Stock Market started the week on a positive note, with the S&P 500 and Nasdaq Composite logging consecutive gains on Monday, driven by a rally in semiconductor stocks and optimism surrounding potential policy changes from the incoming administration. Reports suggesting that President-elect Donald Trump’s tariff plans may be narrower than anticipated helped alleviate fears of a global trade war, boosting market sentiment. Nvidia and other chipmakers led the charge, fuelled by record revenue announcements and bullish investor confidence. Meanwhile, the Dow Jones Industrial Average lagged slightly, reflecting a cautious tone among some sectors. With key economic data, including the December jobs report, on the horizon, market participants remain focused on potential policy moves from the Federal Reserve and broader global economic trends.

Key Takeaways:

  • S&P 500 Posts Consecutive Gains Amid Chip Rally: The S&P 500 climbed 0.55% on Monday to close at 5,975.38, marking back-to-back gains as Wall Street rebounded from last week’s losses. The index’s recovery was largely driven by strong performance in the technology sector, particularly among semiconductor stocks, which benefitted from bullish sentiment and record revenue announcements from key players like Foxconn.
  • Nasdaq Soars as Nvidia Hits Record Highs: The Nasdaq Composite surged 1.24% to close at 19,864.98, propelled by gains in chipmakers such as Nvidia, which jumped 3.4% to reach an all-time high. Broadcom and Micron Technology also contributed to the rally, gaining 1.7% and a staggering 10.5%, respectively. 
  • Dow Jones Slips Despite Early Gains: The Dow Jones Industrial Average ended the session slightly lower, shedding 25.57 points, or 0.06%, to close at 42,706.56. The 30-stock index had climbed as much as 383 points earlier in the day but lost momentum as gains in tech and autos failed to offset broader market caution.
  • European Markets Close Higher on Positive PMI Data: European markets posted strong gains on Monday, bolstered by robust economic data and a rally in chip stocks. The Stoxx 600 index rose 0.94%, with the FTSE 100 up 0.31% to close at 8,249.66, France’s CAC 40 advancing 2.24% to 7,464.44, and Germany’s DAX climbing 1.56% to 20,123. PMI data boosted sentiment, with the Eurozone December Composite PMI coming in at 49.6, exceeding expectations of 49.5. The Eurozone December Services PMI also beat forecasts, reaching 51.6 (vs. 51.4 expected). Spain’s Services PMI rose to 57.3 (vs. 54.1 expected), Italy’s to 50.7 (vs. 50.0 expected), and France’s to 49.3 (vs. 48.2 expected). Germany’s Services PMI registered at 51.2, slightly above the forecast of 51.0. Chipmakers like ASML and ASM International added 8.7% and 6.2%, respectively, leading gains in the region.
  • Asia-Pacific Markets Mixed as China’s Services PMI Rises: Asian markets displayed a mixed performance on Monday. China’s CSI 300 slipped 0.16% to 3,769, marking its fourth consecutive loss despite a rise in the country’s services PMI to 52.2, the fastest expansion since May 2024. Japan’s Nikkei 225 led losses in the region, falling 1.47% to 39,307.05, dragged down by consumer cyclical stocks. Meanwhile, South Korea’s Kospi gained 1.91%, closing at 2,488.64, and the Kosdaq surged 1.73% to reach its highest level since November 2024.
  • Oil Prices Pull Back from Recent Highs: After five consecutive days of gains, oil prices eased on Monday amid weaker economic data from the US and Germany. Brent crude dipped 0.27% to settle at $76.30 per barrel, while West Texas Intermediate (WTI) fell 0.54% to close at $73.56 per barrel. Both benchmarks exited overbought territory, with traders eyeing upcoming economic reports and China’s fiscal stimulus efforts for further direction.
  • Treasury Yields Rise Ahead of Key Jobs Data: US Treasury yields edged higher as investors positioned themselves ahead of critical jobs data expected later this week. The 10-year Treasury yield rose over 3 basis points to 4.63%, while the 2-year Treasury yield dipped nearly 1 basis point to 4.27%. 
  • Cryptocurrencies Rally as Bitcoin Surges Past $101,000: The cryptocurrency market started the week on a bullish note, with bitcoin climbing 3%, its highest level since December. This marks bitcoin’s best week since early December 2024, fuelled by renewed risk-on sentiment among traders. The broader crypto market also advanced, with the CoinDesk 20 index gaining over 3%. Ethereum and Solana followed suit, posting strong gains. Meanwhile, crypto-linked stocks such as Coinbase and MicroStrategy surged nearly 8% and 11%, respectively, the latter driven by an announcement of an additional bitcoin purchase worth $101 million.

