European Markets Dip, US Stocks Steady After Mixed Monday
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European stock markets are anticipating a lower opening on Tuesday, January 7th, 2025, following a day of mixed results. Analysts predict declines across major indices, with the German DAX expected to fall 68 points, the French CAC 40 down 27 points, and the British FTSE 100 dropping 34 points.
Monday’s trading saw a surge in European markets, primarily driven by gains in the technology sector, especially chip stocks. This initial positive momentum received a further boost following a washington Post report suggesting a more moderate approach to import tariffs from the then-incoming president Trump. However, this optimism was short-lived.
President Trump swiftly refuted the Washington Post article via a post on Truth Social,stating,“the story in The Washington Post,citing so-called anonymous sources that do not exist,falsely states that my tariff policy will be rolled back. That is false. The Washington Post knows it is false. It is just another example of Fake News.”
The strong performance of chip stocks was largely attributed to better-than-expected fourth-quarter results from Taiwanese manufacturer Foxconn. The company, which assembles products for tech giants like Apple and Nvidia, reported increased revenue due to high demand for AI servers and projected significant growth in the first quarter of 2025.
Global economic data also played a role in Monday’s market movements. Positive purchasing managers’ index (PMI) figures for the services sector in China and the Eurozone contributed to the initial optimism.The Eurozone PMI rose from 49.5 to 51.6 in December. However, Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, cautioned that these December figures don’t necessarily signal a robust economic boom for 2025.
De la Rubia emphasized the need for the European Central Bank (ECB) to proceed cautiously, recommending “small interest rate cuts in the first quarter of 2025.” He noted that the services sector, unlike manufacturing, is less vulnerable to potential US import tariffs. This advice comes as inflation in germany rose to 2.6 percent in December 2024, exceeding expectations.
Meanwhile, US stock markets opened relatively unchanged on Tuesday, according to futures trading. Monday’s session on Wall Street was characterized by initial gains, fueled by the same chip stock performance seen in Europe, followed by a decline as other sectors, including real estate, utilities, and consumer goods, weighed on the indices, particularly the Dow Jones.
Positive news on the macroeconomic front included faster growth in the US services sector in December, offsetting a contraction in manufacturing. This underscores the complex interplay of global economic factors influencing both US and European markets.
Key Market indices (Close of Monday,january 6th,2025):
- euro STOXX 50: 4,986.64 (+2.4%)
- STOXX Europe 600: 513.02 (+1.0%)
- DAX: 20,216.19 (+1.6%)
- CAC 40: 7,445.69 (+2.2%)
- FTSE 100: 8,249.66 (+0.3%)
- SMI: 11,691.13 (+0.6%)
- AEX: 891.56 (+0.8%)
- BEL 20: 4,284.41 (+0.6%)
- FTSE MIB: 34,780.81 (+1.9%)
- IBEX 35: 11,808.20 (+1.3%)
US Markets Show Mixed Signals: Services Boom, Manufacturing Slows
Wall Street experienced a day of mixed signals on Tuesday, with the services sector showing robust growth while the manufacturing sector continued its contraction. The dichotomy highlights a complex economic picture, leaving investors to navigate both positive and negative trends.
The institute for Supply Management (ISM) reported that the services sector Purchasing Managers’ Index (PMI) jumped from 56.1 in November to 56.8 in December, marking its highest level in 33 months. this initial reading, though, was a revision down from a previously reported 58.5. In contrast, the manufacturing PMI painted a less optimistic picture, falling from 49.7 in November to 49.4 in December,indicating a continued contraction in the sector.
Adding to the manufacturing sector’s woes, November factory orders fell by 0.4 percent, exceeding economists’ expectations of a 0.3 percent decline. This follows a revised 0.5 percent increase in October.
oil prices experienced volatility, initially rising before closing down 0.5 percent at $73.56 per barrel of WTI crude. The 10-year Treasury yield climbed to 4.62 percent, while the euro strengthened against the dollar, reaching 1.0390. ING currency strategists predict a potential, albeit short-lived, dollar correction this week, citing the upcoming inauguration and the Federal Reserve’s hawkish stance. “The dollar could lose some momentum this week,” they stated, “but any correction woudl be short-lived as Donald Trump’s inauguration approaches and the Fed remains hawkish.”
Winners and Losers on Wall Street
Several companies experienced significant share price movements. FuboTV soared by as much as 250 percent following its announced merger with Disney’s Hulu + Live TV. Super Micro computer saw its stock rise over 9 percent, boosted by Microsoft’s $80 billion investment in AI data centers for the fiscal year ending in june. Microsoft shares themselves increased by more than one percent.
Micron Technology, a memory chip maker, jumped 10.5 percent, driven partly by the demand for high-bandwidth memory chips in Nvidia’s latest processors. Nvidia itself rose 3.4 percent, nearing record highs around $152-$153, fueled by anticipation surrounding CEO Jensen Huang’s presentation at CES 2025. Investors eagerly await news about the Blackwell chip,considered Nvidia’s next growth engine for AI data centers. “Investors will be keen on any news about the Blackwell chip for use in AI data centers,” one analyst noted.
uber climbed 2.7 percent after announcing a $1.5 billion share repurchase program thru Bank of America, part of a larger $7 billion plan. MicroStrategy surged 11.6 percent after announcing plans to raise up to $2 billion through a preferred stock offering to further its bitcoin acquisitions. Bitcoin itself closed up around 4 percent at $102,348.17.
