Market Update 20/01/2025

Wall Street showed strong performance again on Friday, with the Nasdaq closing up 1.5%, the S&P 500 rising 1.0%, and the Dow Jones gaining 0.8%. The U.S. 10-year Treasury yield increased by 5 basis points to 4.28%, while oil fell 0.9% to $78 per barrel.

Asian stock markets closed mixed on Friday, with the Nikkei down 0.3%, while the Hang Seng and Shenzhen indices rose 0.3%. The ASX fell 0.2%, mainly due to a 1.0% decline in the financial sector.

U.S. housing starts in December increased by 15.8% to 1.499 million units, far exceeding the expected 3% growth to 1.327 million. Building permits decreased by 0.7% to 1.483 million, also better than the expected 2.2% contraction to 1.460 million. Later, U.S. industrial production for December showed growth of 0.9%, against expectations of 0.3%, while capacity utilization was 77.6%, compared to the expected 77.0%. The dollar strengthened further after the data release, with AUD/USD falling to a low of 0.61645, NZD/USD dropping to 0.5564, and EUR/USD declining to 1.0266.

On the other hand, China’s Q4 GDP was released, showing growth of 5.4% (expected 5.0%). Subsequently, news emerged of a phone call between President-elect Trump and President Xi, described as “very good, discussing various topics including trade balance.” Risk assets reacted positively to this news, with AUD/USD rebounding from its low to a high of 0.62265, NZD/USD reaching 0.56145, and EUR/USD breaking above 1.0330.