12/30/24-1/3/25 Weekly Market Recap - Movers, Macro, Monetary, and Fiscal



Week 12/30/24-1/3/25

Weekly Market Summary by Aremorph


Summary - Movers, Macro, Monetary, and Fiscal


Happy New Year! Rounding out the holiday weeks and charging into the new year, check out below how the markets have changed into 2025. With lower trading volume, look how macroeconomic and geopolitical events impacted the markets!


Global Weekly Movements

U.S. Equities

  • S&P 500 Index: 5,942.47 (-1.06%)

    • This week, all sectors except Energy, Real Estate, and Utilities were down: (3.44%), (1.31%) , and (0.74%) respectively. Energy received a boost from heightening geopolitical risks in the middle east and eastern Europe. The largest dividend payout and economic stimulation promised by Xi Jinping of China, which is the largest importer of oil. Record breaking cold fronts down the midwest also contributed to the crude jump. Materials and Consumer Discretionary led the bear charge at (-2.06%) and (-1.68%) with a failed Nippon Steel merger and continuous slowing since the FOMC cut and announcement of reduced cuts.

  • Dow Jones Industrial Average: 42,732.13 (-0.95%)

  • Russell 3000 Index: 3,395.77 (-0.98%)

  • NASDAQ Composite: 19,621.68 (-1.38%)

  • Big Movers of the Week

    • Tesla (TSLA): 410.44 (-9.62%)

      • A turbulent week for Tesla resulted in a nearly 10% drop in price, largely due to their miss in deliveries target as well as a recent terrorist attack that utilized their Cyber Truck vehicle to execute. 

    • NVIDIA (NVDA): 144.47 (3.24%)

      • Steady rise in Nvidia reflected a continuing market sentiment regarding the importance of AI, quantum computing, and the dominance of tech giants. Going into 2025, analysts are hailing investors to turn their attention to the hardware and technology required to run AI and software.

    • Boeing (BA): 169.90  (-5.81%)

      • Boeing slides as devastating news from Korea reveals a record breaking crash occurred in the Boeing 737-800. In 2024 Boeing suffered continuous negative press regarding various whistleblowing incidents as well as a large strike from workers.

    • Vistra Corp (VST): 162.36 (12.66%)

      • Natural gas, nuclear, solar, and battery energy storage facilities at Vistra jumped in valuation based on an easing Biden hydrogen tax credit as well as energy reliance as the AI train moves forward.

    • Uber (UBER): 64.59 (4.92%) 

      • Goldman Sachs added UBER to their conviction list, indicating promising growth in the future. 


Chinese Equities - Shanghai Composite (SHCOMP): 3,211.43 (-5.47%)

Hong Kong Equities - Hang Seng Index (HSI): 19,760.27 (-1.61%)

Japanese Equities- Nikkei 2225 (NI225): 39,894.54 (1.75%)

European Equities

  • UK Index (UKX): 8,223.98 (1.07%)

  • German Index (DAX): 19,906.08 (.029%)

Commodities

  • Gold Futures: 2,655.1 (0.19%)

  • Crude Oil Futures: 74.24 (6.67%)

U.S. Monetary & Fiscal Policy:

Fed Impact of Foreign Exchange: After December 18th, 2024 when the FOMC cut the fed funds rate by 25 bps, the EUR/USD traded at a 2 year low 1.03, nearing parity. After the initial shock settled, EUR/USD rose 1.4 and has since fallen once more to an annual low of 1.025. With Fed Chair Powell illustrating the strength of the American economy by citing less rate cuts in the following year, this could strengthen market sentiment regarding US yields and currency.


Likewise the Dollar strength against the Euro, USD/CNY hit a 2 year high at 7.32, matching a close high since 2007. With the Chinese economy and currency continuing to weaken, demanding the government to inject stimulus into the economy, the US economy remains strong as demand for treasuries increases, driving the yields down.


The Phantom Tariff: Before Trump even steps into office, there have been concerns regarding the global supply chain, multinational companies, and what some would call “egregiously” high tariffs. Many companies both domestic and international have begun frontloading orders, negotiating with suppliers, and altering shipping partners. Bloomberg AI scans show a 400% increase in company discussions of tariffs  during conference calls from October to December. The large problem with all preemptive moves from the businesses, there is no guarantee that Trump's tariffs will set in as expected, potentially rendering their preparation useless. Moreover, air freight cargo has been shipped off at nearly 150% annual frequency, illustrating that to curb potential tariffs, companies are creating a product buffer. Finally, the largest fear for the next two years for businesses is a global trade war with 65% of respondents highlighting such as the largest risk. 

 

Global Macroeconomic News: 

Consumer Sentiment: The University of Michigan's December 2024 consumer sentiment index was confirmed at 74, marking the highest level since April, up from 71.8 in November. The expectations gauge saw a notable upward revision to 73.3, reflecting growing optimism about the economy, while the current conditions index was slightly revised down to 75.1 from 77.7. A standout feature was a 32% improvement in buying conditions, driven by consumers' expectations of future price increases for major purchases. While Americans feel that the economy has improved due to a slowdown in inflation, they are not yet experiencing a sense of prosperity.


Initial Jobless Claims: The latest U.S. Labor Department report revealed that weekly jobless claims fell to 211,000, the lowest level in eight months, signaling continued stability in the labor market. Claims dropped by 9,000 from the previous week, and continuing claims also decreased by 52,000 to 1.844 million. This data supports the Federal Reserve's expectation of fewer interest rate cuts in 2025. Additionally, U.S. construction spending remained unchanged in November, with a rise in single-family homebuilding offset by declines in multi-family housing investments. Overall, the labor market's resilience continues to counteract inflation concerns, with the Fed focusing on gradual rate cuts amid strong employment data.


Russian Air Defense: The Azerbaijan Airlines Embraer 190 aircraft crashed in Kazakhstan after being hit by Russian air defense systems near Grozny, according to Azerbaijan's state-backed media. The plane was damaged by Russian electronic warfare, which disabled its communication systems before it attempted an emergency landing in Kazakhstan. The aircraft was en route from Baku to Grozny and was carrying 62 passengers and five crew members. Authorities found 38 bodies at the crash site, with 29 survivors in the hospital. Heightened geopolitical risks regarding Russia continue to contribute to dynamic movements in prices of crude futures, especially given the current sanctions and trade agreements regarding crude. 

Potentially Impacted Securities: Crude, Gold, XOM, CVX, WMB


 South Korean Airline Crash: Jeju Air Flight 2216, a Boeing 737-800, crashed at Muan International Airport on December 29, 2024, killing 179 people. The aircraft, which had 175 passengers and 6 crew, was attempting a go-around after a bird strike warning when its landing gear failed. The plane skidded down the runway and crashed into a wall. Only two flight attendants survived. Investigators are examining the bird strike and gear failure as potential causes. The crash is South Korea's deadliest aviation disaster and one of the worst globally in recent years. The incident may affect investor confidence in the airline industry and could result in increased insurance premiums for airlines operating in the region. The USD is up against the Korean Won by 2% since the crash.

Potentially Impacted Securities: (JejuAir Co Ltd), BA


Sources: Google Finance, Market Watch, CME Fedwatch, Yahoo Finance, Reuters, New York Times, Bloomberg, Wall St Journal

Have a great week investing!

Sincerely,
Aremorph

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