US inflation data boosts market, corporate and international news
Stock market news
• Global stocks and non-dollar currencies have calmed somewhat on inflation worries, helped by a strong start to the earnings season and soft U.S. core inflation data that have revived hopes for a Fed rate cut this year. However, the upswing may be short-lived as U.S. inflation still looks too high for comfort and could face upward pressure if the new Trump administration pursues aggressive tariff and tax policies.
• Stock market reaction to U.S. inflation data on Wednesday helped boost BTC. U.S. gasoline prices rose 4.4% in December as “heightened” geopolitical tensions pushed up energy prices. Energy prices were volatile in December, helping to push inflation up modestly from the previous month.
• Normal inflation data in the US led to a rally in the stock market, with stock indices and long-term US government bonds up by an average of 2%. Oil and gas rose by 3-4%. The dollar fell slightly, but mainly against gold and bitcoin. Other fiat currencies are not yet able to hurt the dollar. Investors are hoping for a softening of monetary policy by the Federal Reserve.
• Sales from Cartier owner Richemont will headline the European session on Thursday and provide a first glimpse of the state of luxury demand as luxury goods companies pin their hopes on U.S. consumers while weakness persists in China.
• Investors will also be closely watching developments in the Middle East after Israel stepped up strikes on the Gaza Strip hours after declaring a ceasefire and releasing hostages that ended fighting that began 15 months ago.
• Soft US core inflation data for December lifted sentiment, sending Treasury yields lower and stocks higher, with analysts warning that the 3.2% annual rate is still a bit high and the Fed will likely keep it there for a while.
• Strong earnings from U.S. banks Goldman Sachs, JPMorgan Chase, Wells Fargo and Citigroup also helped boost sentiment. Wall Street executives expressed confidence that the new U.S. administration will be pro-business and pro-bank. Bank of America and Morgan Stanley are due to report results on Thursday.
• European chipmakers could take advantage of Taiwan Semiconductor Manufacturing Co's earnings report, which showed profits broadly in line with estimates. TSMC, whose customers include Apple and Nvidia, is closely watching demand figures for AI-related chips.
• The yen was the biggest mover in the currency market on Thursday, rising to a one-month high in Asian hours after comments from Bank of Japan Governor Kazuo Ueda pushed up bets on a rate hike next week. A large majority of economists polled by Reuters expect the BOJ to raise interest rates at one of its two meetings this quarter, with most leaning towards doing so in January. Whether the BOJ hikes rates will depend on whether markets are calm when Donald Trump returns to the White House next Monday. His inauguration speech will be a focal point for politicians and policymakers around the world to assess his likely policy moves.
• Analysts expect Trump's actions to boost growth but add to inflationary pressures, keeping the dollar firmly supported. So much so that the dollar index has risen 5% in the two months since the US election on expectations that the Fed will keep rates higher for longer. Scott Bessent, Trump's pick to lead the Treasury, has pledged to ensure the dollar remains the world's reserve currency, outlining his vision for a "new golden age of economics" in prepared testimony to the US Senate Finance Committee.
• South Korea's central bank unexpectedly left its interest rate unchanged and signaled it needed to wait for domestic political turmoil affecting the currency to stabilize before it could cut rates further.
• Sales have fallen, but it could have been worse: German automakers have published their results for the year. All leading German automakers are suffering losses due to the fact that in the past they made China their most important market. Now competition with local manufacturers has sharply intensified there, and German companies are seeing falling sales. This follows from the reports on gross indicators for the last year, which German companies have published.
• Musk sued over Twitter purchase. The U.S. Securities and Exchange Commission has filed a lawsuit against the billionaire over his purchase of shares during the acquisition of social network Twitter in 2022. Musk is accused of failing to publicly disclose in time that his stake in the company had exceeded the 5% mark, which allowed him to buy additional shares at a lower price. The commission concluded that by delaying the mandatory disclosure, Musk saved more than $150 million, and shareholders who sold their shares to him at that time suffered financial losses.