FX Today:

  • EUR/USD Rises but Faces Resistance Near 1.0400: The EUR/USD pair climbed 0.77% to close at 1.0387, recovering from recent lows near 1.0200. The rally brought the pair closer to testing the critical resistance level at 1.0400, which aligns with the 50-day Simple Moving Average (SMA). This level has previously capped recoveries, reflecting ongoing selling pressure on longer timeframes. Immediate support is at 1.0300, and a break below this level could reverse recent gains, pushing the pair back toward 1.0200 and possibly the psychological level of 1.0000. While the RSI indicates moderate momentum, suggesting potential consolidation, a decisive breakout above 1.0400 could pave the way for a recovery toward 1.0500, where the 100-day SMA is positioned.
  • GBP/USD Bounces but Encounters Key Hurdles: The GBP/USD pair surged 0.77% to close at 1.2517, rebounding strongly from recent lows near 1.2300. This recovery has brought the pair into contention with the 50-day SMA at 1.2550, a critical resistance level. A sustained move above 1.2550 could open the door to further gains, targeting the next resistance at 1.2700. On the downside, immediate support lies at 1.2450, with a break below this level exposing the pair to renewed selling pressure toward 1.2300. While momentum indicators suggest neutral conditions, further consolidation is likely unless the pair clears 1.2550.
  • USD/CAD Pulls Back as Canadian Dollar Recovers: USD/CAD declined 0.76% to close at 1.4332, retreating from its recent highs near 1.4450. The pair’s pullback reflects a broader easing of US dollar flows and renewed strength in the Canadian dollar following the resignation of Canadian Prime Minister Justin Trudeau. Immediate support lies at 1.4300, with a sustained break below this level potentially pushing the pair toward 1.4200, where buyers may look to defend the trend. On the upside, resistance at 1.4450 remains a key hurdle for bulls, and a breakout above this level could extend the rally toward 1.4600. 
  • Gold Struggles to Sustain Momentum: Gold prices was flat to close at $2,634, consolidating below the critical $2,650 resistance level. While the metal remains above its 200-day SMA at $2,494, indicating long-term bullish momentum, the failure to sustain gains above $2,650 signals potential weakness. On the downside, support is expected at $2,625, with further declines potentially targeting $2,595. Momentum indicators suggest a neutral short-term outlook, with traders awaiting fresh catalysts for the next significant move. A breakout above $2,650 could target $2,675 and the psychological $2,700 level.

Market Movers:

  • Nvidia Climbs to Record Highs: Shares of Nvidia jumped 3.4% on Monday, closing at a record high after posting three consecutive days of gains. The stock benefitted from strong momentum in the semiconductor sector, boosted by Foxconn’s record fourth-quarter revenue. Foxconn (Taiwan Semiconductor Manufacturing) shares surged 5.5% in Asian trading, closing at an all-time high.
  • Paycor Jumps on Acquisition Talks: Shares of Paycor surged 23% after reports indicated the company is in advanced discussions to be acquired by Paychex. Sources suggest a deal could be announced as early as this week, with the potential acquisition generating significant investor interest in the payroll services provider.
  • Plug Power Gains on Hydrogen Tax Credit Rules: Plug Power shares surged 20%, continuing Friday’s momentum when the stock gained 13% after the US Department of the Treasury finalized rules for hydrogen production tax credits. 
  • FuboTV Soars on Disney Partnership: FuboTV shares skyrocketed 251% after the company confirmed a deal with Walt Disney to combine their online live TV businesses. The new venture, which will be 30% owned by FuboTV and 70% by Disney, will create the second-largest digital pay-TV provider, trailing only YouTube TV.
  • American Airlines Pops on Analyst Upgrade: American Airlines shares climbed 3.2% following an upgrade from TD Cowen to “buy” from “hold.” The investment firm also raised its price target for the stock to $25, reflecting a new high among Wall Street analysts. This optimism comes amid expectations for stronger revenue performance in 2025.
  • T-Mobile Falls on Analyst Downgrade: T-Mobile shares fell 3% after Wells Fargo downgraded the stock to “equal weight” from “overweight.” The firm cited slowing growth metrics and a high valuation premium compared to competitors, raising concerns about the company’s near-term performance.

As markets opened, the S&P 500 and Nasdaq posted solid gains, led by a rally in semiconductor stocks, while the Dow slipped slightly after early strength faded. European markets found support from stronger-than-expected PMI data and a tech-driven rally, while Asia-Pacific markets showed mixed results, with China’s services sector rebounding but broader indices struggling. Oil prices pulled back from recent highs, and Treasury yields edged higher as investors braced for key jobs data later this week. With global markets navigating a delicate balance of economic data, corporate developments, and policy expectations, all eyes remain on upcoming labour market reports and their potential impact on Federal Reserve decisions in the weeks ahead.