Photo - Andreas Zanin
Andreas Zanin
Analysis, Market Analysis | January 15, 2024

JASPER’S MARKET SQUAWK 15-01-2024

Markets Navigate Taiwan’s Election Results

Global financial markets are mixed, influenced by election results in Taiwan, Chinese monetary policy, the U.S. economic outlook, and Middle East tensions.

Key Factors for Today

  1. China’s unexpected decision to maintain key policy rates, influencing global market sentiments.
  2. European stocks tracking higher, while U.S. markets observe a holiday, reflecting mixed global cues.
  3. Geopolitical risks in the Middle East are influencing oil futures and gold prices.
  4. Upcoming U.S. retail sales and jobless claims data, and the Federal Reserve’s interest rate policy.
  5. Taiwan’s election results potentially affecting international relations and local market trends.

Chart of the Day

Interesting levels and price zones in Dax. Graphic M5 and VP Daily. Classic Wedge of technical analysis in formation with decreasing maximums and increasing minimums. Normally it is a continuation figure, but sometimes it transforms into an inversion. It seems to be difficult to break the daily VAH, but as long as prices remain stable above POC and VWAP, shorts are “forbidden”.

Source: Matteo Marchetti, KTM Market Analyst

For all the latest market developments follow Matteo @MMTradingKTM and Key to Markets @keytomarkets on Telegram

Biggest Stories

The People’s Bank of China’s decision to keep its key policy rates unchanged has surprised markets, diverging from the major commercial banks’ recent move to lower deposit rates. This decision is seen as a strategic maneuver, potentially paving the way for future rate cuts. This development is crucial as China remains a significant player in the global economy, and its monetary policy decisions have far-reaching impacts on international financial markets.

European stock futures are indicating a positive start to the week, buoyed by optimism in Asian markets and a slight weakening of the U.S. dollar. The U.S. markets, however, are closed for a holiday, leaving a temporary gap in the global market dynamics. Last week’s positive close in the U.S. stock indexes, following a decline in early January, suggests a cautious optimism among investors.

The ongoing geopolitical tensions in the Middle East are having a notable impact on commodity prices. Oil futures have risen, reflecting concerns over potential supply disruptions, despite assurances that current conflicts are not significantly affecting supply. Concurrently, gold prices have edged higher, driven by investor uncertainty and a search for safe-haven assets in times of geopolitical instability.

Key US economic data releases, such as retail sales and jobless claims, are on the horizon this week. These indicators will provide insights into the health of the U.S. economy and may influence the Federal Reserve’s approach to interest rates. The anticipation of a Fed rate cut in 2024, alongside a potential slowdown in balance sheet reduction, is a significant point of focus for investors, reflecting the complex interplay between economic data and monetary policy.

The outcome of Taiwan’s election, with Vice President Lai Ching-te’s victory, could ease global concerns about Taiwan-China relations. However, the loss of the parliamentary majority by the ruling party may lead to uncertainties in domestic economic policies and reactions in local markets. This development is of particular interest as Taiwan is a critical player in the global technology supply chain, and any political shifts could have implications for international trade and relations.

Econ Calendar

  • UK: Dec UK Regional PMI and Jan Rightmove House Price Index.
  • Finland: Dec CPI and Nov Retail Sales.
  • Sweden: Dec CPI.
  • Germany: Dec WPI.
  • US: Retail Sales and Jobless Claims Data (Due Wednesday and Thursday).
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