index gave up 0.48% and the Nasdaq Stock Market Composite lost by 0.51%. The NYSE Composite bucked the trend and ended up by 0.08%. Investor risk perception, as measured by the CBOE Volatility Index (VIX), rose slightly by 1.13% this week.

Although stocks ended the week mixed, they nevertheless closed the year strong. Broad gains on Friday helped the indexes to finish above their worst levels. The underperformance at the beginning of the week was partially due to some profit-taking that is only to be expected as the year’s end draws near. Tuesday was the fourth consecutive day of declines for the S&P Index. However, despite the year-end slump, 2024 still marked the second straight annual gain of over 20% for the S&P 500 Index. It also capped off the best two-year stretch in 25 years. Furthermore, the Nasdaq Composite also finished the year up by 20% for the sixth time in the past eight years.

Other stock headlines weighed on the broader sentiment on Thursday. These include Tesla’s fourth-quarter deliveries report, which failed to meet consensus expectations. Declining iPhone shipments to China likewise led to Apple shares plunging by 2.62% for the day.

U.S. Economy                             

Macroeconomic releases were light during this New Year’s week. The Atlanta Fed revised its fourth-quarter gross domestic product (GDP) forecast downward, from 3.1% to 2.6%. The revision was based on recent data releases from the US Census Bureau that resulted in a reduction in expectations, from 1.3% to 0.7%, for real gross private domestic investment growth. But there was also positive news. For the week ended December 28, the Labor Department reported initial jobless claims of 211,000. This was a reduction from the previous week’s reading of 220,000 and was the lowest level in eight months. There was also a decline in continuing claims for the prior week to a three-month low of 1.84 million.

Metals and Mining

The spot market for precious metals was up for the first week of the new year. Gold gained 0.72% from its last weekly close at $2,621.40 to end this week at $2,640.22 per troy ounce. Silver settled 0.78% above last week’s close of $29.39 to reach $29.62 per troy ounce. Platinum gained 1.51% from last week’s closing price of $925.54 to end at this week’s closing price of $939.51 per troy ounce. Palladium inched up by 1.01% from its close last week at $916.38 to this week’s close at $925.64 per troy ounce. The three-month LME prices of industrial metals were down for this week. Copper came from $8,982.00 last week to $8,802.50 per metric ton this week for a loss of 2.00%. Aluminum closed last week at $2,558.00 and this week at $2,529.00 per metric ton for an attrition of 1.13%. Zinc, which ended last week at $3,031.50, settled this week at $2,927.00 per metric ton, down by 3.45%. Tin ended this week at $28,557.00 per metric ton, 0.88% lower than its close last week at $28,810.00.

Energy and Oil

Tacit optimism marked the gradual return of oil market participants from the New Year’s Eve holidays as US stock draws tightened product availability. Cold snaps are threatening both the US and Europe. As forecasts indicated a series of Arctic cold snaps across the United States, the NYMEX ULSD futures contract climbed to $2.36 per gallon this week and hit a three-month high. The anticipated cold weather is bound to lift diesel and heating oil demand beyond seasonal patterns over January. Further, it is reported that outgoing US President Joe Biden is preparing to issue a decree to permanently ban offshore drilling in US coastal waters. These waters are to be considered biodiversity-sensitive under the 1953 Outer Continental Shelf Lands Act. Meanwhile, the spirits of those who gave up on the more robust policy coming from Beijing have been lifted, even if temporarily, by China’s promises to be more proactive with stimulus measures. These developments pushed the ICE Brent futures closer to $76 per barrel.

World Markets

The pan-European STOXX Europe 600 Index closed 0.20% higher in local currency terms on thin trading volume and light news flow. Most major stock indexes ended modestly lower. Italy’s FTSE MIB was slightly down, Germany’s DAX slid by 0.39%, and France’s CAC 40 Index eased by 0.99%. On the other hand, the UK’s FTSE 100 Index gained by 0.91%. Lending support to the index was a weaker British pound versus the US dollar, providing leverage to many multinational British companies that generate revenue overseas. The year started with a light macroeconomic data calendar, with Spain releasing its first estimate of consumer price inflation for December, at a rate stronger than initially forecasted. Non-seasonally adjusted annual inflation rose to 2.8% from 2.4% in November due to higher fuel prices. Core inflation, however, which excludes energy and food prices, exceeded the forecasted 2.4% to 2.6%. The uptick in Spain’s inflation rate appeared to bolster arguments from more restrictive policies in the European Central Bank (ECB) for a more gradual reduction in borrowing costs. Governing Council member Robert Holzmann suggested that rate-setters could take more time before once more cutting interest rates, in light of the rising energy prices and possible devaluation of the euro if the US introduces trade tariffs. In any case, President Christine Lagarde stated in a video that inflation was on track to achieve the 2% target in 2025, implying that rates remained on a downward trajectory.

