The stock market's lackluster beginning to 2025 isn't surprising, as we anticipated a more cautious approach. Citadel, a major hedge fund, is advising its investors to take profit.
While 2024 saw impressive gains, we expect 2025 to be more challenging, with potentially slower growth and less predictable market movements. This initial sluggishness suggests our cautious outlook might be on the right track. However, we'll need to wait until next week to get a clearer picture of the market's direction. Key indicators to watch include European inflation (projected to rebound to 2.4%), US employment figures, and trading volume.
The US dollar has already strengthened against the Euro, reaching 1.027/€, and could potentially reach parity by the end of the year. Beyond next week's European inflation report, we'll be closely watching US inflation data on the 15th, Trump's inauguration on the 20th, and the Fed and ECB meetings on the 29th and 30th. January is likely to be a period of uncertainty and potential weakness in the market.
Today's economic releases, such as German unemployment figures and the US ISM Manufacturing Index, won't significantly impact today's trading. While US futures are showing a slight rebound, European futures are reflecting yesterday's bearish close in New York. It's difficult to predict the market's direction with certainty, but based on current data and trends, the first two sessions of 2025 could see a slight decline in stock prices, rising bond yields that stabilize at current levels, and continued appreciation of the US dollar.
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