US markets stumbled on Thursday, with the S&P 500 snapping a three-day winning streak and the Nasdaq weighed down by weakness in big tech stocks. Apple, Tesla, and Nvidia led the losses, overshadowing earlier optimism from strong corporate earnings in the financial sector. Meanwhile, European markets found support from a rally in luxury stocks after Richemont’s robust quarterly results boosted sentiment. In Asia-Pacific, gains were tempered by South Korea’s surprising decision to keep interest rates unchanged, reflecting mixed regional sentiment. As inflation fears eased, Treasury yields continued their slide, offering some relief to markets amid growing economic uncertainty.

Key Takeaways:

  • S&P 500 Ends Three-Day Winning Streak: The S&P 500 slipped 0.21% to close at 5,937.34, marking the end of its three-day rally. The decline was driven by a pullback in big tech stocks which overshadowed earlier optimism from strong corporate earnings. 
  • Nasdaq Falls on Tech Weakness: The Nasdaq Composite fell 0.89% to close at 19,338.29. The tech-heavy index’s sharp drop follows a robust 2.5% gain in the prior session, underscoring the volatile nature of the current market environment as investors assess the sustainability of the recent tech rally.
  • Dow Slips Despite Banking Gains: The Dow Jones Industrial Average dropped 68.42 points, or 0.16%, to settle at 43,153.13. The index faced pressure from weak performance in health insurance and technology-related stocks. The broader market struggled to maintain momentum after Wednesday’s significant 700-point surge in the Dow.
  • Treasury Yields Decline Further: The yield on the 10-year Treasury fell nearly 5 basis points to 4.608%, while the 2-year yield dipped by approximately 3 basis points to 4.238%. Earlier this week, Treasury yields experienced a steep drop following lower-than-expected inflation data, reinforcing expectations of a softer monetary policy stance.
  • European Markets Rally on Luxury Sector Gains: European markets closed higher, with the Stoxx 600 index rising 0.93% on Thursday. The FTSE 100 gained 1.09%, to close at 8,391.90, while France’s CAC 40 climbed 1.96%. Italy’s FTSE MIB rose 0.5%, nearing its highest levels since January 2008. Germany’s DAX edged up 0.3% to 20,634. The rally was driven by Richemont’s 16% surge on stronger-than-expected quarterly sales, which also lifted luxury peers like LVMH, Kering, and Burberry. Meanwhile, the UK reported GDP growth of 0.1% in November, slightly below expectations of 0.2%. This modest growth weighed on the British pound, which fell 0.18% against the US Dollar and 0.16% against the Euro shortly after the data release.
  • Asia-Pacific Markets Mixed Amid Central Bank Surprises: The Kospi in South Korea rose 1.23% to 2,527.49 after the Bank of Korea unexpectedly kept its benchmark rate steady at 3%, defying expectations for a cut. Japan’s Nikkei 225 gained 0.33% to 38,572.60, driven by stable producer price index data, though the Topix slipped 0.09% to 2,688.31. In Hong Kong, the Hang Seng index climbed 1.08%, while mainland China’s CSI 300 edged up 0.11%. Australia’s S&P/ASX 200 outperformed with a 1.38% rise, closing at 8,327. Mixed signals in economic data across the region kept investor sentiment cautious.
  • US Weekly Jobless Claims Increase but Labour Market Remains Resilient: Initial jobless claims for the week ending January 11 rose by 14,000 to a seasonally adjusted 217,000, exceeding forecasts of 210,000. Continuing claims declined slightly to 1.86 million, underscoring the strength of underlying employment conditions. December’s nonfarm payrolls showed an increase of 256,000 jobs, while the unemployment rate ticked down to 4.1% from 4.2%, reflecting a robust labour market.
  • Oil Prices Retreat After Hitting Multi-Month Highs: Oil prices declined on Thursday after reaching multi-month highs earlier in the week. Brent crude futures fell 0.9%, closing at $81.29 per barrel, while West Texas Intermediate (WTI) crude dropped 1.7% to settle at $78.68 per barrel. The decline came amid profit-taking and uncertainty following new sanctions imposed by the Biden administration on Russia’s oil exports. 