In a holiday-shortened weekend, Japan’s stock market ended lower amid signs of profit-taking. On Monday, the last trading day of 2024, the Nikkei 225 Index gave up almost 1% to close at 39,894.54, its record-high year-end closing level. The benchmark index posted a 20% gain over last year due to share buybacks, corporate governance reforms, and a weaker yen that helped boost export-oriented companies and industries that generate their income from foreign markets. The broader TOPIX, on the other hand, dipped by 0.6% from last week, but posted an annual increase of 17.6%. The yen maintained its level at near JPY 157 on Friday in thin trading volumes, hardly changed from last week’s close. Over the year, it depreciated close to 11%, keeping traders on the lookout for signals that the Bank of Japan (BoJ) is intervening to support the currency. Investors continue to monitor the BoJ’s rate outlook after Tokyo’s consumer price inflation accelerated in December. The yield on the bank’s 10-year government bond moved lower to 1.09% on Monday, keeping close to its highest level in 13 and a half years. According to the minutes of the BoJ’s policy meeting, policymakers continue to debate the likelihood of a near-term rate hike. On the economic front, the final release of the au Jibun Bank Manufacturing PMI indicates that factory activity contracted for the sixth consecutive month in December, but the decline in new orders appeared to be stabilizing and backlogs of work were diminishing.

China’s equities markets retreated due to a weaker-than-expected manufacturing data release that impacted investor sentiment negatively. The Shanghai Composite Index dropped by 5.5%, while the blue-chip CSI declined by 5.17%. The Hong Kong benchmark Hang Seng Index dipped by 1.64%. For the third consecutive month, China’s factory activity expanded. According to the statistics bureau, the official manufacturing PMI slowed to 50.1 in December from 50.3 in November. This reading, while still in expansion territory, missed economists’ forecasts. The non-manufacturing PMI, a measure of construction and services activity, advanced to 52.2 in December from November’s 50, registering a better-than-forecasted level. The value of new home sales by the top 100 developers remained unchanged in December from one year ago according to the China Real Estate Information Corporation, compared to November’s 6.9% fall. New home sales increased by 24.2% month-on-month. Sales from the top 100 developers sank for the full year by 28.1% compared to a 16.5% drop in 2023. The data showed further evidence of a possible turnaround in China’s housing market after a rescue package was unveiled by Beijing in September to revive the troubled housing sector.

The Week Ahead

In the coming week, some of the important economic news scheduled for release are the ISM services PMI and the nonfarm payrolls report for December.

Key Topics to Watch

• S&P final U.S. services PMI for Dec.
• Factory orders for Nov.
• Richmond Fed President Tom Barkin speaks (Jan. 7)
• U.S. trade deficit for Nov.
• ISM services for Dec.
• Job openings for Nov.
• ADP employment for Dec.
• Minutes of Fed’s December FOMC meeting
• Consumer credit for Dec.
• Initial jobless claims for Jan. 4
• Wholesale inventories for Nov.
• Consumer sentiment (prelim) for Jan.
• U.S. employment report for Dec.
• U.S. unemployment rate for Dec.
• U.S. hourly wages for Dec.
• Hourly wages year over year

Markets Index Wrap-Up

Stock Markets

Markets recovered some ground by the end of the week and chalked up some modest gains. The 30-stock Dow Jones Industrial Average (DJIA) added 0.35% while the Total Stock Market charted a 0.57% gain. The broad S&P 500 Index rose by 0.67% although the SmallCap 600 fell by 0.02%. The technology-heavy Nasdaq Stock Market Composite gained by 0.76%, and the NYSE Composite ticked up by 0.62%.  The investor risk perception indicator, the CBOE Volatility Index (VIX) fell by 13.13% for the week.

The week was relatively quiet as the country celebrated the Christmas holiday. It began with a continuation of the preceding Friday’s move in a rally largely driven by large-cap growth stocks. The technology-heavy Nasdaq Composite led the way and the Russell 1000 Growth Index outpaced its value counterpart through Tuesday. However, the trend reversed midweek with the market’s closure on Wednesday, Christmas day, as most indexes declined in the days following where most of the early gains were returned.

