Market waits for clarity on Trump policies – Tesla set to report deliveries

EU mid-market update: Red start to 2025 across Europe; US futures bounce; Market waits for clarity on Trump policies; Tesla set to report deliveries.

Notes/observations

- Following the worst last trading week of any year since 1937, sentiment is cautious on the first trading session of 2025 and ahead of Trump inauguration on Jan 20th; Equities saw immediate bid for at the cash open in Europe and US futures, before rolling over back to little changed. Switzerland exchange remains closed, and all other indices are mixed, with underperformance from French CAC40 at -1.0%.

- Disparate European manufacturing PMI, with slight bias to weakness. Spain, Euro Zone, UK, Poland, Sweden and Czech all missed estimates. France and Germany were unchanged in final readings. Italy and Netherlands beat.

- Natural gas prices climbing as cold weather sweeps Western Northern Hemisphere and the expiration of Ukraine pipeline deal for Russian gas exports.

- Press reports that leaders from a US dockworkers’ union and the group that represents their employers are set to resume contract talks on next Tue, Jan 7th, ahead of looming Jan 15th's deadline to agree on automation issues.

- US's House of Representatives is scheduled to hold a vote on Friday, Jan 3rd, to select the Speaker for the 119th Congress, after Trump endorsed Johnson earlier, who still faces a tight margin for success; Note: if there’s no House Speaker by Jan 6th, the House can’t certify Pres-elect Trump’s Electoral College victory.

- Tesla set to report its Q4 deliveries either later today or tomorrow; Musk says they have confirmed that the Cybertruck explosion was caused by very large fireworks and/or a bomb carried in the bed of the rented Cybertruck and is unrelated to the vehicle itself.

- No central bankers are scheduled to speak, and debt issuance remains light.

- Asia closed lower with Shanghai underperforming -2.7%. EU indices are -0.1% to -1.0%. US futures are +0.4-0.8%. Gold +0.5%, DXY +0.3%; Commodity: Brent +1.3%, WTI +1.4%; Crypto: BTC +3.6%, ETH +4.1%.

Asia

- China Dec Caixin PMI Manufacturing registered its 3rd month of expansion (50.5 v 51.7e).

- Australia Dec Final Manufacturing PMI: 47.8 v 48.2 prelim (confirmed 11th month of contraction).

-South Korea Dec PMI Manufacturing moved back into contraction (49.0 v 50.6 prior).

- Singapore Q4 Advance GDP Q/Q: +0.1% v -0.8%e; Y/Y: 4.3% v 3.8%e.

- BOK Gov Rhee noted that the domestic economy faced new difficulties in growth and heightened FX volatility; Continued rate cuts might become a 'source of anxiety'.

Europe

- ECB Lagarde stated via social media that she hoped to hit 2.0% inflation target in 2025, maintained stance that made significant progress in 2024 in bringing down inflation.

Americas

- Islamic State terror cell is believed to be behind an attack in which a pick-up truck rammed into crowds of people celebrating the New Year on Bourbon Street in New Orleans.

- Tesla Cybertruck exploded outside Trump International hotel in Las Vegas in 'potential act of terror'.

Energy

- Russian gas exports via Ukraine halted as of Jan 1st (as expected) [Transit nomination point at Sudzha, Ukraine.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.18% at 506.70, FTSE +0.02% at 8,174.74, DAX -0.02% at 19,906.03, CAC-40 -0.96% at 7,313.09, IBEX-35 -0.80% at 11,502.00, FTSE MIB -0.68% at 33,953.00, SMI +0.10% at 11,600.90, S&P 500 Futures +0.57%].

Market focal points/key themes: European indices open higher across the board but quickly turned around to be mostly in the red in the first hours of the session; light trading in first session of the year; concern over rising energy prices seen weighing on sentiment; among better performing sectors are materials and utilities; lagging sectors include consumer discretionary and health care; no major events expected in the upcoming US session.

Equities

- Consumer discretionary: Barratt Redrow [BDEV.UK] -0.5%, Persimmon [PSN.UK] -1.0%, Taylor Wimpey [TW.UK] -0.5%, Bellway [BWY.UK] -2.0%, Crest Nicholson [CRST.UK] -0.5% (UK Nationwide Dec House Prices above estimates for MoM and YoY).

- Energy: OMV [OMV.AT] +2.0% (EU gas prices rises as Russian gas transit through Ukraine halted), Vestas Wind Systems [VWS.DK] +3.0% (multiple orders over previous couple days while market closed) - Financials: Intrum [INTRUM.SE] +15.5% (US bankruptcy court approves Intrum's Chapter 11 plan - press) - Healthcare: Haleon [HLN.UK] -0.5% (US FDA announces Jan 9, 2025 Webcast to discuss Key Findings from the Population Assessment of Tobacco and Health (PATH) Study to Inform FDA’s Regulatory Activities).

- Industrials: Maersk [MAERSKB.DK] +1.5% (sees no progress on US port strike talks as Jan 15th deadline nears), Volkswagen [VOW3.DE] -2.0% (CEO interview), Tecnicas Reunidas [TRE.ES] +6.5% (contract award).

- Telecom: Vodafone [VOD.UK] +0.5% (Swisscom closes Vodafone Italia deal).

Speakers

- Spain Econ Min Cuerpo stated that saw domestic GDP growth >2.5%.

