Daily Market Overview and Strategy 14 January 2025

Daily Market Overview and Strategy - January 2025

Global Market Update

1. US Treasury Yields Surge:
• 10-year Treasury yields hit 4.805%, a 14-month high, sparking investor concerns over inflation and the future of Fed rate policies.
• Strong US payroll data reduced expectations of near-term rate cuts, fueling market uncertainty.
2. Tech Sell-off Spreads to Asia:
• US technology stock weakness extended to Asian markets.
• Japan’s Nikkei dropped 1.5% amid global investor anxiety.
3. Dollar Strength:
• The dollar index reached a two-year high before easing slightly.
• Strong economic data supported its rise, though investors remain cautious ahead of US inflation data.
4. Oil Prices Surge:
• Brent and WTI crude prices are up over 8% YTD, hitting a 5-month high.
• Supply concerns were driven by:
• Declining stockpiles in the US (Cushing, Oklahoma, at their lowest since 2014).
• Harsh winter forecasts in the US.
• Tightened sanctions on Russian energy exports and insurance companies.
5. Political Developments in Europe:
• France’s 2025 budget debate, with focus on pension reforms, raised political uncertainty and drove French debt risk premiums to 12-year highs.

Corporate News

• US Tech and AI Restrictions:
• Further export restrictions on AI chips and technology targeting China.
• TikTok Ban Progress:
• US Supreme Court appears likely to uphold a potential TikTok ban, citing national security concerns.
• Apple Market Share Decline:
• Falling iPhone shipments in China led to a 2.4% drop in Apple stock.
• M&A Activity:
• Johnson & Johnson plans to acquire Intra-Cellular Therapies for $14.6 billion.
• Amazon Service Closure:
• “Try Before You Buy” for Prime members to end by January 31, 2025.
• Crypto Market:
• Bitcoin fell below $91,000, raising concerns at the $3.2 trillion market support level.
• BlackRock launched a Bitcoin ETF in Canada.

Economic Calendar:

• USA:
• PPI Data: Key indicator of inflation.
• EIA Short-Term Energy Outlook: Focus on oil price drivers.
• Federal Budget Balance for December.
• FOMC Member Williams Speaks: Possible monetary policy insights.

DAX Technical Analysis

• Trend Overview:
• The DAX remains in an uptrend with bullish momentum.
• Trading above key moving averages (50, 100, 200 EMA) supports long-term sentiment.
• Key Levels to Watch:
• Resistance: 20,525.3 (previous swing high).
• Support: 20,158 (Fibonacci 0.786 level); 19,870 (Fibonacci 0.618 level).
• A break above 20,525.3 could signal a continuation of the uptrend.
• Indicators:
• RSI: Mildly bullish at ~60.88; caution above 70.
• Stochastic RSI: Overbought (~80.73); signals potential consolidation or pullback.
• Outlook:
• Bullish Case: Breakout above 20,525.3 targets new highs.
• Bearish Case: Drop below 19,870 may signal a pullback to 19,667 or 19,465.

Actionable Strategy

1. For Equity Traders:
• Watch US tech sector for signs of stabilization post-selloff.
• Traders might currently be watching the DAX levels of 20,525.3 where strong resistance lies historically according to the chart. If this resistance is breached a possible continuation might be in order..
2. For Oil Traders:
• Monitor Brent and WTI price action amid tight supply dynamics and geopolitical risks.
• Short-term bullish bias, particularly if forecasts of colder US weather materialize.
3. For FX Traders:
• Focus on USD strength; evaluate the dollar's performance post-PPI data.
• Watch for volatility in EUR/USD due to European political concerns.
4. For Crypto Investors:
• Cautiously assess Bitcoin's ability to hold above critical support levels.
• Monitor the impact of BlackRock’s ETF on market liquidity and sentiment.
5. Prepare for High Volatility Events:
• If you are exposed to excessive risk and wish to hedge a portion of your account, it may be prudent to adjust stop-loss levels and position sizes ahead of US inflation data and Fed commentary.