U.S. Economy

The Conference Board reported on Monday that its index of U.S. consumer confidence fell to 104.7 in December from 112,8 in November. According to Dana M. Peterson, chief economist at the Conference Board, “The recent rebound in consumer confidence was not sustained in December as the Index dropped back to the middle of the range that has prevailed over the past two years.” The report stated that while the consumer assessments of both the present situation and expectations contributed to the overall decline, the expectations component of the index sustained the sharpest drop, falling by 12.6 points to 81.1. The expectations component measures consumers’ short-term outlook for income, business, and labor market conditions. A reading below 80 could signify an upcoming recession.

Also on Monday, a reading for durable goods orders for the month of November came in below consensus. In the past six months, this is the fourth time that new orders for durable goods declined, falling by 1.1% compared to consensus expectations for a rise of 0.2%. The November decline resulted from fewer orders for commercial aircraft and lower-than-expected defense spending. Also coming in slightly below consensus expectations are new home sales in November. The Census Bureau reported a seasonally adjusted annual pace of 664,000, as against expectations for 670,000. The November figure, however, was a notable improvement over the previous month which was negatively impacted by hurricanes in southeast US.

On Thursday, the Labor Department reported that applications for unemployment benefits fell slightly to 219,000 for the week ended December 21, its lowest level since mid-November, although continuing claims rose to 1.91 million for the prior week, the highest since late 2021. This is a signal that out-of-work individuals are taking longer to find new jobs.

Metals and Mining

The spot prices of precious metals hardly moved during the Christmas holiday week. Gold slid a hairline 0.06% down from its close last week at $2,622.91 to end this week at $2,621.40 per troy ounce. Silver ticked down by 0.44% from last week’s close at $29.52 to settle this week at $29.39 per troy ounce. Platinum edged 0.24% down from its closing price last week of $927.80 to close this week at $925.54 per troy ounce. Palladium slipped by 0.34% from its previous weekly close of $919.54 to its new weekly close of $916.38 per troy ounce. The three-month LME prices of base metals took modest steps up for the week. Copper came from its close last week of $8,883.00 and rose by 1.11% to settle this week at $8,982.00 per metric ton. Aluminum climbed by 2.03% from its previous weekly close of $2,507.00 to end this week at $2,558.00 per metric ton. Zinc added 2.17% to its previous closing price of $2,967.00 to end this week at $3,031.50 per metric ton. Tin settled 1.45% higher than last week’s closing price of $28,399.00 to end this week at $28,810.00 per metric ton.

Energy and Oil

Oil prices climbed this week on falling U.S. inventories and China’s stimulus outlook. Toward the end of the week, oil prices were gaining ground with WTI bouncing back above $70 and Brent trading at $73.72. After Beijing agreed to issue special treasury bonds worth roughly $411 billion, optimism surrounding China’s economic growth helped to spark bullish sentiment in markets this week. Expectations of a crude draw in the U.S. prompted prices to rise even further, with the EIA set to report at 13:00 EST due to a Christmas holiday delay.

Natural Gas

For the report week beginning Wednesday, December 11, and ending Wednesday, December 18, 2024, the Henry Hub spot price fell by $0.09 from $3.11 per million British thermal units (MMBtu) to $3.02/MMBtu. Concerning Henry Hub futures, the price of the January 2025 NYMEX contract was largely unchanged from $3.378/MMBtu to $3.374/MMBtu. The price of the 12-month strip averaging January 2025 through December 2025 futures contracts declined by $0.05 to $3.232/MMBtu. Natural gas spot prices fell at most locations this report week. Price changes ranged from a decrease of $6.88 at the Algonquin Citygate to an increase of $0.07 at the Waha Hub.

International natural gas futures prices decreased this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia decreased by $1.26/MMBtu to a weekly average of $13.78/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands decreased by $1.38/MMBtu to a weekly average of $12.73/MMBtu. In the week last year corresponding to this report week (beginning December 13 to December 20, 2023), the prices were $13.30/MMBtu in East Asia and $10.89/MMBtu at the TTF.

