Alpha Edge Report

Category: Economic Indicators

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Global Markets in Flux: How January 27, 2025, Shaped Investor Sentiment
Market Insights: January 27, 2025

The financial markets on January 27, 2025, painted a picture of complexity and divergence. Investor sentiment remained divided, swayed by a series of macroeconomic data releases, sector-specific movements, and the anticipation of crucial central bank meetings. The mood was one of cautious recalibration, as markets responded to shifting economic indicators and sectoral pressures.

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A Mixed Economic Backdrop

In the eurozone, optimism bubbled up as stronger-than-expected PMI data pushed government bond yields higher. Across the Atlantic, however, the mood was more subdued. U.S. Treasury yields dipped, driven by disappointing consumer sentiment and underwhelming services PMI readings. These contrasting signals added to the global uncertainty, as markets grappled with how inflation and monetary policy might evolve in the coming weeks.

Meanwhile, global equity markets broke an eight-day winning streak, weighed down by fears over inflation and tightening central bank policies. With a data-heavy week ahead—including the Federal Reserve’s rate decisions, PCE inflation data, and GDP reports—investors adopted a wait-and-see approach.

The Tech Sector Takes a Hit

The tech sector was among the hardest hit, facing pressures on multiple fronts. A major disruptor was China’s DeepSeek AI model, which intensified competitive concerns and triggered a selloff in leading tech stocks such as Nvidia and ASML. This wasn’t just a story of international competition; market analysts began to reassess AI-related spending, hinting that the industry’s future investments might become less capital-intensive.

Adding to the woes were macroeconomic pressures, as rising U.S. Treasury yields and inflation fears fueled a more cautious investment climate. Together, these factors created a perfect storm that rattled confidence in one of the market’s most prominent growth sectors.

Commodity Markets: A Tale of Contrasts

Commodity markets reflected a similarly divided narrative. Crude oil prices tumbled, slipping 4% to $74.29 as concerns over supply-demand dynamics took center stage. The drop was a sharp reversal, dampening recent optimism in the energy sector.

In contrast, precious metals offered a glimmer of resilience. Gold consolidated near historic highs of $2,790/oz earlier in the week before pulling back slightly to $2,735/oz. This performance underscored gold’s enduring appeal as a hedge against inflation and a weak U.S. dollar. Silver, however, lagged behind, with only modest gains since mid-2024, while copper traded flat amidst a neutral global growth outlook.

Cryptocurrencies: Caught in the Crossfire

The cryptocurrency market struggled to find its footing, mirroring the turmoil in tech stocks. Bitcoin, once soaring above $100,000, fell by 5% to $98,432, dragging the broader crypto market down by nearly 10%. Several factors played into this decline: the tech selloff, profit-taking by traders, and mixed reactions to President Trump’s latest crypto policies.

Though the SEC’s reversal of a controversial crypto accounting rule initially buoyed sentiment, it wasn’t enough to counterbalance concerns over regulatory uncertainty and a risk-off environment. Liquidations of over $250 million in long positions further amplified the downturn.

Forex Markets: Subtle Shifts in the Dollar

The U.S. Dollar Index (DXY) remained subdued, reflecting broader weakness as investors sought safety in bonds and the Japanese Yen, which surged by more than 1%. The Euro gained ground against the dollar, closing at 1.0490 on positive sentiment. Meanwhile, USD/JPY fell below key support levels, and GBP/USD and AUD/USD both edged higher, buoyed by technical momentum and a weaker greenback.

A Week of Uncertainty Ahead

As the markets move into the next phase, the focus remains firmly on the decisions of central banks and the release of pivotal economic data. With inflation and monetary policy at the forefront of investor concerns, the coming days are likely to provide greater clarity—or sow even more uncertainty.

The story of January 27, 2025, is not just one of numbers and indices; it’s a snapshot of a global market recalibrating to new realities. From AI-driven tech shifts to evolving monetary policies and the ever-present push-pull of commodities and currencies, the markets continue to navigate a path through complex and interconnected challenges. Investors will need to remain agile, as the next chapter unfolds.

Financial Market Summary for January 27, 2025

General Market Overview

Investor sentiment was mixed. Eurozone government bond yields rose on better-than-expected PMI data, while U.S. Treasury yields declined due to disappointing consumer sentiment and services PMI. Global stock markets saw a decline after eight days of gains, influenced by a tech selloff and upcoming central bank meetings that could shape future monetary policies.

Sector Performance
1. Technology:
U.S. tech stocks experienced pressure due to competition from China’s DeepSeek AI model.

Adjusted AI investment expectations and inflation concerns reduced investor confidence.
1. Commodities:
Oil: Prices fell by 4% to $74.29 amid supply-demand concerns.

