Daily Markets: Investors Eye Escalating Red Sea Tensions, December PPI and Bank Earnings


Today’s Big Picture

Asia-Pacific equity markets finished the day modestly lower except for India’s SENSEX which gained 1.18%, and Japan’s Nikkei which extended gains by 1.50% to close out the week at levels not seen since 1990, boosted today by the parent of global retailer Uniqlo, Fast Retailing Co. (FRCOY). Australia’s ASX All Ordinaries ended the day close to flat, down 0.08%, China’s Shanghai Composite declined 0.16%, Taiwan’s TAIEX fell 0.19%, Hong Kong’s Hang Seng gave back 0.35%, and South Korea’s KOSPI closed 0.60% lower in a broad decline led by Industrial Service, and Finance names.

European markets are up across the board except for Italy and Turkey in midday trading and US equity futures are pointing to a modestly lower open as investors grapple with renewed Middle East tensions. 

Following yesterday’s hotter-than-expected December Consumer Price Index data, this morning’s focus will be on the December Producer Price Index (PPI) as well as the start of big bank earnings with results due from JPMorgan (JPM)Bank of America (BAC) and Citigroup (C). Much like yesterday’s CPI report, the headline PPI for December is expected to rebound to +1.3% from November’s 0.9% print. Core PPI for the last month of 2023 is expected to dip to 1.9% YoY from 2.0% the month before, but the market will be watching for a hotter print just like we saw the December core-CPI. 

Given the leading relationship between the PPI and CPI data, final December prints above consensus expectations will be another blow to market rate cut expectations that still call for six rate cuts this year even after yesterday’s CPI report. Bank earnings and what they say about lending activity, consumer spending and mortgage activity will offer another view on the vector and velocity of the economy.

With equity markets closed on Monday, Jan 15, the next edition of Daily Markets will be published on Tuesday, Jan 16.

Data Download

International Economy

China’s consumer prices fell by 0.3% YoY in December, marking the third straight month of decline. However, core consumer prices, which exclude prices of food and energy, increased by 0.6% YoY in December, the same as in the previous two months. China’s producer prices, shrank by 2.7% YoY in December, softer than the 3.0% drop in the previous month and a tad larger than the expected 2.6% decline. 

Japan’s Economy Watchers Survey Outlook decreased to 49.10 points in December from 49.40 points in November. For comparison, the outlook averaged 46.49 between 2001- 2023.

Domestic Economy

Federal Reserve Bank of Cleveland President Loretta Mester said it was premature to consider cutting interest rates as soon as the U.S. central bank’s March meeting, emphasizing that fresh inflation data suggests policymakers have more work to do. Chicago Fed President Austin Goolsbee also chimed in saying he thinks the Fed needs to see more data to confirm any rate cut plans. Those comments set the stage for Minneapolis Fed President Neel Kashkari, who speaks shortly after today’s market open. 


Equities reacted as expected to yesterday’s inflation update as all sectors except Energy rose 0.26% and Technology (0.51%) posted gains. Technology was buoyed by Microsoft (MSFT)Broadcom (AVGO), and Salesforce (CRM), which combined to contribute to 55% of the sector’s results. Aside from Utilities which fell 2.3% and Real Estate which dropped 0.93% the remaining sectors were modestly lower. Broad indexes reflected traders’ mood as the Dow closed essentially flat eking out a 0.04% gain the Nasdaq Composite (0.00%) was actually flat, and the S&P 500 declined 0.07% while the Russell 2000 closed 0.75% lower.

On their first day of trading, Bitcoin ETFs saw about $4.6 billion in flows, with half of that activity focused on the $22 billion $GBTC, the fund run by the group (Grayscale) that successfully sued the SEC last year and set this whole ball rolling. Our take is that the first day’s activity was some repositioning of existing Bitcoin exposure to lower-cost funds. Once the first few days of repositioning have settled, we will start to see if the 10-year wait (and decade of lawyers fees) was worth it for these issuers and investors alike.