World Markets

Over the truncated holiday trading week, stocks in Europe moved higher with the STOXX 600 Index annexing 0.99% in local currency terms. Major regional indexes also realized gains, with France’s CAC 40 Index adding 1.11% and Germany’s DAX climbing by 0.50%. The only noteworthy economic news released this week was that of the UK’s Office for National Statistics. On Monday, the ONS announced that it was lowering its final estimate for third-quarter economic growth to 0.0% from 0.1%. Its revised estimate of second-quarter growth from 0.5% to 0.4%. The unexpected downward revisions added to investor concerns that the economy may have stalled even prior to the planned tax increases by the Labor government to meet budgetary requirements. On the same day as the ONS release, US President-elect Donald Trump announced on social media that the European Union (EU) should “make up their tremendous deficit with the US by the large-scale purchase of our oil and gas.” Failure to do so would result in tariffs imposed by the US on EU exports entering the country. Analysts believe that as the EU proceeds to wean itself off Russian supplies, it is likely to increase its purchases of U.S. energy exports.

Japan’s stock markets climbed this week with the Nikkei 225 Index ascending by 4.08% and the broader TOPIX Index gaining by 3.69%. The yen’s weakness lent support to the profit outlooks for Japan’s export-oriented industries, which remain near five-month lows due to cautions by the Bank of Japan (BoJ). From about JPY 156 to the USD at the end of the week prior, the yen lost some ground to about JPY 157 against the US dollar. The yield on the 10-year Japanese government bond increased to its highest level in five weeks 1.1%.  If economic conditions continue to improve as expected, the central bank will need to hike interest rates again as stated by BoJ Governor Kazuo Ueda. In December, the Tokyo-are consumer price index (CPI) rose to an above-expected 3% year-on-year up from 2% in November. The core CPI (excluding volatile food and energy prices) increased by 2.4% from one year ago in December. This is slightly higher than the 2.2% increase of the prior month. Tokyo prices, which have been hovering around the BoJ’s 2% inflation target, are viewed as a leading indicator of trends nationwide. Japan’s November activity data painted a mixed picture of the economy. Industrial production dipped by 2.3%, lower than October’s 2.8% but higher than estimates of a 3.5% decline. However, retail sales were optimistic, rising by a better-than-expected 1.8% in November and speeding up from October’s 0.1% increase. The 2.5% unemployment rate remained unchanged, as forecasted.

Amid hopes that the government will announce further stimulus measures to support economic growth, the Chinese stock markets climbed this week. The Shanghai Composite Index gained by 0.95% and the blue-chip CSI 300 added 1.36%. The Hong Kong benchmark Hang Seng Index ascended by 1.87% this holiday-shortened week. Markets were closed for Christmas and Boxing Day, which fell on Wednesday and Thursday respectively. The lending rate was unchanged at 2% as the People’s Bank of China injected RMB 300 billion into the banking system via its medium-term lending facility. RMB 1.45 trillion in loans are due to expire in December. Thus, the operation will result in a net withdrawal of RMB 1.15 trillion from the banking system. This will be the largest liquidity drain via the one-year lending facility since 2014. With respect to manufacturing, profits at industrial firms fell by 7.3% in November according to reports by the National Bureau of Statistics. The November decrease is the fourth consecutive monthly decline, although it is slower than the 10% year-on-year October drop. Although the slower decline follows Beijing’s extensive stimulus measures, it shows that the policies have yet to stop the decline in corporate earnings, which are under pressure from deflation in China over the last year.

The Week Ahead

The ISM manufacturing PMI and housing price data are among the important economic releases in the coming week.

Key Topics to Watch

• Chicago Business Barometer (PMI) for Dec.
• Pending home sales for Nov.
• S&P Case-Shiller home price index (20 cities) for Nov.
• Initial jobless claims for Dec. 28
• Construction spending for Nov.
• ISM manufacturing for Dec.

Markets Index Wrap-Up

Stock Markets

All major indexes moved sharply lower when it was determined that only two rate cuts would be taking place in 2025 instead of the expected four rate cuts. The 30-stock Dow Jones Industrial Average (DJIA) fell by 2.25% for the week while the Total Stock Market Index was not far behind, having lost 2.26%. The broad S&P 500 Index finished the week 1.99% lower and the technology-heavy Nasdaq Stock Market Composite ended 1.78% lower than its close last week. The NYSE Composite dropped by 3.09% for the week. The CBOE Volatility Index (VIX), a measure of investor risk perception, shot up by 32.95%.