SolarEdge Technologies rose 6.6 percent despite announcing 400 global layoffs, its fourth round of job cuts in the past year.Verisign gained 2.5 percent after Berkshire Hathaway increased its stake, now owning approximately 14 percent of the company. US Steel jumped over 8 percent after Nippon Steel’s legal challenge to the White House’s blocked takeover. President biden blocked the acquisition citing concerns about supply chain security. “The president is concerned about the consequences for the supply chain and thus America’s security,” a White House official stated. Nippon Steel and US Steel maintain the acquisition would strengthen the supply chain and that Nippon Steel is uniquely positioned to make necessary investments.
Conversely, tencent’s US listing fell 7.8 percent after being added to a US Department of Defense blacklist. This impacted Prosus, the Amsterdam-listed company with a major stake in Tencent.
Market Indices:
S&P 500: 5,975.38 (+0.6%)
Dow Jones: 42,706.56 (-0.1%)
Nasdaq Composite: 19,864.98 (+1.2%)
Asian Markets: Asian markets showed mixed results on Tuesday, with the Nikkei 225 up 2.1% and the Shanghai Composite at 3,211.
Global Markets Dip Slightly; US Economic Data Awaited
Global markets opened lower today, with several key indices experiencing modest declines. The Dow Jones Industrial Average saw a slight decrease, while the Hang Seng Index in Hong Kong experienced a more significant drop. This comes as investors await crucial economic data releases from the United States later this week, including inflation figures, unemployment numbers, and the Services purchasing Managers Index (ISM).
The euro traded at 1.0399 against the dollar at the time of this report. This represents a slight change from the closing values in both European and American markets earlier today. The USD/JPY (Yen) exchange rate stood at 157.82, while the EUR/JPY (yen) was at 164.13.
Key Economic Indicators to Watch
Several critically important economic indicators are scheduled for release today and tomorrow, potentially influencing market movements. These include:
- Inflation data for December from the Netherlands (6:30 AM ET), France (8:45 AM ET), and the Eurozone (11:00 AM ET).
- Eurozone unemployment figures for November (11:00 AM ET).
- US trade balance for November (2:30 PM ET).
- US Services Purchasing Managers Index (ISM) for December (4:00 PM ET).
- US jobs report for November (4:00 PM ET).
These figures will provide valuable insights into the health of the US and European economies, potentially impacting investor sentiment and market trends. Analysts are particularly focused on the US jobs report, as it could offer clues about the Federal Reserve’s future monetary policy decisions.
Company News
In corporate news, Sligro is set to release its fourth-quarter turnover figures at 7:00 AM ET, while InPost will publish its fourth-quarter results later today. These announcements could also influence market activity, depending on the performance reported.
“The information in this article is not intended as professional investment advice or as a advice to make certain investments,” a disclaimer from the original source stated.Investors should conduct their own thorough research before making any investment decisions.
source: Adapted from ABM Financial News.
This article provides a detailed analysis of the stock market performance in Europe and the US on January 6th and 7th, 2025. Hear’s a breakdown of the key takeaways:
European Markets (January 6th):
Strong Performance: European stock markets closed higher, driven by positive earnings from chip manufacturer Foxconn and strong PMI data from China and the Eurozone.
Chip Stocks Lead the Rally: Foxconn’s better-than-expected results fueled a surge in chip stocks, as investors anticipate continued demand for AI servers.
Caution from Economists: Despite positive PMI figures, economists like cyrus de la Rubia urge the European Central Bank to proceed cautiously with interest rate cuts due to potential economic vulnerabilities.
US Markets (January 6th and 7th):
Mixed signals: The US market showed mixed signals, with the services sector experiencing robust growth (ISM PMI at 56.8) while manufacturing continued its contraction (PMI at 49.4).
Key Movers:
Winners: FuboTV (merger with Hulu + Live TV), Super Micro Computer (Microsoft investment), Micron Technology (high-bandwidth memory chip demand), Nvidia (anticipation for CEO presentation and Blackwell chip), Uber (share repurchase program), MicroStrategy (preferred stock offering for Bitcoin acquisitions).
Losers: Tencent (US Department of Defense adding it to a list of companies barred from US investment).
Othre Factors:
Factory orders declined by 0.4 percent in November.
Oil prices initially rose but closed down 0.5 percent at $73.56 per barrel.
the 10-year Treasury yield climbed to 4.62 percent.
The euro strengthened against the dollar.
Other Notable Points:
Trump’s Inauguration and Federal Reserve: ING currency strategists predict a short-lived dollar correction this week due to Trump’s upcoming inauguration and the Federal Reserve’s hawkish stance.
White House Blocks Acquisition: President biden blocked Nippon Steel’s takeover of US steel citing concerns about supply chain security.
Overall:
The article highlights the complex dynamics influencing global stock markets.Positive economic data in Europe and strong performance in the US tech sector are counterbalanced by concerns about manufacturing weakness and geopolitical events.
Its significant to note that this analysis is based on the data provided in the article. Further research and analysis are necessary to understand the full context and implications of these market movements.
