
Markets Update: China reinforces yuan stability, alleviating devaluation concerns. Wall Street futures decline following disappointing Alphabet earnings. The dollar weakens against the yen as Treasury yields fall. Gold reaches a new high due to trade tensions.
Global Markets Roundup: 5 February 2025
FESX1! | Z1! | NI225 | NQ1! | ES1! | EURUSD | USDJPY | DXY | GOLD | CL1! | ZC1! | ZS1! HG1!
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Equity Markets
Asian stock markets faced difficulties on Wednesday, influenced by Wall Street futures which declined due to disappointing earnings and a weaker dollar against the yen following a decrease in Treasury yields. Investors were unsettled by President Donald Trump's unexpected comments about the U.S. potentially taking control of Gaza and developing it economically, highlighting the ongoing policy uncertainty and potential market volatility. Market sentiment improved slightly when Beijing set a firm exchange rate for the yuan, alleviating fears of a devaluation to counteract the impact of tariffs on Chinese exports. China's response to the additional 10% tariffs imposed by Trump has been relatively measured, with new levies covering approximately $14 billion of U.S. exports. A survey indicated slower expansion in China's services sector in January, likely due to the timing of the Lunar New Year holidays. Chinese blue chips showed a minor decline of 0.2% upon returning from the holiday. The MSCI's broadest index of Asia-Pacific shares outside Japan increased by 0.6%, and South Korea's main index rose by 1.2%. In Japan, the Nikkei remained flat as the yen strengthened along with local bond yields.
European markets showed a cautious outlook with EUROSTOXX 50 futures down by 0.5%, FTSE futures easing by 0.2%, and DAX futures falling by 0.4%, reflecting concerns over potential U.S. trade taxes. Wall Street futures faced selling pressure when Alphabet's earnings failed to meet expectations, mainly due to increased capital expenditure. Alphabet's shares fell by 7.6% in extended trading, reducing its market capitalization by $192 billion. Consequently, S&P 500 futures dropped by 0.4%, and Nasdaq futures declined by 0.5%. Notable companies expected to release their results on Wednesday include Uber, Ford, Qualcomm, and Walt Disney. The delay in tariffs on Canada and Mexico has somewhat alleviated concerns about significant restrictions on the Federal Reserve's ability to cut interest rates, leading to a bounce in fund futures. Yields on two-year Treasuries have settled at 4.224%, down from a peak of 4.282% reached on Monday.
Currencies
The decline in yields was accompanied by the dollar retreating from its highs, with the dollar index DXY decreasing to 108.050 from Monday's peak of 109.880. The euro EURUSD strengthened to $1.0380, recovering from a two-year low of $1.0125 reached earlier in the week. Similarly, the dollar fell to 1.4327 Canadian dollars, down from a 22-year high of 1.4792. Additionally, the dollar weakened by 0.7% against the Japanese yen, reaching a seven-week low of 153.09 and breaking support at 153.72. Japanese government bond yields reached new multi-year highs following positive wage data, which reinforced expectations of further tightening by the Bank of Japan this year.
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Commodities
In the commodities market, gold reached a new peak at $2,848 per ounce, supported by the decline in both the dollar and yields. Oil prices experienced pressure from China's tariffs on U.S. oil imports but gained some backing from reports that President Trump reinstated his "maximum pressure" campaign on Iran, aiming to reduce Iranian oil exports to zero. Consequently, Brent crude decreased by 35 cents to $75.85 per barrel, while U.S. crude fell by 22 cents to $72.48 per barrel. In agricultural commodities, the most-active soybean contract on the Chicago Board of Trade (CBOT) ZS1! decreased by 0.6% to $10.68-1/4 per bushel, following a peak since late July on Tuesday. Corn ZC1! edged down by 0.1% to $4.94-1/4 per bushel, while wheat ZW1! increased by 0.2% to $5.78 per bushel, reaching its highest level since November earlier in the session.. BRN1! | CL1! | GOLD | HG1! | KC1! | RC1! | CC1!
Looking forward refer to the economic calendar below to see the upcoming events scheduled for today and the rest of the week.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team