• Adobe has launched AI for “bulk” image editing. The Firefly Bulk Create tool lets you edit a batch of tens of thousands of images at once.
• The US is the leader in nuclear energy, but China may catch up. By the end of 2024, the world's nuclear capacity is 396 GW, and this is not the limit. According to Global Energy Monitor, another 299 GW of capacity is planned to be added in the coming years through the construction of new reactors. Although the US is the clear leader, China is showing the greatest growth, the country already has 58 GW and plans to add 118 GW through the construction of 104 new reactors. After the completion of these projects, China will reach 176 GW, ahead of the US, which, although it will remain in second place, but with a capacity of only 109 GW.
• The US will return 120,000 BTC ($11.87 billion) confiscated after the Bitfinex hack to their rightful owners.
• Reuters claims that the new SEC, to be formed by Trump, will review crypto policy and halt enforcement of some cases pending in the courts.
• Investment giant BlackRock has raised a record $641 billion in 2024 funds, with $390 billion going to ETFs, $226 billion to equity funds and $164 billion to bonds. BlackRock (BLK) shares rose 5% after beating fourth-quarter earnings estimates on record inflows and asset growth. Fourth-quarter net income reached $281 billion. The asset manager reported a 14% jump in revenue to more than $20 billion, while adjusted operating income rose 23%. Bitcoin adoption is still in its early stages - BlackRock
• Bank earnings: JPMorgan Chase (JPM), Wells Fargo (WFC) and Goldman Sachs (GS) reported better-than-expected results, leading to a positive reaction with shares of the reporting banks rising 2-6%.
• Nvidia (NVDA) announced its upcoming GTC event, which will feature the company's first-ever Quantum Day. The event will feature discussions on current and future quantum computing technologies, with companies including D-Wave (QBTS) and IonQ (IONQ).
• D-Wave Quantum (QBTS) announced a partnership with Carahsoft Technology to advance its quantum computing solutions in the U.S. public sector. The collaboration aims to expand D-Wave's reach through Carahsoft's dealer network, sending D-Wave and other quantum stocks like Rigetti (RGTI) higher.
• Plug Power (PLUG) announced a deal to supply a 3-GW electrolyzer for a green hydrogen-to-ammonia plant in Australia. The project, powered by a 4.5-GW solar plant, aims to produce green ammonia for a variety of applications. Plug Power shares rose 2%.
• Meta Platforms (META) plans to cut 5% of its workforce that is considered low-performing, according to an internal memo from CEO Mark Zuckerberg. The company plans to offer generous severance packages and aims to achieve a 10% attrition rate by the end of its performance cycle. The move is part of a broader strategy to raise productivity standards and more quickly manage underperforming companies.
• Fed Chairman Barkin said the latest Consumer Price Index (CPI) data shows that price pressures continue to ease.
• J&J's (JNJ) top rating at risk in latest deal: Johnson & Johnson, one of the last U.S. companies with the highest credit rating, is at risk of losing its AAA rating from S&P Global Ratings after the drugmaker and medical device maker said it was buying Intra-Cellular Therapies Inc.
• Reckitt to Boost U.S., China Production as Tariff Risks Grow - Bloomberg. Reckitt Benckiser Plc is ramping up production in the U.S. and China to strengthen its supply chain and potentially reduce its exposure to new trade wars.
• Influential short-selling firm Hindenburg Research has said it is shutting down after eight successful years in which its reports took on big-name investors like Carl Icahn and Gautam Adani and helped destroy companies like electric truck maker Nikola Corp.
• Hindenburg founder Nathan Anderson, 40, said he and his team are ready to move on to the next chapter in their lives and that he would like to spend more time with his family and those close to him.
• OpenAI is testing a feature that allows users to sign up for ChatGPT with just a phone number. The feature, which is available in beta in the US and India, is very convenient for users who don't have an email address, according to software engineer Tibor Blaho.
