Earnings reports began last week with strong results from the banking sector, which supported the slight uptrend in stock markets. Earnings releases will continue next week, with attention also focused on Trump’s inauguration at the start of the week.

Among the key economic data published, U.S. inflation remains well below the Federal Reserve’s 2% target. Internationally, China’s achievement of its 5% economic growth target was perhaps the most significant news. The Chinese economy ended 2024 on a strong note, with Q4 GDP growing 5.4% year-over-year, supported by accelerated retail sales and industrial activity in December. However, 2025 growth faces challenges from U.S. tariffs and the need for large-scale fiscal stimulus to maintain momentum.

Next Week’s Highlights:

• U.S.: Leading Economic Index (Wed.), Existing Home Sales (Fri.)
• Canada: Consumer Price Index (Tue.)
• Japan: Bank of Japan Policy Rate Decision (Fri.)
• Eurozone: Purchasing Managers’ Index (PMIs) (Fri.)

Earnings Report Overview

Last week, earnings season kicked off with strong performances from the banking sector, providing support to stock markets and maintaining a positive trend. Key earnings included reports from major financial institutions, showcasing resilient profitability despite challenging macroeconomic conditions. These reports will offer further insight into sector-specific trends and the broader economic outlook. Investors will be closely watching for guidance updates and the impact of economic headwinds on corporate performance.

Main Earnings for the Week Ahead:

• Tuesday: Netflix (NFLX), Charles Schwab (SCHW), 3M (MMM)
• Wednesday: P&G (PG), J&J (JNJ)
• Thursday: Louis Vuitton ADR (LVMUY)
• Friday: American Express (AXP), Verizon (VZ), NextEra Energy (NEE)

Trump’s U.S. is Starting Over!

The U.S. Consumer Price Index (CPI) ended 2024 at 2.9% year-over-year, down slightly from 3.1% in January but still far from the Federal Reserve’s 2% target. We anticipate two 25-basis-point rate cuts in late 2025, with the Federal Open Market Committee (FOMC) maintaining a target range of 3.75%-4.00% through 2026. The Beige Book highlighted modest economic growth across all regions, resilient employment, and rising prices, though tariffs remain a concern.

In the week ahead, Trump’s inauguration marks a pivotal moment for financial markets, as investors closely monitor his policy signals. Promises of tax cuts, deregulation, and infrastructure spending could boost sectors like industrials and financials. However, trade protectionism or healthcare reforms may create uncertainty for technology and healthcare. Trump’s first day in office is expected to feature a flurry of executive orders, with a particular focus on potential tariff-related actions. Markets are paying close attention to any immediate trade measures, which could significantly impact global supply chains and export-driven economies. These first-day actions will set the tone for Trump’s trade agenda, influencing market sentiment and shaping the outlook for economic growth and global commerce.

As markets respond, the U.S. dollar and bond yields may fluctuate based on growth expectations. Global markets, particularly in emerging economies, could experience heightened volatility due to trade policies. While short-term optimism may drive gains, market stability will hinge on the administration’s ability to implement its agenda effectively, especially in relation to the stock and cryptocurrency markets, where optimism is higher regarding the new administration’s decisions and policies.

On the economic data front, this week does not feature many significant market-moving releases. The Leading Index and Existing Home Sales are the main data points to watch. The December Leading Index, set to be released on Wednesday, follows a 0.3% rise in November driven by gains in building permits, stock prices, average workweek hours, and fewer jobless claims. Although the index has mostly been in negative territory since 2022, December is expected to show only a small decline of -0.1%. This movement toward positive territory could still be interpreted as a hopeful signal.

In the housing market, mortgage rates have climbed back nearly 7% in January, reducing hopes for rate cuts in 2025 and likely keeping housing activity subdued in the years ahead. For December, we can expect pressures on sales but modest improvement after a 4.8% rise in November, which was supported by easing mortgage rates in late 2024.

From a market reaction perspective, the inauguration is expected to bring positive energy across the markets, supporting the U.S. Dollar Index (DXY) and stock markets in maintaining their gains and encouraging further optimism. Technically, the DXY remains bullish, with strong support around 107.80. However, with the RSI below 60, the bulls lack sufficient momentum to push prices significantly higher.

In the stock markets, the S&P 500 is also attempting to confirm its upward trend by holding above the 5,960 support level. The first resistance is at 6,032, but breaking above this level may prove challenging. We anticipate that the S&P 500 will face some pressure in the latter part of the week, following the positive environment in the initial days, and could end the week lower.

BoJ and the Yen: Expecting a Potential Rate Hike

This week, the BoJ’s interest rate decision and the CPI release will be key events for Yen traders, with the potential for increased volatility depending on inflation dynamics and the BoJ’s response.

The Bank of Japan (BoJ) is set to announce its first monetary policy decision of the year on Friday, and we believe it’s time to move towards policy normalization. After raising interest rates twice in 2024—once in March and again with a surprise 25 bps hike in July—the BoJ has held its policy steady for several months. This pause was supported by both the government and the central bank and influenced by market volatility, including significant fluctuations in the yen following the July rate hike.

For this week’s meeting, market participants are increasingly anticipating a 25 basis point rate hike, with a 79.13% probability priced in. BoJ Governor Ueda has indicated that the bank will discuss the possibility of raising rates, echoing comments from Deputy Governor Ryozo, who suggested that maintaining current rates would be “abnormal.”