U.S. stocks plummeted during the week but a rally on Friday helped major indexes recover some of their lost ground. While smaller-cap indexes generally fared worse, losses were broad-based. Traders observed that Thursday marked the 14^th consecutive trading session wherein decliners outnumbered gainers in the S&P 500 Index, the longest record since 1978. The dominant event during the week seems to be the Fed’s rate announcement after its highly-awaited policy meeting on Wednesday. The policymakers announced a quarter basis point cut to the Fed’s policy rate as expected, bringing the total rate reduction to 100 basis points (1.00 percentage point) since the start of the rate-cutting cycle in September. Investor sentiment turned sour when Fed Chair Jerome Powell noted that core inflation in 2025 rose to 2.5% from 2.2% in September, prompting greater caution before adopting future rate cuts.

U.S. Economy

The U.S. economy grew at an annualized rate of 3.1% in the third quarter, the Commerce Department reported on Thursday. The reading outpaces a previous estimate of 2.8%, partly due to increases in consumer spending. Also possibly related is the increase in retail sales in November by 0.7%, up from 0.5% in October. Also ringing a positive tone is the jobs data for the week. Initial jobless claims of 220,000 were reported by the Labor Department, as well as continuing claims of 1.87 million. Both indicators were down from the week before. Finally, on Friday morning the personal consumption expenditure (PCE) inflation report was released. The core PCE index, which is the Fed’s preferred inflation metric, rose by 2.8% year-over-year in November. This is in line with October’s reading and slightly lower than consensus expectations. The better-than-expected report appeared to have helped push stocks higher on Friday to end the week above their lowest levels.

Metals and Mining

The spot price of precious metals generally fell for this week. Gold closed at $2,622.91 per troy ounce, 0.96% lower than last week’s closing price of $2,648.23. Silver settled this week at $29.52 per troy ounce for a loss of 3.37% from its final price last week of $30.55. Platinum bucked the trend and closed this week at $927.80 per troy ounce, 0.10% higher than last week’s closing price of $926.91. Palladium ended this week at $919.54 per troy ounce for a loss of 3.86% from last week’s close of $956.42. The three-month LME prices of industrial metals also lost ground over the week. Copper settled this week at $8,883.00 per metric ton, 1.87% lower than last week’s closing price of $9,052.50. Aluminum ended this week at $2,507.00 per metric ton which is lower by 3.76% from last week’s close at $2,605.00. Zinc, which ended last week at $3,095.50 and this week at $2,967.00 per metric ton for a loss of 4.15%. Tin closed one week ago at $29,097.00 and this week at $28,399.00 per metric ton for a drop of 2.40%.

Energy and Oil

The 2025 rate policy outlook of the Federal Reserve produced two key takeaways. The foreseen policy will be slower and shallower, with a suggested prolonged break in rate-cutting next year. This adds insult to the injury suffered by the oil market. China remains bearish on its oil market for 2025, with the country’s state refining giant Sinoper expecting the country’s oil consumption to peak by 2027 at 16 million barrels per day. As both gasoline and diesel are expected to fall next year by 2.4% and 5.5% respectively, growth is seen to come only from the petrochemicals sector. Almost all 2025 outlooks are trying to outcompete one another in terms of bearishness. As a result, Brent prices dipped to $72 per barrel again.

Natural Gas

For the report week beginning Wednesday, December 11, and ending Wednesday, December 18, 2024, the Henry Hub spot price fell by $0.09 from $3.11 per million British thermal units (MMBtu) to $3.02/MMBtu. Regarding the Henry Hub futures, the price of the January 2025 NYMEX contract was generally unchanged from $3.378/MMBtu to $3.374/MMBtu for the report week. The price of the 12-month strip averaging January 2025 through December 2025 futures contracts declined by $0.05 to $3.232/MMBtu. At most locations this report week, natural gas spot prices fell. Price changes ranged from a decline of $6.99 at the Algonquin Citygate to an advance of $0.07 at the Waha Hub.

International natural gas futures prices decreased this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia fell by $1.26/MMBtu to a weekly average of $13.78/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands declined by $1.38/MMBtu to a weekly average of $12.73/MMBtu. In the week last year corresponding to this report week (beginning December 13 and ending December 20, 2023), the prices were $13.30/MMBtu in East Asia and $10.89/MMBtu at the TTF.