• Microsoft (MSFT) Launches Copilot Chat for Business to Accelerate AI Adoption. Microsoft on Wednesday launched a chat service that lets companies use on-demand artificial intelligence agents to perform routine tasks, with a pay-as-you-go model.
• Dutch chipmaker NXP gets €1bn loan from EIB for European projects - Reuters
Correlation between Bitcoin and US tech stock index hits two-year high - Bloomberg
• China has blacklisted four US companies for involvement in arms sales to Taiwan.
• Goldman Sachs' profit surged as investment banking and trading hit quarterly records.
• Oil tycoon Shvidler has said in a landmark appeal that UK sanctions are arbitrary.
• The 30-year mortgage rate in the US has exceeded 7%, the highest level since May 2024.
• Trump's return to the US presidency ushered in a new era of volatile markets.
• JPMorgan posts biggest annual profit ever as investment bankers rebound
• According to LSEG, Russian oil products ended up in the sea due to US sanctions.
• Wells Fargo profit rises as deal recovery boosts investment banking
• BNY's fourth-quarter profit rose on higher fee and commission income.
• Squared Capital is considering buying HKBN for up to $1 billion, sources say.
• Generali plans to conclude an initial asset management agreement with Natixis by January 20, sources said.
• Citi beats earnings on trading gains but cuts earnings targets after 'critical' year
• Goldman Sachs beats earnings expectations for the quarter on investment banking and trading.
• JPMorgan posts biggest annual profit ever as investment bankers rebound
• Wells Fargo's profit beat deal estimates as the company raised its interest income forecast.
• The head of the French central bank said that financial deregulation in the US will increase the risks of a crisis.
• BlackRock assets hit record $11.6 trillion in fourth quarter.
• Janus Henderson CEO hits back at Saba in battle for investment trust
• The French central bank recommends cutting interest rates on popular savings accounts.
Key events that could impact markets on Thursday:
- German inflation data for December.
- UK GDP estimate for November.
- Eurozone trade balance for November.
Fundamental news
• US consumer prices rose less than expected in December,
a welcome decline that helped stem a deep sell-off in bond markets and revived bets that the Fed will cut interest rates sooner than expected.
US CPI (YoY): +2.9% (expected +2.9%) previous: +2.7%
US CPI Core (YoY): +3.2% (expected +3.3%) previous: +3.3%
UK consumer inflation came in weaker than expected
CPI +2.5% y/y (expected +2.6% / previously +2.6%)
Core CPI = +3.2% y/y (expected +3.4% / previously +3.5%)
• Trump's Greenland remarks spark debate in China over Taiwan, Reuters says, with some saying Trump may be inclined to make a deal on Taiwan. The constraint on China is that the US is obliged to give Taiwan the means to defend itself.
• Trump plans to create 'Foreign Revenue Service' to collect tariffs - Bloomberg It is the latest evidence that Trump intends to follow through on his promises to impose significant trade levies.
The moves underscore Trump's desire to portray import tariffs as a way to offset the costs of his policy agenda that would otherwise fall on taxpayers.
• South Korea has arrested its ousted president. Yun Seok-yul was detained at his residence despite resistance from his personal guards and after his arrest he said that "the rule of law has completely collapsed," AP reports.
• Cuba to release 553 prisoners under deal with US The country's authorities announced they would release the prisoners from prisons hours after US President Joe Biden told Congress he would remove Cuba from the list of state sponsors of terrorism.
• The Spanish government plans to introduce a tax of up to 100% on property bought by non-EU citizens - The Guardian. The measure, proposed by Prime Minister Pedro Sanchez, is aimed at tackling a housing crisis caused by soaring prices (up 48% in a decade) that are making homes unaffordable for locals. The politician warned of the danger of dividing society into rich property owners and poor renters.
• A ceasefire agreement was reached in the Gaza Strip on the eve of Trump's inauguration. Israel plans to release all Palestinian women and children under the age of 19 detained since October 7, 2023, as part of the first phase of the agreement. It will also release 30 Palestinian prisoners for every civilian hostage released and 50 for every Israeli soldier released by Hamas.