Economic growth is steady, and core inflation is still above 2%. Additionally, recent developments, such as a 3.0% year-over-year increase in November labor cash earnings, highlight the need for further rate hikes. Moreover, reports indicate that the BoJ is considering raising its inflation forecast in January, which could support a rate increase in future meetings.

Yen traders will also be watching Japan’s December Consumer Price Index (CPI) data, which will be released before the BoJ’s decision. A lower-than-expected CPI reading could prompt the BoJ to reconsider or adopt a more cautious stance. Conversely, a CPI print showing inflation is not nearing the BoJ’s 2% target would likely strengthen the case for a rate hike, supporting the yen.

From a technical point of view, we expect the Yen to continue its gains against its rivals, especially against the US Dollar, even though the USD itself is also expected to remain resilient. USD/JPY is currently in a slight downtrend, which is expected to continue further with 154.30 and then 153 as its next target. On the flip side, a re-increase above 156.60 could change the trend for the short term.

Gold in the Week Ahead

Gold ended last week with a 0.4% gain, while global bond yields increased and the dollar continued its strength after various economists at major banks pared back forecasts for additional U.S. rate cuts.

The yield on the 10-year Treasury note climbed to 4.8%, its highest level since October 2023, before lowering to 4.63%. While we expect the Federal Reserve to proceed more cautiously with cutting interest rates this year, which could slow down stock rallies, gold may prove itself to be a reasonable option.

In the coming days, there isn’t much economic data expected to move the markets, so overall market sentiment and stock market movement will be key factors to watch, along with U.S. dollar behavior.

From a technical perspective, with RSI at 55, we don’t see much strong bullish momentum on the chart. However, candles are still forming above the trend line and the 50-period EMA. OBV continues to confirm money flow in the market, with 2,690 now serving as key support.

WTI Crude Oil Market Review and Weekly Outlook

Oil prices have experienced some pressure but remain supported by mounting supply risks. WTI crude oil surged to a six-month high, but concerns over sanctions, geopolitical tensions, and supply disruptions continue to influence market sentiment. Reports indicate that the incoming U.S. administration may take a more aggressive stance on Russia, Iran, and Venezuela, potentially escalating tensions and impacting oil markets.

The latest U.S. sanctions against Russia have led buyers to seek alternative suppliers. Saudi Aramco, for example, has received requests for additional oil from China and India, highlighting the shift in supply dynamics. As clarity on these political developments emerges after the U.S. inauguration, market reactions may follow.

Despite this, oil prices faced some weakness, with WTI falling below $80 per barrel, indicating that the market might be in overbought territory and due for a correction. Nonetheless, oil prices traded higher later, reaching the highest levels since August 2024, driven by supportive U.S. CPI data that showed lower-than-expected inflation in December, benefiting risk assets and oil.

The market remains focused on the uncertainty surrounding the Russian oil supply amid the new sanctions. Additionally, the decline in U.S. crude inventories, as indicated by the EIA’s data showing a drop of 1.96 million barrels, also supports the market. U.S. crude imports fell, while exports rose, which contributed to the lower inventory levels.

Reports from the IEA and OPEC published last week also highlighted risks to supply. The IEA raised its demand growth forecasts for 2024, driven by colder weather in the Northern Hemisphere, while OPEC maintained its 2025 demand growth estimate at 1.45 million barrels per day. Both agencies also noted the potential impact of U.S. sanctions on Russia’s energy sector and warned of supply disruptions.

Looking ahead, the market will remain vigilant to any shifts in geopolitical events and the market’s reaction to the new administration in the White House. The balance between supply disruptions, sanctions, and demand forecasts will dictate the oil price trajectory in the coming days.

From a technical point of view, WTI remains bullish with $75 as a strong support. However, with the RSI at 44 and a declining OBV, we can expect a correction towards the main support before its next movement. Technically, holding the $72 level will keep WTI in a longer-term bull run. Recovering above $80 will set $85 as the next target.

BTC Market Update and Outlook with New Government!

Bitcoin’s daily chart shows a recovery above $104K, but the market remains uncertain. Investors will closely monitor the actions of the U.S. government and the incoming administration, which could significantly impact BTC’s trajectory in the coming weeks.

Bitcoin recently recovered above $103K after dropping below $100K per coin. This movement has raised questions about the factors driving BTC’s fluctuations, particularly in relation to the recent legal developments concerning U.S. government BTC holdings and the upcoming inauguration of President Trump, which coincides with SEC Chair Gary Gensler’s departure.

A recent ruling by the U.S. District Court in Northern California has granted the U.S. government permission to sell approximately 69,370 BTC seized in 2020 from an unidentified hacker. This approval has sparked concerns about a potential mass auction, which could lead to a market sell-off and weigh on Bitcoin’s price. However, on-chain data shows that the government has not yet sold its BTC holdings, and the actual impact on price will depend on whether the government proceeds with the auction. If the government holds onto Bitcoin, it is unlikely to affect the market.

Another event that could impact the markets is the new SEC chairman. SEC Chair Gary Gensler, who has been a controversial figure in the crypto community due to his enforcement-focused approach, is set to step down on January 20th, coinciding with President-elect Trump’s inauguration. Trump has been a vocal supporter of Bitcoin and the crypto market, and his administration could potentially influence Bitcoin’s price depending on whether he follows through with policies supporting digital assets. If Trump promotes pro-crypto legislation, it could positively affect Bitcoin. However, if his administration does not prioritize crypto, it could have bearish implications for the market.

From a technical point of view, $101K is the key support, and holding this level will put $115K on the radar. However, falling back below $97K could open the doors to $94K.