Before the bell: investors captivated by (central) banks

After stronger-than-expected job data last Friday, Western markets took a hit. Now, all eyes are on the first corporate earnings reports to see if this trend will continue throughout the week.

Markets await the opening bell following last week’s lackluster performance. On Friday, both the S&P 500 (-1.5%) and Euro Stoxx 50 (-0.8%) ended lower after the US labor market showed unexpected strength, with 256,000 new jobs added in December, far surpassing the expected 165,000. This is bad news for investors hoping for further rate cuts, as the likelihood of the Federal Reserve holding back on significant rate reductions has increased. Markets now anticipate just one 25-basis-point cut by the end of 2025. On Friday, US Treasury yields rose, with the 30-year bond briefly exceeding 5%. If Wednesday’s inflation data also comes in hotter than expected, further rate hikes could follow, potentially dragging equities down further. In Asia, markets mirrored Wall Street’s losses, with Chinese and South Korean indices trending lower.

Today marks the quietest day of the week for corporate news. However, earnings season kicks off in the US this week, starting with the banking sector. Results from major players like Goldman Sachs and Citigroup are expected on Wednesday.

Biden shakes up the oil market

The recent US sanctions against Russia have sent shockwaves through the oil market. Over the past month, oil prices have climbed roughly $10 per barrel, with a sharp spike on Friday. This latest surge was triggered by President Biden, who imposed new sanctions on Russia just a week before leaving the White House. Two major Russian oil producers, responsible for shipping approximately 1 million barrels of oil daily, were sanctioned, along with 160 oil tankers. As a result, Western tanker companies like Frontline (+8.8%), CMB.Tech (+4.7%), and Scorpio Tankers (+4.7%) saw their shares rise on Friday. With Asian buyers now facing the risk of sanctions for dealing with Russia, Western competitors may benefit from increased demand for their services, potentially boosting their earnings. The key question for investors in the tanker sector: will Trump keep these sanctions in place? If so, it could provide the industry with a strong tailwind.

Argenx on the path to profitability

Today, biotech investors will converge on San Francisco for the first day of J.P. Morgan’s annual Healthcare Conference, where companies typically unveil their outlooks for the year, often driving significant stock movements. Belgium’s pharmaceutical heavyweights are in attendance, with Argenx kicking off the event at 6:45 PM Belgian time. Positive news is expected, as the company generated $2.2 billion in revenue in 2024, including $737 million in Q4, exceeding consensus estimates. CEO Tim Van Hauwermeiren has stated that the company could turn a profit in 2025. Investors now await updates from other speakers. UCB will take the stage on Wednesday at the same time, while Galapagos is scheduled for 10:30 PM that evening.

Did you know…

the Japanese stock market is closed today for Coming of Age Day? This public holiday celebrates those who have turned 18 and marks their transition into adulthood, offering investors an opportunity to spend the day with family and friends.

This article was translated from Dutch and was originally published on Spaarvarkens.be.