Macro update
Wall Street posts modest gains:
United States (US) equity markets closed slightly higher, with the S&P 500 up 0.2% at an intraday record and the Nasdaq 100 gaining 0.5%, underpinned by strength in technology stocks and Walmart.
Walmart boosts index performance:
Walmart shares rose 2.7% after confirmation it will join the Nasdaq 100 on 20 January, lifting both the Nasdaq and S&P 500 as investors positioned for anticipated passive inflows.
Financials under pressure:
Bank and consumer finance stocks lagged after President Trump proposed a one-year cap on credit card interest rates at 10%, dragging the S&P financials sector down 1.2%.
Fed independence concerns fade:
Markets largely looked past reports of a Justice Department investigation into Federal Reserve (Fed) Chair Jerome Powell, viewing the issue as a known risk and keeping the focus on earnings and economic data.
Asia rallies on weaker yen:
Japan’s Nikkei 225 jumped more than 3% to fresh record highs as the yen slid to multi-year lows, while South Korean and Taiwanese markets also set records and Chinese blue chips climbed to a four-year high.
Data and earnings ahead:
Attention now turns to US consumer price index (CPI), with core inflation expected around 2.7%–2.8%, and the start of fourth quarter (Q4) earnings season led by major US banks, where guidance risk remains elevated.
Nikkei 225 hits record high
The Nikkei 225 rallied by over 3% to a record high amid Japanese February snap election speculation and a weakening Japanese yen, making the country’s exports cheaper.
A rise above Tuesday’s 53,549 high may lead to the psychological 55,000 region being reached.
Support sits around the previous November record high at 52,637.
Short-term outlook:
Bullish while above the 8 January 51,053 low.
Medium-term outlook:
Bullish while above the 48,235 mid-November low.