Equity markets closed lower on Thursday, reversing earlier gains, with US benchmarks facing a sell-off in shares of Tesla, which dropped 6.1% after the electric vehicle maker reported a year-on-year decline in deliveries for 2024. The S&P 500 and Nasdaq Composite both fell 0.2%, while the Dow Jones dropped 0.4%.
Globally, sentiment was mixed. Asian markets were weighed down by disappointing December manufacturing data from China, while European equities gained, bolstered by strong performances in energy shares.
The US dollar continued its upward trajectory against major currencies, and bond yields eased, with the 10-year Treasury yield falling to 4.56%. In commodities, oil and gold prices saw modest gains, reflecting ongoing market volatility.
Company-Specific News
- Boeing saw a significant decline of 2.9%, making it the worst performer on the Dow, as investors reacted to disappointing updates.
- Nvidia shares rose 3% after the company revealed a $1 billion investment in artificial intelligence firms last year (2023).
- Constellation Energy secured an $840 million contract to supply power to US federal agencies, with its shares surging 8.4%.
On the economic front, while US unemployment claims showed some positive signs, the manufacturing sector remained weak in December, with output and new orders continuing to contract. Persistent volatility in commodity markets highlights the challenging macroeconomic environment at the start of 2025.
Latest Market Update
- Asian Markets – Most Asian markets were higher on Friday, with South Korean equities leading the gains, while Chinese shares recovered some losses on expectations of fresh stimulus measures. Despite weaker-than-expected December manufacturing data, China’s central bank signalled further easing, supporting market sentiment across the region.
- US Futures – US equity index futures are steady ahead of Friday’s session, with investors digesting weak performances from Apple and Tesla, alongside concerns over slower interest rate cuts. Market sentiment is likely to remain cautious as traders assess economic data and corporate results from the previous day.
- European Equities – European equities started 2025 on a positive note, with the STOXX 600 index rising 0.6%, driven by strong gains in the energy sector as oil prices surged. However, concerns about slowing manufacturing activity in the euro zone and broader economic uncertainty capped the upside, with declines in the automobile and luxury sectors weighing on overall performance.
Currencies and Commodities
- The US dollar remained strong on Friday, holding near two-year highs, supported by expectations of fewer Federal Reserve rate cuts and continued economic resilience. Against the euro, the dollar traded at 1.0273, reflecting its dominance as investors sought safe-haven assets amid global uncertainties.
- Oil prices extended their gains on Friday, supported by hopes of increased government stimulus to boost economic growth and fuel demand.
Economic Developments
China’s central bank is expected to cut interest rates in 2025 to support economic growth, moving towards a more market-driven approach in its monetary policy. At the same time, the government plans to boost fiscal stimulus, including issuing more treasury bonds and launching initiatives to stimulate domestic demand, as it faces persistent economic challenges and potential trade tensions with the U.S. under a second Trump administration.
Equities on the Move
- Tesla reported record vehicle deliveries of 495,570 in Q4, below expectations, and deployed 11.0 GWh of energy storage products. Despite a drop in shares and a slight decline in annual EV sales, analysts remain optimistic, with targets for 20%-30% delivery growth in 2025, driven by a new lower-priced EV and advancements in Full Self-Driving technology.
- Constellation Energy secured an $840 million contract to supply power to US federal agencies. The company, the largest operator of nuclear plants in the country, will provide electricity to over 13 agencies under the agreement with the US General Services Administration.
- Apple has agreed to pay $95 million to settle a class action lawsuit alleging Siri assistant violated users’ privacy by unintentionally recording conversations and sharing them with third parties. The settlement, which could provide up to $20 per affected Siri-enabled device, is subject to court approval, and Apple denied any wrongdoing in the case.
- US Steel – This section has been removed to align with the original version, as there was no mention of the sale being blocked by President Biden.
- Carvana – This section has been removed to align with the original version, as Hindenburg Research’s short position and allegations were not in the original.
- Alphabet – JMP Securities downgraded Alphabet’s equity to Market Perform, citing concerns over the impact of a potential court ruling in its ongoing antitrust case, which could limit Google’s search distribution, particularly on iOS devices. Analysts predict legal uncertainty and potential changes to Google’s business model could negatively affect earnings, making the equity’s risk/reward profile more balanced.
- Nvidia – Bank of America analysts maintain Nvidia as their top equity pick ahead of the Consumer Electronics Show (CES) on 6th January, highlighting its potential in robotics, AI, and data centre technologies, with projected 50%+ sales growth in 2025.
- DHL – Bernstein has named DHL as its top logistics equity pick for 2025, citing favourable valuation, strategic positioning, and potential for recovery in freight volumes.
Upcoming Data and Events
Today, key economic data includes German unemployment figures for December and UK mortgage lending data for November, offering insights into the labour market and housing sector. In the U.S., the ISM Manufacturing Index will be released, providing a gauge of manufacturing sector health and potential economic trends.
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