World Markets

European stocks lost ground this week on concerns regarding the uncertainty of interest rate reductions and potential U.S. trade tariffs to be imposed on the European Union. The pan-European STOXX Europe 600 Index ended 2.76% lower this week in local currency terms. The region’s major stock indexes also fell for the week. France’s CAC 40 Index lost by 1.82%, Germany’s DAX declined by 2.55%, and Italy’s FTSE MIB dropped by 3.22%. The UK’s FTSE 100 Index gave up 2.60%. The Bank of England (BoE) maintained its key interest rate at 4.75%, which was in line with expectations. Also as expected, headline annual inflation accelerated in November to 2.6% from 2.3% in October as gasoline and clothing costs went higher. Sweden’s central bank reduced its key interest rate by a quarter-point to 2.50% as expected, with the potential of one more cut in the first half of 2025 if conditions remain unchanged. Norway’s central bank left its policy rate unchanged at 4.50%, a 16-year-high, as it attempts to stabilize inflation around its target. Activity in the Eurozone’s private sector closed the year in contraction. A rebound in the services sector, however, kept the overall decline marginal, according to the S&P Global purchasing managers’ surveys. The slowdown in business activity in Germany and France, the bloc’s largest economies, eased only modestly.

Japan’s stock markets fell this week, with the Nikkei 225 Index losing by 2.0% and the broader TOPIX Index falling by 1.6%. Banks faced tougher challenges due to a slight increase in expectations that the pace of monetary policy normalization by the Bank of Japan (BoJ) could be slower than anticipated. Broadly unchanged during the week at 1.05% was the yield on the 10-year Japanese government bond. The profit outlook for Japan’s exporters, especially automakers, was supported by the sell-off in the yen, reducing the currency’s value and making Japanese exports more attractive to foreign markets. The yen softened to within the high-JPY 156 range against the US dollar, from about JPY 153.7 at the end of the previous week. The situation prompted fresh verbal intervention by Japanese authorities to prop up the yen. At its December 18-19 meeting, the BoJ maintained its policy rate steady at approximately 0.25%. BoJ Governor Kazuo Ueda’s post-meeting comments were read as dovish by investors. Market expectations are strengthening around the possibility of a rate hike in January. It is more likely that a rate hike may be delayed beyond January, according to analysts, as Ueda mentioned that wage trends will be clearer in March or April and that the economic policy of the new U.S. administrations will continue to pose a risk. In the meantime, consumer inflation rose to a three-month high, pressure remains on the BoJ to raise interest rates.

Disappointing data raised concerns about the economy and sent Chinese stocks retreating. The Shanghai Composite Index declined by 0.7% while the blue-chip CSI 300 gave up 0.14%. The Hong Kong benchmark Hang Seng Index fell by 1.25%. Amid a looming trade war with the U.S., November activity data pointed to the uneven nature of China’s recovery. From a year ago, retail sales expanded a below-consensus 3%, down from 4.8% in October and highlighting the unwillingness of Chinese consumers to spend. In the January to November period, fixed asset investment grew by 3.3%, lagging forecasts and less than the 3.4% increase in the calendar year to October. In the same period, property investment fell by 10.4%. On the contrary, a bright spot was industrial production rising by a better-than-expected 5.4% year-on-year attributed to an increased demand for robots, passenger cars, and solar panels. For the third straight month, China’s youth unemployment rate eased after hitting its highest level this year in August. According to official data, the jobless rate for 16- to 24-year-olds (excluding students) was 16.1% in November, down from, 17.1% in October. As expected, urban unemployment remained steady at 5%. After Beijing unveiled a sweeping package in late September aimed at revising the crisis-hit sector, China’s property market has shown signs of stabilizing.

The Week Ahead

New home sales and consumer confidence reports are among the important economic releases scheduled for this coming week.

Key Topics to Watch

• Consumer confidence for Dec.
• Durable-goods orders for Nov.
• Durable-goods minus transportation for Nov.
• New home sales for Nov.
• Initial jobless claims for Dec. 21
• Advanced U.S. trade balance in goods for Nov.
• Advanced retail inventories for Nov.
• Advanced wholesale inventories for Nov.

Markets Index Wrap-Up

Stock Markets

All major indexes moved sharply lower when it was determined that only two rate cuts would be taking place in 2025 instead of the expected four rate cuts. The 30-stock Dow Jones Industrial Average (DJIA) fell by 2.25% for the week while the Total Stock Market Index was not far behind, having lost 2.26%. The broad S&P 500 Index finished the week 1.99% lower and the technology-heavy Nasdaq Stock Market Composite ended 1.78% lower than its close last week. The NYSE Composite dropped by 3.09% for the week. The CBOE Volatility Index (VIX), a measure of investor risk perception, shot up by 32.95%.

