This report is from today’s TNC’s Daily Open, our international markets update. TNC Daily Open keeps investors informed on everything they need to know, no matter where they are.
What To Note Today
Rates Are Raised By The Bank Of Japan
The Bank of Japan raised rates by 25 basis points to 0.5% on Friday, the highest level since 2008. As of 1:30 p.m. Singapore time after the ruling, the value of the Japanese yen had increased to 155.3 versus the US dollar. Tokyo published a report on Friday showing that core inflation in the nation increased to a 16-month high of 3% annually in December, as predicted by a Reuters poll.
S&P Record Close
Thursday saw the S&P 500 close at a new high as investors responded favourably to Trump’s announcements about rate cuts. Every significant U.S. standard has been rising for the past four days. Asian markets saw a boost on Friday due to positive optimism on Wall Street. Following the rate increase, Japan’s Nikkei 225 slightly declined, but Hong Kong’s Hang Seng index surged over 2%.
Trump’s Speech In Davos
On Thursday, U.S. President Donald Trump gave a virtual speech at the World Economic Forum in Davos, Switzerland. In his speech, Trump labeled the European Union’s trade relationship with the United States extremely unfair, said he would “demand that interest rates drop immediately,” and asked Saudi Arabia and OPEC to “bring down the cost of oil.”
Trump Claimed To Be “Very Much” Fond Of Xi
The White House summary of Trump’s virtual interview at Davos on Thursday stated that he liked Chinese President Xi Jinping “very much.” He suggested collaborating with Xi to put an end to the conflict in Ukraine. In addition, according to a poll conducted by the American Chamber of Commerce in China and published on Thursday, 30% of American businesses operating in China are moving their production or sourcing operations faster than they have since 2022.
Trump Signs Crypto Order
Trump signed an executive order on Thursday to encourage the development of cryptocurrencies in the United States, giving proponents of the technology yet another boost. Establishing crypto-related technology and regulations takes up the majority of the order. Establishing a working committee to examine a national digital asset stockpile is one of the essential components.
Boeing Anticipates A Significant Loss
Boeing reported on Thursday that it probably lost $4 billion, or $5.46 per share, in the fourth quarter. Revenue is likely to be lower than LSEG’s projections, at $15.2 billion. Since 2018, Boeing has not reported an annual profit. The aircraft manufacturer concluded 2024 with layoffs and a crippling labour strike after starting the year with a midair catastrophe.
Bottom Line
Numbers—previous performance, earnings forecasts, and return on equity—are meant to drive markets. However, as Trump’s virtual speech to the World Economic Forum on Thursday showed, words have just as much ability to influence markets.
Following Trump’s announcement that he would “ask Saudi Arabia and OPEC to bring down the cost of oil,” the price of U.S. crude and the global benchmark Brent fell.
Additionally, equities slightly increased as the 2-year Treasury yield, which typically tracks short-term interest rates, slightly decreased after Trump declared he would “demand that interest rates drop immediately.”
The S&P 500 closed at a record-high 6,118.71, up 0.53%. Early December saw its most recent closing high of 6,090.27. The Nasdaq Composite increased by 0.22%, while the Dow Jones Industrial Average increased by 0.92%. All three indexes were in the green for the fourth straight session.
Words can be arbitrary, unlike numbers, which are usually factual.
According to a note by Vital Knowledge founder Adam Crisafulli, “Trump’s Davos speech contained some ostensibly positive lines (he called for OPEC to lower oil prices, demanded central banks lower interest rates, and reiterated prior pledges to slash taxes and regulation), but there was very little either incremental or within his control.”
That does not imply that Trump will not follow through on his promises. However, it is a bad idea to rely on remarks that aren’t supported by tangible action.
However, investors should take certain phrases carefully because they carry the weight of policy behind them.
The U.S. Federal Reserve will convene next week. CMEGroup’s FedWatch Tool indicates little probability of a rate drop. Still, James Demmert, chief investment officer at Main Street Research, believes that what Chair Jerome Powell says at his news conference is “likely to cause market volatility.”
Therefore, for investors, knowing what to listen to maybe just as crucial as understanding numbers.
