U.S. Indices saw broad-based weakness on Tuesday (SPX -1.1%, DJIA -0.4%, RUT -0.7%) with underperformance in the Nasdaq 100 (-1.8%) as macro moves were seen in wake of a hot US ISM Services and JOLTS report. Recapping the data, the latter rose above the top end of of analyst forecast ranges, while ISM Services topped, accompanied by a notable upside in the prices paid, and with employment little changed. As such, the data took T-Notes to lows and pushed the Dollar higher, reversing earlier session troughs, to the detriment of all G10 FX peers. In addition, Antipodeans pared European strength, while the Swiss Franc was further weighed on after being hit in the European morning on soft core CPI. Meanwhile the Canadian Dollar was also under pressure following President-elect Trump comments that something will have to be done with Canada and Mexico trade. Elsewhere, the US 10 Year Treasury Auction was soft with similar dynamics to the 3 Year results on Monday, albeit garnered little market reaction. The crude complex saw slight gains and managed to hold onto its morning strength from initial Dollar weakness, despite a reversal in the Dollar after a strong ISM Services report. Sectors were largely in the red with only Energy and Health in firmer territory, buoyed by crude gains and strength in vaccine names, respectively. Technology and Consumer Discretionary were the clear laggards amid broad based weakness in Mag7 names. Apple (AAPL) (-1.1%) and Tesla (TSLA) (-4.1%) were both downgraded, while Nvidia (NVDA) (-6.2%) pared its initial pre-market strength in wake of CES 2025. ISM Services PMI for December lifted to 54.1 from 52.1, and above the expected 53.3. New orders and business activity rose to 54.2 (prev. 53.7) and 58.2 (prev. 53.7), respectively, while the inflationary gauge of prices paid disappointingly soared to 64.4 from 58.2. Employment was more-or-less unchanged at 51.4 (prev. 51.5). Inventories lifted, but remained sub-50, while backlog of orders and imports dipped, whereas new export orders and supplier deliveries lifted back into expansionary territory. The report added that the past relationship between Services PMI and the overall economy indicates that the headline corresponds to a 1.7 point increase in real GDP on an annualised basis. In addition, the survey adds, many industries noted that end-of-year and seasonal factors were helping drive business activity or impact inventory management. Some of the increased business activity seems to have been driven by preparation for demand in the new year, or risk management for impacts from port strikes and potential tariffs. Furthermore, the survey states, there was general optimism expressed across many industries, but tariff concerns elicited the most panellist comments. Headline JOLTS in November rose to 8.1 million from 7.74 million, and above the consensus 7.7 million – it was also above all analyst forecasts. Within the report, the quits rate eased to 1.9% from 2.1% while the vacancy rate rose to 4.8% from 4.7%. On the headline, Oxford Economics point out that the South accounted for 75% of the increase in job openings, and the increase in that region might be an extension of the rebound following the September drop due to Hurricane Helene. Regarding the drop in the quits rate, the consultancy notes it is consistent with the slower pace of hiring and signals further deceleration in wage growth. OxEco also note the ratio of openings to unemployed workers ticked up to 1.11 from 1.10 over a three month moving average basis, which is still below pre-pandemic levels and therefore does not signal a renewed tightening in the labour market. Overall, OxEco note this is unlikely to alter the Fed’s conviction that a slower pace of normalising interest rates in 2025 is appropriate. The US deficit widened to 78.2 billion in November, from the prior deficit of USD 73.6 billion, deeper than the expected deficit of 78 billion. Exports rose by USD 7.1 billion to USD 273.4 billion, while imports rose USD 11.6 billion to USD 351.6 billion. Exports were driven by a USD 6.2 billion increase in exports of goods, while exports of services rose by 0.9 billion. Imports of goods rose by USD 11.6 billion, while imports of services rose by less than 0.1 billion. Analysts at Oxford Economics highlight that despite the widening of the deficit, net trade is on track to be slightly positive or neutral to GDP growth in Q4, the first time since Q4 2023, due to imports seeing a modest decline while exports have managed a small increase. However, the desk acknowledge there is uncertainty on this with the potential for another dockworkers strike in mid-January. Nonetheless, looking ahead uncertainty on trade policy from the Trump administration is the greater risk. Washington Post reported that Trump is to pare back his aggressive trade policy, but President-elect Trump denied this. Elsewhere, Oil closed 1% higher while despite a weaker Dollar, Gold ended Tuesday with a gian of 0.5%.
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For anyone following my Platinum Service it made 430 points yesterday and is now ahead by 241 points for January after closing December with a gain of 1997 points after closing November with a gain of 3049 points having finished October with a gain of 2179 points. September saw a gain of 4402 points following a 301-point loss for August after closing July with a gain of 1918 points while June closed with a gain of 2074 points, having made 1843 points in May. The Platinum Service made 4010 points in April after ending March with a gain of 2113 points. February closed with a gain of 1606 points, after closing January with a gain of 3675 points. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 after closing September with a small gain of 228 points, after finishing August with a gain of 1485 points, following a small gain of 285 points gain in July, after closing June with a gain of 2683 points. May closed with a gain of 3205 points. April saw a gain of 3354 points while March closed with a gain of 6168 points. The Platinum Service made a record 9619 points last October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1900 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
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