On Monday, S&P 500 futures saw a slight increase as investors anticipated upcoming jobs data in a shortened trading week. This week, which concludes the first five trading days of January, began with some uncertainty and ongoing concerns about the Federal Reserve’s interest rate projections. The New York Stock Exchange will be closed on Thursday to honor the passing of former President Jimmy Carter. The December jobs report, scheduled for release on Friday, is expected to be one of the final significant data points before the Federal Reserve’s meeting at the end of the month.

European markets edged higher on Monday, driven by gains in chip firms, despite a volatile start to the year for stocks. The day was relatively quiet in terms of data and earnings releases, with investors awaiting Spanish business activity and German inflation figures. Dutch chip companies were standout performers, with ASML rising 4.2%, ASM International up 4.3%, and BE Semiconductor Industries gaining 2.3%. Additionally, Taiwan Semiconductor Manufacturing Co. saw a robust performance in Asia, with its Taiwan-listed shares climbing 4.65% to reach an all-time high.

Asia-Pacific markets experienced a mixed performance as investors evaluated business activity data from several key economies in the region. China’s central bank announced over the weekend its plan to adopt a “moderately loose” monetary policy in 2025 to stimulate growth. This announcement coincided with a slight decline in China’s CSI 300 index by 0.16% and a 0.48% drop in Hong Kong’s Hang Seng index. Japan’s markets also saw declines, with the Nikkei 225 falling by 1.47% and the Topix index decreasing by 1.02%. Conversely, South Korea’s markets showed positive movement, with the Kospi rising by 1.91% and the small-cap Kosdaq increasing by 1.73%.

Economic Calendar

Earnings Calendar

Notable reports for Monday before the bell include CMC. After the bell reports there are no notable reports today.

News & Technicals’

On Sunday, President Joe Biden signed the Social Security Fairness Act, a bipartisan law aimed at increasing Social Security benefits for public sector workers such as teachers, firefighters, and police officers who also receive pension income. This legislation repels the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), which have been in effect for over 40 years. As a result, more than 2.5 million Americans will receive a lump sum payment of thousands of dollars to compensate for the shortfall in benefits they should have received in 2024, according to Biden.

Taiwan’s Foxconn, the world’s largest contract electronics manufacturer, exceeded expectations by reporting its highest-ever revenue for the fourth quarter. The company’s revenue surged by 15.2% to reach 2.13 trillion New Taiwan dollars ($64.72 billion), according to a statement released on Sunday. This impressive growth was driven by robust demand for AI servers, which bolstered the performance of Foxconn’s cloud and networking products division. Notably, Foxconn’s clientele includes prominent AI chip firm Nvidia, contributing to the strong revenue figures.

Volkswagen and Xpeng have agreed to open their respective super-fast charging networks to each other’s customers in China, as part of a newly signed memorandum of understanding. The two companies will also explore the possibility of co-branded super-fast charging stations. This collaboration is part of Volkswagen’s broader strategy to strengthen its presence in China, which includes investing in Xpeng and launching an aggressive schedule for electric vehicle releases.

On Monday, U.S. Treasury yields increased as investors looked forward to a series of key jobs data releases throughout the week. The 10-year Treasury yield rose by over 1 basis point to 4.614%, while the 2-year Treasury yield saw a slight increase of less than 1 basis point, reaching 4.281%. This movement in yields reflects investor anticipation of important jobs data in another shortened trading week.

We have a shortened trading week due to the closure on Thursday and the upcoming jobs data are likely crucial to future direction of the indexes. As the big push in big tech this morning, keep a close eye on the T2101 indicator.  We need to see an increase in breadth to accompany the move or the bears could whipsaw the gap open. 

Trade Wisely,

Doug