Yesterday brought very strong and decisive market moves, largely driven by political headlines. The key catalyst was comments from Donald Trump, who stated that a framework of a deal has been formed with Greenland, and that tariffs previously scheduled for February 1st will not be imposed. This was clearly interpreted as risk-on information, and the market reaction followed that narrative precisely. Safe-haven assets sold off, while risky assets such as equities and indices rallied sharply.
Looking at yesterday’s macro calendar, we also had CPI inflation from the UK, which came in higher than expected at 3.4%. While this was an upside inflation surprise, it was largely overshadowed by the broader geopolitical and risk sentiment shift. Today, attention initially turned to Australia, where job data came in better than expected. This release triggered a strong rally in the Australian dollar, which is currently by far the strongest currency in the FX space.
Still ahead, today’s calendar remains heavy. We are waiting for final US GDP, expected at 4.3%, alongside US unemployment claims. In addition, the US core PCE price index is due, with expectations at 0.2%, and CPI inflation from New Zealand is expected at 0.5%. On the earnings front, results from Procter & Gamble and GE Aerospace will be released before the market opens, while Intel will report after the market close.
Referring back to yesterday’s earnings, Johnson & Johnson reported earnings before the market opened. EPS came in line with expectations, while revenue was slightly higher, but the market reaction was very muted, reflecting already well-anchored expectations.
In terms of price action, the upside momentum in indices that started yesterday is continuing into today, carrying through the Asian session and into the early European hours. Risk appetite remains clearly elevated. In currencies, the Australian dollar is leading the market, with additional strength visible in the Canadian dollar and the New Zealand dollar.
Commodities experienced a sharp move lower yesterday, particularly gold and silver, as risk-on flows reduced demand for safe havens. Today, both metals are attempting a recovery. At the same time, oil is pushing higher and is currently trading near weekly highs, supported by improved sentiment and stabilization in demand expectations.
Finally, cryptocurrencies showed a notable shift in behavior. In the first half of yesterday’s session, crypto assets sold off aggressively. However, the second half of the day brought a strong bullish V-shaped reversal. This move could represent the first stage of a broader recovery after several days of sustained weakness. Cryptocurrencies have been under pressure since January 14, and the latest price action opens the door for a potential sentiment shift if follow-through develops.