Market Resilience Amid Political Focus: Analyzing Today's Trends and Tomorrow's Impacts

The market is currently performing exceptionally well. Trump's focus on immigration, the most populist aspect of his policy, is the least practical and has minimal immediate impact on the market. This allows the market to absorb his policies without much disruption. Supported by gradually improving corporate results for Q4 2024, the market is rebounding with a hint of complacency.

Current Market Performance

As of 2025:

ES-50: +6.3%

S&P 500: +3.5%

Nq-100: +4%

This increase may come off as somewhat complacent and risky. However, the positive corporate results and Trump's moderate approach to key short-term market issues (like tariffs, taxes, and deregulation) have boosted investor confidence. The decrease in perceived risk has also stabilized bond yields at acceptable levels:

Bund: 2.50%

T-Note: 4.60%

This stabilization is critical for allowing high liquidity to flow positively into the market, fostering a buying sentiment.

TODAY'S MARKET OUTLOOK

The market is expected to be weaker today, possibly down by -0.2%. Norway is set to maintain its Policy Rate at 4.50% at 10 AM, postponing any rate cuts until March. This decision is likely to go unnoticed but is still worth monitoring.

Key Earnings Reports

General Electric (GE): Expected EPS of $1.041 before the American market opens at 3:30 PM.

Intuitive Surgical: Expected EPS of $1.811 at market close (10 PM).

With 65 companies having reported, the S&P 500's EPS has improved to +8.1%, surpassing the anticipated +7.5%. Notably, Johnson & Johnson (J&J) and Procter & Gamble (P&G) exceeded expectations, while Abbott remained in line with forecasts. In light of the recent gains and limited new information, the market is likely to pause for observation today, without a rise in bond yields, as it awaits significant developments tomorrow.

TOMORROW'S KEY EVENTS

Tomorrow, we will conclude the week with a notable increase in Japan's inflation projected at +3.4%, up from +2.9%. This rise is expected to compel the Bank of Japan (BoJ) to increase its Policy Rate by 25 basis points to 0.50% (with a 70% probability).

Global Economic Indicators

Manufacturing PMIs will be released worldwide, potentially showing slight improvements (all currently in an economic contraction zone, but the US could reach 50 points, indicating expansion).

Major corporate earnings will be reported at 1 PM by Verizon and American Express (Amex).

However, the market is likely to remain subdued as it turns its attention to next week’s significant events, including:

5 of the 7 Magnificent companies reporting earnings.

On Wednesday, the 29th, the Fed is expected to maintain rates at 4.25%/4.50% after reducing them since September.

On Thursday, the 30th, the ECB is anticipated to lower its rate by 25 basis points to 2.75%/2.90%.

The most crucial aspect will be the ECB's potential cautious approach regarding future rate cuts, given the ongoing internal debates and diverse opinions within its council.

Conclusion

Overall, today and tomorrow are likely to be quiet days, with no significant deterioration expected, as focus shifts to the crucial events of next week.