While two days don’t establish a bona fide trend, Tesla (TSLA) continued to lag its Magnificent Seven peers, down 2.87% after the company cut prices yet again, prompting another mention of the “Splendid Six”. 

Here’s how the major market indicators stack up year-to-date: 

  • Dow Jones Industrial Average: 0.06%
  • S&P 500: 0.22%
  • Nasdaq Composite: -0.27%
  • Russell 2000: -3.52%
  • Bitcoin (BTC-USD): 10.57%
  • Ether (ETH-USD): 14.27%

Stocks to Watch

Bank of America (BAC), BlackRock (BLK), BNY Mellon (BK), Citigroup (C), Delta Air Lines (DAL), JPMorgan Chase (JPM), United Health (UNHand Wells Fargo (WFC) are expected to release quarterly earnings before equities begin trading later this morning. 

Pre-market breadth is lighter today as 206 names in the S&P 500 have traded hands so far this morning with roughly even 102 gainers and 104 decliners. Names advancing this morning include VICI Properties (VICI) and Costar Group (CSGP) while Tesla (TSLA) (more below) and Veralto Corp (VLTO) are coming under pressure. 

Oil prices are moving higher this morning following escalating tensions in the Middle East. The US and its allies launched joint military strikes against Houthi rebels in Yemen aimed at halting their campaign of attacks on shipping traffic in the Red Sea. In response, Houthi rebels have said they remained undeterred from launching more attacks in the region. Also trading up on these developments are shipping stocks, including Nordic American Tankers (NAT), Global Ship Lease (GSL),  ZIM Integrated Shipping (ZIMand Golden Ocean Group (NDAC). 

Citing a lack of components due to shifts in transport routes because of attacks on vessels in the Red Sea, Tesla (TSLA) shared it will suspend most car production at its factory near Berlin from January 29 to February 11.

The US Environmental Protection Agency is seeking meetings this month with AT&T (T) and Verizon (VZ) as it continues to review the potential impact of lead-containing telecommunications cables.

Popular messaging service company Discord shared it will lay off 17% of its workforce, roughly 170 employees. The company joins the growing list of tech companies, including Amazon (AMZN), Alphabet (GOOGL), Unity Software (U), and Trend Micro (TMICF) that have recently announced layoffs. 

BlackRock (BLK) announced it is buying Global Infrastructure Partners for about $12 billion in cash and stock. BlackRock also announced it will embed its ETF and Index businesses across the entire firm with the creation of a new strategic Global Product Solutions business.

ABB (ABBNY) has acquired Sevensense, a Swiss start-up specializing in AI-based navigation technology for industrial robots.


Readers who want to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

We’ve made it to the end of the second trading week of 2024, which means there are no companies expected to report quarterly results after equities stop trading today. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar

On the Horizon

Monday, January 15

  • Japan: Producer Price Index, Machine Tool Orders – December
  • Eurozone: Industrial Production – November

Tuesday, January 16

  • Eurozone: Consumer inflation Expectations – November
  • Eurozone: ZEW Economic Sentiment Index – January

Wednesday, January 17

  • China: Retail Sales, Industrial Production, House Price Index – December
  • China: GDP – 4Q 2023
  • Eurozone: Inflation Rate – December
  • US: Weekly MBA Mortgage Applications 
  • US: Retail Sales – December 
  • US: Import/Export Prices – December 
  • US: Industrial Production & Capacity Utilization – December 
  • US: Business Inventories – November 
  • US: NAHB Housing Market Index – January

Thursday, January 18

  • Japan: Machinery Orders – November
  • China: Foreign Direct Investment – December
  • US: Weekly Initial & Continuing Jobless Claims 
  • US: Housing Starts & Building Permits – December
  • US: Weekly EIA Natural Gas Inventories 
  • US: Weekly EIA Crude Oil Inventories 

Friday, January 19

  • Japan: Inflation Rate – December
  • US: Existing Home Sales – December 
  • US: The University of Michigan Consumer Sentiment Index (Preliminary) – January 

Thought for the Day

“You must expect great things of yourself before you can do them.” ~ Michael Jordan


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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