Metals: Gold approached an all-time high of $2,790/oz but dropped to $2,735/oz. Silver and copper remained subdued due to neutral global growth outlooks.
1. Cryptocurrencies:
Bitcoin dropped 5% to $98,432 amidst broader cryptocurrency market losses of nearly 10%. Factors included tech stock declines, profit-taking, and regulatory uncertainty.

Forex Movements

DXY (Dollar Index): Flat, reflecting weakness as investors favored bonds and Yen.

EUR/USD: Strengthened to 1.0490 due to positive euro sentiment.

USD/JPY: Declined below key support levels.

GBP/USD & AUD/USD: Showed modest gains amid broader dollar weakness.

Key Drivers
1. Economic Signals: Inflation concerns and varying regional data.
2. Central Bank Speculation: Anticipation of Federal Reserve and other central bank decisions.
3. Market Adjustments: Recalibration of tech and crypto expectations.
Overall, markets reflected cautious sentiment driven by inflation, regulatory uncertainty, and a recalibration of expectations across sectors.

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January 27, 2025
Short-Term Energy Outlook, January 2025
The following is a brief summary and takeaway of the EIA (Energy Information Administration) Short-Term Energy Outlook (STEO) January publication.

Outlook for Oil Prices:
- Near-term (2025): Prices may remain stable or decline slightly after Q1 2025 due to stock builds and slower demand growth.
- Mid-term (2026): Brent oil prices are forecasted to drop significantly, driven by oversupply and reduced growth in global demand, especially from OECD countries.
Reasons for OPEC Actions:
- Stabilizing market share: OPEC+ is increasing output incrementally to meet anticipated demand growth while maintaining influence over prices.
- Balancing commitments and capacity: Despite higher output, production will likely fall short of announced targets due to internal constraints and deliberate measures to prevent excessive price declines.
- Strategic responses to competition: OPEC’s actions reflect an effort to remain competitive against non-OPEC producers like Brazil, Canada, and Guyana, which are contributing significantly to global supply growth.
Takeaway:
- Global oil production is projected to grow moderately: OPEC+ production is expected to rise annually, though not to the full extent of announced targets. Non-OPEC+ nations will also see steady increases, driven by Brazil, Canada, and Guyana.
- Market balance pressures: While output grows, Brent oil prices are expected to drop after Q1 2025 due to stock builds and reduced OECD demand growth in 2026.
- US oil output nearing a plateau: Growth in tight oil regions like the Permian Basin is barely offsetting declines elsewhere, leading to marginal increases by 2026.
January 21, 2025
US OIL Update January 15th, 2025

With today’s Core CPI printing at 0.2%, cooler than expected, markets may interpret this as the FED pausing rate hikes for now. However, is this enough to dampen the prevailing narrative and curb discussions of further rate increases? While it doesn’t provide a clear green light for a “risk-on” environment, markets reacted positively. Stocks soared, and banks reported strong earnings.

US oil prices followed suit, with the weekly downtrend channel resistance currently being tested. Near-term factors, as outlined in our Alpha Edge Report (Jan 13), continue to support the daily bullish case. Notably, oil remains within a monthly consolidation triangle, with key support at $66. Both the monthly and weekly RSI momentum indicators are bullish. Price has already closed above the daily resistance level of $78 on the 4H chart. A daily close above this level would shift the focus to the next target of $80. We remain bullish on oil in both the near and mid-term outlooks.

Trading Strategy

Ideally, we would prefer a retracement to the low $75 range, as entering long positions from $76–$78 offers limited value. Having exited our previous long trade from $68 to $75, we remain sidelined for now. Our next entry will be contingent on a strong bullish daily close above $79.24.

Key levels to watch:

For bulls: $80, $84, $85, and $88.

For bears: $76 and further down to $71.

January 15, 2025
Market Volatility Increases Pre Inflation Data
A Market on Edge

Following the Non-Farm Payrolls (NFP) report on January 10, 2025, financial market sentiment has shifted notably. U.S. Treasury yields surged as investors reacted to stronger-than-expected job growth, raising concerns about persistent inflation and the Federal Reserve’s interest rate policies. In the UK, investor sentiment turned negative due to rising gilt yields linked to specific fiscal challenges and inflationary pressures from recent budget measures. Overall, markets are bracing for potential volatility as economic data influences central bank strategies amid a backdrop of heightened uncertainty.

