- Market Round Up: Global equity markets traded mixed yesterday, pulling back from the solid new year rally. The S&P500 slipped 0.3%, despite the Nasdaq increasing 0.2%. The EuroStoxx 600 slid -0.05%. US Pharma and Biotech stocks gained +2.0% whilst the S&P Utilities Index fell 2.6%, its worst drop since April 4th as traders sold out of power producers.In Asian markets this morning, it has been a relatively tough start to the day with Japan down 0.8%, Hong Kong down 1.2% and China down 0.8% as tensions between China and Japan remain elevated after China launched an anti-dumping probe into certain products. Markets were also weakened after a Reuters report indicated that Nvidia is requiring full upfront payments for Chinese customers seeking to buy its H200 chips. The weak sentiment and increased geopolitical tensions have also pushed US futures lower this morning
- Day Ahead and Market Drivers: Equities: Looking at the day ahead, the main focus today will be on the release of initial jobless claims data for the week ended January 3rd, with estimates suggesting a rise to 212k from 199k, which if accurate would add further strain to the labour market. Continuing claims will also be released. In Europe German factory orders came in much stronger than expected for November at 5.6%, vs estimates of -1.0% which underscores a potential recovery in Europe’s largest economy.Following CostCo’s solid sales data yesterday, several large UK retailers, including Tesco (Q3 2026 Sales Release), M&S (Q3 2026 Sales Release) and Greggs (Q4 2025 Sales Release) will post updates today, providing further clarity on UK consumer spending. A French peer company of ICG called Getlink S.E. will also report its December 2025 shuttle data today. More interestingly the historic correlation between both stocks price movement is 0.62.
- Stocks in focus: Shell (Overweight PT 3200p +21% upside) – release of pre-results update, offering guidance on production and operations prior to results, which will be published on 5th February. Diageo (Overweight PT 2250p +42% upside) – Commentary relating to weak global sales data in the wine and spirits market over the Christmas period and a legal case taken against the company.
- Bonds: Bond markets have continued to rally strong so far this year mainly led by the long end of the curve. Lower inflation data in Europe keeps hope of a potential rate cut in 2026, with European yields dropping by 2bps over the day. UK gilts also strongly outperformed falling 6bps thanks to increased supply. There has been a huge increase in global supply YTD, totalling $245bn. Some noticeable auctions today include a 1.15% 10-year linker in Spain, and a 0.5% 15 year note in France.
- Commodities: In the commodities space, Crude oil fell 2.0% yesterday after the US announced plans to begin extraction of oil reserves in Venezuela. However, this morning it is up 0.4%. Gold also slipped 0.85% over the course of yesterday despite growing geopolitical tensions as traders wait for the annual rebalancing of commodity indices over the next few days
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