MARKETS week ahead: January 13 – 19Last week in the news
Surprisingly good US jobs data pushed the markets toward the negative sentiment. It is not the case that investors were disappointed with good developments in the US economy, but they needed to correct their previous expectations on Fed's rate cuts. The US equity markets were mostly hit, where S&P 500 ended the week at the level of 5.827. The US Treasury yields ended the week higher, with 10Y reaching 4,8%. The US Dollar continued to gain in strength, however, the price of gold was also strengthening to the level of $2.689 due to investors uncertainty regarding the decisions which will be taken by the new US Administration. The BTC was traded with lower strength during the week, testing the resistance line at $95K, after shortly reaching support level at the $90K.
The major data posted during the previous week were related to the US jobs data. The surprisingly better than expected Non-farm Payrolls figures of 256K hit the market on Friday. At the same time, the unemployment rate dropped to the level of 4,1% from 4,2% posted previously. Although this is good news for the US economy, still markets reacted in a negative manner - by increasing Treasury yields and decreasing the value of major equity indices on the US market. The markets are not perceiving that the Fed would have to keep interest rates at current levels for a longer period of time. At this moment, some analysts are noting a potential first rate cut during this year in September. The sentiment among investors for the rate cut at the January FOMC meeting dropped to the lowest level.
Mark Zuckerberg's recent interview on Joe Rogan show attracted attention from investors and journalists. Mark was criticizing a main rival of his company, Apple, for “a lot of rules, that I think are arbitrary” which are implemented into Apple's technology. In his opinion, these rules are diminishing all the technological effort that Apple has put in place. At the same time, it should be noted that Meta announced that it will ban their “fact checking” program introduced during the pandemic.
Analysts from Bernstein are betting on the European pharmaceutical industry in 2025. As they are noting, there is currently a significant discount of EU pharma stocks, with a solid growth prospectus in 2025 of estimated 8% EPS. Another aspect that Bernstein analysts are noting is solid generation of cash by the EU pharma industry.
Analysts from Bank of America downgraded Tesla shares from Buy to Neutral. The rationale behind such an action is their view on “high execution risks”. They also decreased the price target from $490 down to $400.
Crypto market cap
There has been a lot of volatility on the crypto market during the previous week. The majority of this volatility was driven by BTC. As this coin entered into the mainstream markets, through exchange traded funds during the previous year, its price is reacting to developments in the US macro segment. Surprisingly strong US jobs data increased the sentiment with investors that Fed will halt further decrease of interest rates, in order to cope with the heating economy, in which sense, investors had to adjust their previous expectations. Simply, the less rate cuts implying less liquidity in the economy, in which sense, less money for the crypto market. Still, during this trading week, total crypto market capitalization decreased by 5% w/w, erasing some $160B in total cap. Daily trading volumes remained redacted, moving around the level of $130B on a daily basis, a further decline from last week's $158B. Total crypto market capitalization remained flat when compared to the end of the year 2024.
The majority of crypto coins were traded in red during the previous week. Bitcoin lost around $ 68B in the market cap, decreasing it by 3,5% w/w. Ether was following the sentiment, by which its market cap dropped by $ 43B or 10% on a weekly basis. Bitcoin Gold also had a negative week with a droop in value of 25%. From other major coins, DOGE was traded down by 12%, same as Solana, while BNB managed to sustain a lower drop in value of 2,4%. It is interesting that XRP had a solid week, as this is one of rare coins which ended the week on a positive territory, increasing its market cap by 6,2% w/w.
Regarding coins in circulation, this week IOTA had an increase of coins in circulation by 0,5%, while Filecoins number of circulating coins was higher by 0,3% w/w. Stellar, Solana and Algorand increased the number of coins on the market by 0,2% each.
Crypto futures market
The sentiment from the spot market was reflected on the crypto futures market. Both BTC and ETH futures were traded lower from the end of the week before. BTC futures were traded down by 4% on average, while ETH futures were down by some 10% on average for all maturities.
BTC futures maturing in December this year ended the week with the price of $103.325, and those maturing a year later, closed the market at $112.275. On a positive side is that longer term futures continue to hold above the $100K level.
ETH futures maturing at the end of this year were last traded at $3.511, while those maturing in December 2026 closed the week at $3.711. For one more time ETH did not manage to sustain the futures price levels above the $4K.