Post-NFPs on January 10, 2025, the stock market reacted negatively despite positive job growth data. Investors reassessed the likelihood of central bank rate cuts, leading to higher government bond yields, particularly affecting high-valuation sectors like technology. The Nasdaq fell by 2.3%, while defensive sectors like utilities performed better. Overall, the Dow Jones and S&P 500 also declined by 1.9% each, reflecting a cautious outlook as markets adjusted to the implications of the labor report on monetary policy expectations.

As of January 13, 2025, the CBOE Volatility Index (VIX) is at 19.54, having increased by 8.1% from the previous day. This rise indicates heightened market volatility expectations, often referred to as the “fear gauge.” A VIX level above 20 typically suggests increased uncertainty among investors regarding future market movements. Therefore, the current VIX reading indicates a notable level of anticipated volatility in the market today.

Sector Spotlight: Oil, Gold, and Crypto

After the January 10th Non-Farm Payrolls (NFP) report, which indicated a stronger-than-expected job growth of 256,000, sectors like oil, gold, and crypto experienced notable movements:
- Oil: Prices surged, reaching four-month highs due to increased demand and inflation concerns. Some market commentators noted that this positive trend was supported by expectations of economic growth in China and rising winter fuel demand. However, US pressure on Iran remains a dominant narrative, translating to a near-term bullish case for oil.
- Gold: The performance of gold remained buoyant but contained within its weekly consolidation triangle, acting as a weak hedge against oil market fluctuations.
- Crypto (Bitcoin): We continue to see Bitcoin as a risk asset rather than a safe haven. Thursday’s sell-off and muted bounce post-NFP kept Bitcoin within its weekly consolidation range of 91,000 – 104,000.
Forex Performance: A Dollar Surge

Following the January 10th NFP report, the forex markets reacted significantly:
- US Dollar (DXY): The DXY surged to its highest level since November 2022, nearing 110.00, driven by strong job growth and reduced expectations for Fed rate cuts in 2025.
- EUR/USD: The euro weakened against the dollar, approaching multi-year lows and parity as the dollar’s strength overshadowed any positive domestic data from Europe.
- USD/JPY: The USD/JPY pair saw modest gains, reflecting expectations of potential policy shifts from the Bank of Japan due to strong US labor market data.
Looking Ahead: CPI Inflation Data

Analysts are cautiously optimistic about market performance in the coming days, particularly with the upcoming CPI inflation data. Expectations are for modest inflation, with forecasts suggesting a CPI of around 2.4% for 2025, down from 2.9% in 2024.

The strong labor market could bolster the US dollar further, impacting forex rates like EUR/USD and USD/JPY negatively. In the stock market, analysts predict continued gains but at a slower pace than in 2024, with a projected S&P 500 target of 6,500, reflecting a roughly 9% increase. However, potential inflationary pressures from incoming policies could introduce volatility.

Trading Strategies

Indices
- SPX Weekly up-trend still intact. Price is currently at dynamic support with the 25 EMA and mid Bollinger Band circa 5827. If the CPI print comes in unfavourably, we see price targeting support around 5650 just off the 50 EMA. Near term BEARISH. Long term BULLISH.
- NASDAQ Long term up trend intact as long as we remain above 18000. As last week’s market moves continue we see price holding at dynamic support around 26800 — 50 EMA and mid Bollinger Band. However divergence on the weekly RSI is more prominent. Underlining the near term bearish case as momentum fades. Near term BEARISH. Long term BULLISH.
Commodities
- US OIL Weekly down trend intact. But previously mentioned near term factors maintain the daily bullish case. Note OIL is still contained within a monthly consolidation triangle with support at 66. Monthly and weekly RSI momentum is bullish. Price has already closed above daily resistance at 78 on the 4H chart. A daily close above this level brings the next target of 80 in focus. We remain BULLISH on OIL near term and mid term.
- Gold: As already mentioned, GOLD’s performance remains buoyant, but contained within its weekly consolidation triangle. Near term support is 2600 and resistance at 2730. Price is at multi-year highs we see it remaining BULLISH long term with continued market uncertainty and volatility. Near term RANGE BOUND as price navigates this weekly consolidation.
- Crypto (Bitcoin): Again, Thursday’s sell off and muted bounce post NFPs, kept BItcoin within its weekly consolidation range of 91,000 – 104,000. We have been monitoring this consolidation pattern in BTC and altcoins since mid-December. Failure to maintain 104,000 and strong RSI divergence have kept us bearish. Next targets for BTC is 80,000. Above the last consolidation and dynamic supports 50 EMA and mid Bollinger. Near term BEARISH. Long term BULLISH.
Forex
- US Dollar (DXY): Dollar holla. As noted in our post NFP summary above, USD remains strong across the board. Price and RSI momentum are bullish on all charts including weekly and monthly with healthy pullbacks. Price is on course for all time highs at 114. Near term BULLISH. Long Term BULLISH.
- EUR/USD: Again multi-year lows and parity in sight with USD strength. Near term BEARISH. Long term BEARISH.
- USD/JPY: The pair is at multi-year highs and the only negative we see is possible near term consolidation as price looks to attack at high 161s. Weekly range. Support 140.50 to 160 resistance. So as RSI momentum drops, buy any dips. Near term RANGE. Long term BULLISH.
January 13, 2025
Market Caution Amid Tech Selloff, Inflation Fears & Oil Volatility January 8, 2025