U.S. stocks plummeted during the week but a rally on Friday helped major indexes recover some of their lost ground. While smaller-cap indexes generally fared worse, losses were broad-based. Traders observed that Thursday marked the 14^th consecutive trading session wherein decliners outnumbered gainers in the S&P 500 Index, the longest record since 1978. The dominant event during the week seems to be the Fed’s rate announcement after its highly-awaited policy meeting on Wednesday. The policymakers announced a quarter basis point cut to the Fed’s policy rate as expected, bringing the total rate reduction to 100 basis points (1.00 percentage point) since the start of the rate-cutting cycle in September. Investor sentiment turned sour when Fed Chair Jerome Powell noted that core inflation in 2025 rose to 2.5% from 2.2% in September, prompting greater caution before adopting future rate cuts.

U.S. Economy

The U.S. economy grew at an annualized rate of 3.1% in the third quarter, the Commerce Department reported on Thursday. The reading outpaces a previous estimate of 2.8%, partly due to increases in consumer spending. Also possibly related is the increase in retail sales in November by 0.7%, up from 0.5% in October. Also ringing a positive tone is the jobs data for the week. Initial jobless claims of 220,000 were reported by the Labor Department, as well as continuing claims of 1.87 million. Both indicators were down from the week before. Finally, on Friday morning the personal consumption expenditure (PCE) inflation report was released. The core PCE index, which is the Fed’s preferred inflation metric, rose by 2.8% year-over-year in November. This is in line with October’s reading and slightly lower than consensus expectations. The better-than-expected report appeared to have helped push stocks higher on Friday to end the week above their lowest levels.

Metals and Mining

The spot price of precious metals generally fell for this week. Gold closed at $2,622.91 per troy ounce, 0.96% lower than last week’s closing price of $2,648.23. Silver settled this week at $29.52 per troy ounce for a loss of 3.37% from its final price last week of $30.55. Platinum bucked the trend and closed this week at $927.80 per troy ounce, 0.10% higher than last week’s closing price of $926.91. Palladium ended this week at $919.54 per troy ounce for a loss of 3.86% from last week’s close of $956.42. The three-month LME prices of industrial metals also lost ground over the week. Copper settled this week at $8,883.00 per metric ton, 1.87% lower than last week’s closing price of $9,052.50. Aluminum ended this week at $2,507.00 per metric ton which is lower by 3.76% from last week’s close at $2,605.00. Zinc, which ended last week at $3,095.50 and this week at $2,967.00 per metric ton for a loss of 4.15%. Tin closed one week ago at $29,097.00 and this week at $28,399.00 per metric ton for a drop of 2.40%.

Energy and Oil

The 2025 rate policy outlook of the Federal Reserve produced two key takeaways. The foreseen policy will be slower and shallower, with a suggested prolonged break in rate-cutting next year. This adds insult to the injury suffered by the oil market. China remains bearish on its oil market for 2025, with the country’s state refining giant Sinoper expecting the country’s oil consumption to peak by 2027 at 16 million barrels per day. As both gasoline and diesel are expected to fall next year by 2.4% and 5.5% respectively, growth is seen to come only from the petrochemicals sector. Almost all 2025 outlooks are trying to outcompete one another in terms of bearishness. As a result, Brent prices dipped to $72 per barrel again.

Natural Gas

For the report week beginning Wednesday, December 11, and ending Wednesday, December 18, 2024, the Henry Hub spot price fell by $0.09 from $3.11 per million British thermal units (MMBtu) to $3.02/MMBtu. Regarding the Henry Hub futures, the price of the January 2025 NYMEX contract was generally unchanged from $3.378/MMBtu to $3.374/MMBtu for the report week. The price of the 12-month strip averaging January 2025 through December 2025 futures contracts declined by $0.05 to $3.232/MMBtu. At most locations this report week, natural gas spot prices fell. Price changes ranged from a decline of $6.99 at the Algonquin Citygate to an advance of $0.07 at the Waha Hub.