FX Today:

  • EUR/USD Attempts Recovery Amid Bearish Momentum: EUR/USD traded at 1.0298 on Thursday, stabilising after a prolonged downtrend that saw the pair lose 4.5% over the past three months. The pair remains below key moving averages, with the 50-day SMA at 1.0469, the 100-day SMA at 1.0731, and the 200-day SMA at 1.0779, reinforcing the bearish outlook. Immediate support lies at 1.0200, a level last tested in late December 2024, while resistance is at 1.0300, aligning with the 50-day SMA. A break above this could lead to a test of 1.0400, though sustained recovery would require a move above the 100-day SMA. 
  • GBP/USD Nears Multi-Month Lows: GBP/USD traded at 1.2231, consolidating near levels last seen in March 2024. The pair has declined steadily since December 2024, losing over 4% in value. It trades below key moving averages, with the 50-day SMA at 1.2593, the 100-day SMA at 1.2857, and the 200-day SMA at 1.2794. Support is located at 1.2150, a critical level that aligns with January 2025 intraday lows, while resistance is at 1.2300. A break below 1.2150 could lead to a test of 1.2100, marking a nine-month low. RSI remains subdued, and MACD confirms bearish divergence, signalling continued weakness unless the pair reclaims the 50-day SMA.
  • USD/CAD Extends Rally to Five-Year Highs: USD/CAD surged to 1.4392, its highest level since May 2020, as the pair continued its relentless uptrend. The price remains above all key moving averages, with the 50-day SMA at 1.4183, the 100-day SMA at 1.3920, and the 200-day SMA at 1.3809. Resistance is seen at 1.4400, a psychological level last breached five years ago. If broken, the pair could target 1.4500. On the downside, support is at 1.4300, with additional protection at the 50-day SMA. 
  • USD/JPY Retreats After Multi-Year Highs: USD/JPY traded at 155.196, pulling back after reaching a multi-year high of 158.000 in December 2024. The pair remains in a strong uptrend, supported by the 50-day SMA at 154.629, the 100-day SMA at 150.777, and the 200-day SMA at 152.743. Immediate support is at 155.000, while resistance lies at 156.000, with the December peak at 158.000 representing a key level. RSI has eased from overbought conditions, reflecting reduced bullish momentum, while MACD supports the broader uptrend. The pair remains bullish but could consolidate near-term.
  • Gold Surges as Yields and Dollar Weaken: Gold continued its rally, rising to $2,716 on Thursday as falling Treasury yields and a weaker US Dollar bolstered demand for the safe-haven metal. Gold has gained over 10% since its December lows of $2,460 and trades firmly above key moving averages, including the 50-day SMA at $2,642, the 100-day SMA at $2,639, and the 200-day SMA at $2,509. Resistance lies at $2,725, with a breakout above this level potentially targeting $2,750. On the downside, support is at $2,680, followed by the 50-day SMA. Momentum indicators suggest further upside potential, with RSI remaining below overbought levels and MACD signalling strengthening bullish momentum. 

Market Movers:

  • Apple Plummets on Worst Day Since August: Apple shares dropped 4% on Thursday, marking their worst single-day performance since August 5. The selloff was a significant drag on the Nasdaq Composite, erasing earlier gains and contributing to the index’s 0.89% decline. 
  • Tesla Extends Decline: Tesla shares tumbled more than 3%, continuing a recent downtrend that reflects growing investor concerns about the company’s ability to navigate a challenging macroeconomic environment. 
  • Morgan Stanley Surges on Earnings Beat: Morgan Stanley shares rose 4%, leading gains in the sector, after the bank reported stronger-than-expected fourth-quarter earnings. Their equities trading revenue of $3.33 billion exceeded the consensus estimate of $2.63 billion.
  • UnitedHealth Group Leads S&P 500 Declines: UnitedHealth Group shares plunged more than 6% after the company reported fourth-quarter revenue of $100.81 billion, falling short of the consensus estimate of $101.68 billion. The disappointing results put pressure on the broader healthcare sector, with other insurers like Humana (-1.3%), Elevance Health (-1.1%), and Cigna (-1.2%) also trading lower.
  • Chip Stocks Rally on Optimistic Spending Forecasts: Semiconductor stocks surged on Thursday after Taiwan Semiconductor Manufacturing Company forecasted 2025 capital spending of $38 billion-$42 billion, well above the consensus of $35.1 billion. Lam Research (+4.2%), KLA Corp (+4.1%), and Applied Materials (+4.3%) all rallied, contributing to a strong performance for the sector.
  • Symbotic Skyrockets on Strategic Acquisition: Symbotic shares surged more than 19% after the company announced its acquisition of Walmart’s Advanced Systems and Robotics business. The deal is expected to strengthen Symbotic’s market position in robotics and automation, driving strong investor interest.

As the week progresses, markets remain on edge amid mixed signals from corporate earnings, economic data, and geopolitical developments. The S&P 500 snapped its three-day rally, dragged lower by sharp declines in tech heavyweights like Apple and Tesla, while the Nasdaq struggled to maintain momentum. European markets, however, found strength in luxury stocks following Richemont’s standout performance, and chipmakers rallied globally on optimistic spending forecasts. Gold continued its upward trajectory, reflecting heightened demand for safe-haven assets as Treasury yields declined. With ongoing concerns about inflation, central bank policy, and corporate earnings, investors are likely to remain cautious, closely monitoring upcoming developments to gauge the market’s next direction.