- Sweden Central Bank (Riksbank) Dec Minutes noted that it needed to evaluate and analyze how the Swedish economy responded to the rate cuts were made, how the fiscal stimulus affected economic activity and how international economic conditions developed.

Currencies/fixed income

- USD starting 2025 on a firm note after gaining approx. 6.5% over 2024. Market will be gauging Trump's plans for tariffs, tax cuts. Greenback had benefited last year amid expectations that Trump's protectionist and fiscally loose economic policies could fuel inflation thus aided as expectations for Fed to cut interest rates had receded over the past few months.

- EUR/USD at 1.0350 area as various major EU PMI Manufacturing readings remained in contractionary territory. Concerns on the impact in the region as Russian gas exports via Ukraine were halted as of Jan 1st.

- GBP/USD unable to muster any momentum after better housing data. Pair at 1.2485 by mid-session.

- USD/JPY hovering around the 157 area in quiet trading.

Economic data

- (NL) Netherlands Dec Manufacturing PMI: 48.6 v 46.0e (6th month of contraction).

- (UK) Dec Nationwide House Price Index M/M: 0.7% v 0.1%e; Y/Y: 4.7% v 3.8%e.

- (TR) Turkey Dec Manufacturing PMI: 49.1 v 48.3 prior (9th month of contraction).

- (SE) Sweden Dec PMI Manufacturing: 52.4 v 53.5e (5th month of expansion).

- (TH) Thailand Dec Business Sentiment Index: 48.4 v 49.3 prior.

- (HU) Hungary Dec Manufacturing PMI: 50.6 v 49.9e (2nd month of expansion).

- (PL) Poland Dec Manufacturing PMI: 48.2 v 48.9e (32nd month of contraction).

- (ES) Spain Dec Manufacturing PMI: 53.3 v 53.5e (11th month of expansion).

- (CZ) Czech Dec Manufacturing PMI: 44.8 v 45.9e (31st month of contraction).

- (HK) Hong Kong Nov Retail Sales Volume Y/Y: -8.3% v -5.4%e; Retail Sales Value Y/Y: -7.3% v -3.4%e.

- (NG) Nigeria Dec Manufacturing PMI: 52.7 v 49.6 prior.

- (IT) Italy Dec Manufacturing PMI: 46.2 v 45.0e (9th month of contraction).

- (FR) France Dec Final Manufacturing PMI: 41.9 v 41.9 prelim (confirmed 23rd month of contraction).

- (DE) Germany Dec Final Manufacturing PMI: 42.5 v 42.5 prelim (confirmed 30th month of contraction).

- (EU) Euro Zone Nov M3 Money Supply Y/Y: 3.8% v 3.5%e.

- (EU) Euro Zone Dec Final Manufacturing PMI: 45.1 v 45.2 prelim (confirmed 30th month of contraction).

- (GR) Greece Dec Manufacturing PMI: 53.2 v 50.9 prior (22nd month of expansion).

- (NO) Norway PMI Manufacturing: 50.3 v 50.5 prior (6th month of expansion).

- (UK) Dec Final Manufacturing PMI: 47.0 v 47.3 prelim (confirmed 3rd month of contraction).

- (CY) Cyprus Dec CPI M/M: % v -0.4% prior; Y/Y: % v 1.5% prior.

Fixed income issuance

- None seen.

Looking ahead

- (IT) Italy Dec Budget Balance: No est v -€5.1B prior.

- (AR) Argentina Dec Government Tax Revenue (ARS): No est v 13.026T prior.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 06:00 (PT) Portugal Dec Consumer Confidence: No est v -14 prior; Economic Climate Indicator: No est v 2.5 prior.

- 06:00 (NZ) New Zealand Dec CoreLogic Home Prices M/M: % v -0.4% prior.

- 06:30 (CL) Chile Nov Economic Activity Index (Monthly GDP) M/M: 0.2%e v 0.4% prior Y/Y: 1.7%e v 1.3% prior.

- 07:00 (US) MBA Mortgage Applications w/e Dec 27th: No est v -0.7% prior (prior two weeks ago, reading to include two weeks of data).

- 08:00 (SG) Singapore Dec Purchasing Managers Index (PMI): No est v 51.0 prior; Electronics Sector Index: No est v 51.6 prior.

- 08:00 (BR) Brazil Dec Manufacturing PMI: No est v 52.3 prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Initial Jobless Claims: 221Ke v 219K prior; Continuing Claims: 1.89Me v 1.910M prior.

- 09:30 (CA) Canada Dec Manufacturing PMI: No est v 52.0 prior.

- 09:45 (US) Dec Final S&P Manufacturing PMI: 48.3e v 48.3 prelim.

- 10:00 (US) Nov Construction Spending M/M: 0.3%e v 0.4% prior.

- 10:00 (MX) Mexico Dec Manufacturing PMI: No est v 49.9 prior.

- 10:00 (MX) Mexico Nov Total Remittances: No est v $5.7B prior.

- 10:00 (CO) Colombia Dec PMI Manufacturing: No est v 53.4 prior.

- 11:00 (US) Weekly DOE Oil Inventories.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 12:00 (IT) Italy Dec New Car Registrations Y/Y: No est v -10.8% prior.

- 13:00 (MX) Mexico Dec IMEF Manufacturing Index: No est v 48.3 prior; Non-Manufacturing Index: No est v 50.5 prior.