International natural gas futures prices decreased this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia fell by $1.26/MMBtu to a weekly average of $13.78/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands declined by $1.38/MMBtu to a weekly average of $12.73/MMBtu. In the week last year corresponding to this report week (beginning December 13 and ending December 20, 2023), the prices were $13.30/MMBtu in East Asia and $10.89/MMBtu at the TTF.

World Markets

European stocks lost ground this week on concerns regarding the uncertainty of interest rate reductions and potential U.S. trade tariffs to be imposed on the European Union. The pan-European STOXX Europe 600 Index ended 2.76% lower this week in local currency terms. The region’s major stock indexes also fell for the week. France’s CAC 40 Index lost by 1.82%, Germany’s DAX declined by 2.55%, and Italy’s FTSE MIB dropped by 3.22%. The UK’s FTSE 100 Index gave up 2.60%. The Bank of England (BoE) maintained its key interest rate at 4.75%, which was in line with expectations. Also as expected, headline annual inflation accelerated in November to 2.6% from 2.3% in October as gasoline and clothing costs went higher. Sweden’s central bank reduced its key interest rate by a quarter-point to 2.50% as expected, with the potential of one more cut in the first half of 2025 if conditions remain unchanged. Norway’s central bank left its policy rate unchanged at 4.50%, a 16-year-high, as it attempts to stabilize inflation around its target. Activity in the Eurozone’s private sector closed the year in contraction. A rebound in the services sector, however, kept the overall decline marginal, according to the S&P Global purchasing managers’ surveys. The slowdown in business activity in Germany and France, the bloc’s largest economies, eased only modestly.

Japan’s stock markets fell this week, with the Nikkei 225 Index losing by 2.0% and the broader TOPIX Index falling by 1.6%. Banks faced tougher challenges due to a slight increase in expectations that the pace of monetary policy normalization by the Bank of Japan (BoJ) could be slower than anticipated. Broadly unchanged during the week at 1.05% was the yield on the 10-year Japanese government bond. The profit outlook for Japan’s exporters, especially automakers, was supported by the sell-off in the yen, reducing the currency’s value and making Japanese exports more attractive to foreign markets. The yen softened to within the high-JPY 156 range against the US dollar, from about JPY 153.7 at the end of the previous week. The situation prompted fresh verbal intervention by Japanese authorities to prop up the yen. At its December 18-19 meeting, the BoJ maintained its policy rate steady at approximately 0.25%. BoJ Governor Kazuo Ueda’s post-meeting comments were read as dovish by investors. Market expectations are strengthening around the possibility of a rate hike in January. It is more likely that a rate hike may be delayed beyond January, according to analysts, as Ueda mentioned that wage trends will be clearer in March or April and that the economic policy of the new U.S. administrations will continue to pose a risk. In the meantime, consumer inflation rose to a three-month high, pressure remains on the BoJ to raise interest rates.

Disappointing data raised concerns about the economy and sent Chinese stocks retreating. The Shanghai Composite Index declined by 0.7% while the blue-chip CSI 300 gave up 0.14%. The Hong Kong benchmark Hang Seng Index fell by 1.25%. Amid a looming trade war with the U.S., November activity data pointed to the uneven nature of China’s recovery. From a year ago, retail sales expanded a below-consensus 3%, down from 4.8% in October and highlighting the unwillingness of Chinese consumers to spend. In the January to November period, fixed asset investment grew by 3.3%, lagging forecasts and less than the 3.4% increase in the calendar year to October. In the same period, property investment fell by 10.4%. On the contrary, a bright spot was industrial production rising by a better-than-expected 5.4% year-on-year attributed to an increased demand for robots, passenger cars, and solar panels. For the third straight month, China’s youth unemployment rate eased after hitting its highest level this year in August. According to official data, the jobless rate for 16- to 24-year-olds (excluding students) was 16.1% in November, down from, 17.1% in October. As expected, urban unemployment remained steady at 5%. After Beijing unveiled a sweeping package in late September aimed at revising the crisis-hit sector, China’s property market has shown signs of stabilizing.

The Week Ahead

New home sales and consumer confidence reports are among the important economic releases scheduled for this coming week.

Key Topics to Watch

• Consumer confidence for Dec.
• Durable-goods orders for Nov.
• Durable-goods minus transportation for Nov.
• New home sales for Nov.
• Initial jobless claims for Dec. 21
• Advanced U.S. trade balance in goods for Nov.
• Advanced retail inventories for Nov.
• Advanced wholesale inventories for Nov.

Markets Index Wrap-Up