Market Pulse: Navigating the Turbulence of January 8, 2025

As the financial markets kicked off the second week of 2025, the mood among investors could best be described as cautious. The year had barely begun, yet volatility seemed to have already made itself at home. The source of the jitters? A sharp selloff in the tech sector, lingering inflation fears, and rising Treasury yields.

On this particular day, futures for the Dow Jones and S&P 500 edged lower, reflecting investor anxiety. With the Federal Reserve signaling a 95% likelihood of maintaining its current rate policies, hopes for a near-term pivot were all but extinguished. Treasury yields, climbing past 4.7%, underscored persistent inflation concerns and left traders bracing for another rocky session. Adding to the suspense, critical job market reports and the release of Federal Reserve meeting minutes were on the day’s agenda.

Tech Takes a Hit

The tech-heavy Nasdaq bore the brunt of investor unease on January 7. A strong ISM services index reading hinted at continued economic expansion and, alarmingly, rising prices. For inflation-wary investors, this spelled trouble. Concerns swirled that the Federal Reserve might maintain its hawkish stance on interest rates, keeping borrowing costs elevated and dampening growth.

Big names in tech took a beating. Nvidia plummeted 6.2%, while Tesla slid 4%. These declines dragged the Nasdaq down nearly 2%, sending ripples across the broader market. The selloff served as a stark reminder that even giants are not immune to the broader economic narrative.

Commodities Hold Their Ground

While the tech sector stumbled, commodities painted a more nuanced picture.

Oil: Early in the week, crude prices enjoyed a modest rally, buoyed by optimism surrounding economic recovery in the U.S. and China. Brent crude reached $75.48 per barrel, and WTI climbed to $72.44. Supply constraints from OPEC and weather disruptions in key production regions lent additional support. But the tide turned on January 7. A strengthening U.S. dollar, coupled with concerns about oversupply from non-OPEC producers, reversed earlier gains. Bearish inventory data added fuel to the fire, sending crude prices lower.

Metals: Gold shone brightly amid the uncertainty, with prices surging to $2,650 per ounce. The metal’s safe-haven appeal drew strong demand from investors seeking shelter from inflation and economic volatility. Copper and aluminum held steady, supported by favorable financing conditions for gold-related projects.

Cryptocurrency: Despite some volatility, the crypto market proved its resilience, delivering a generally positive performance. Bitcoin and Ethereum led the charge, buoyed by expectations of lower interest rates and optimism around Bitcoin ETFs. Whilst some may view this asset class as an inflation hedge, we still view the sector as highly speculative.

What’s Driving Oil Prices?

The rise and fall of oil prices during this period illustrate how complex and interconnected the energy market can be. Early optimism was driven by strong economic data from the U.S. and China, which suggested higher energy demand as their economies recovered. OPEC’s production cuts further tightened supply, while geopolitical tensions and weather-related disruptions added risk premiums to prices.

Yet, the market’s mood shifted as quickly as a change in the wind. On January 7, oil prices stumbled in response to a stronger U.S. dollar and concerns over rising supply. Reports of increased production from the U.S. and other non-OPEC countries introduced the specter of oversupply, while weaker economic data from Germany hinted at slower demand growth. By the end of the day, the once-promising rally had turned into a selloff.

The Road Ahead

Looking forward, analysts are sounding a note of caution. While U.S. equities have shown resilience in the face of elevated valuations, the road ahead is far from smooth. Inflation remains a pressing concern, and any hints of further rate hikes from the Federal Reserve could unsettle markets.

Sectoral dispersion will likely define the coming days, with some areas offering opportunities while others falter. Technology, in particular, will remain a focal point, as investors weigh the sector’s growth potential against the broader economic backdrop.

For commodities, the balance between supply constraints and demand optimism will continue to shape the narrative. Meanwhile, cryptocurrency traders will keep a close eye on regulatory developments and market sentiment, hoping for another leg up in this volatile space.

In a market defined by uncertainty, staying informed and adaptable is more important than ever. As the trading year unfolds, one thing is clear: 2025 is shaping up to be anything but predictable.

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January 8, 2025