Market sentiment turned slightly negative after a positive start to the week, with rising geopolitical tensions adding to a cautious mood ahead of key U.S. data. Concerns also grew from mixed U.S. statistics and the upcoming U.S. Supreme Court decision on President Donald Trump’s ability to impose global tariffs.
President Donald Trump is reportedly planning to gain significant control over Venezuela’s state-owned oil company, Petróleos de Venezuela SA (PdVSA), as part of a broader strategy to reshape global energy markets and strengthen U.S. influence in Latin America. However, U.S. oil majors are seeking guarantees before committing to investments in Venezuela as Trump aims to revive oil production there.
U.S. Secretary of State Marco Rubio confirmed that he will meet with Danish officials next week, amidst growing tensions over Greenland, an autonomous territory of Denmark. This comes as the Biden administration's successor government under President Donald Trump reiterates its controversial desire to take control of the Arctic island, alarming Denmark, Greenland, and NATO allies.
On Wednesday, early trading was generally risk-positive, with the S&P 500 hitting a fresh all-time high at midday. However, President Trump’s comments about defense companies halting dividends and buybacks, as well as a potential ban on institutional ownership of single-family homes, dampened the mood. Although he doesn't have the power to enforce these changes, his remarks were not viewed as supportive of the stock market.
Additionally, there was rising concern about the U.S. Supreme Court decision on tariffs, with some stocks suffering if the court supports tariffs or gives the President authority to implement them in another way.
U.S. employment data showed ADP national employment rising by 41K in December, compared to an expected 47K. JOLTS job openings in November were 7.146M, missing the 7.6M estimate. U.S. October factory orders fell 1.3%, slightly worse than the expected 1.2% decline. Durable goods orders also fell by 2.2%. However, the December ISM services index came in at 54.5, higher than the expected 52.3, signaling a recovery since September.
U.S. concerns over Chinese cyber espionage grew after reports that email systems used by congressional staff, particularly in powerful House committees, were compromised in a hacking campaign known as “Salt Typhoon.” While Reuters was unable to verify the details, the breach adds urgency to Washington’s focus on cybersecurity amid rising U.S.-China tensions.
China’s Ministry of Industry warned battery manufacturers to limit capacity expansion due to the risk of overcapacity in the electric vehicle and energy storage sectors, signaling growing concerns about chaotic competition and margin erosion.
China-related market sentiment remained mixed. While Chinese markets were uneven—Hong Kong pressured by weakness in tech stocks and mainland China supported by a CNY 1.1tn People's Bank of China (PBoC) reverse repo operation—geopolitical concerns over Chinese cyber espionage and U.S.-China tensions weighed on risk assets and Asia FX.
Japan’s real wages fell by 2.8% year-on-year in November, marking the steepest decline since January. The drop in bonus payments and high inflation continue to erode household purchasing power, presenting a challenge for the Bank of Japan (BOJ) as it faces the decision of tightening policy in a weak income environment. Japan's latest 30-year JGB (Japanese Government Bonds) auction showed weaker demand, signaling market unease with ultra-long-term debt at current yield levels.
Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser pushed back against market expectations for easing inflation and indicated that interest rate cuts are unlikely soon. Australia's goods trade surplus narrowed sharply to A$2.94bn in November, driven by a 9% drop in iron ore exports. The RBA's firm stance supported front-end yields and helped limit downside pressure on the Australian dollar.
The U.S. Energy Information Administration (EIA) reported a 3.832M barrel decline in crude oil inventories, larger than the expected 447K build.
Blackstone shares fell sharply after President Trump suggested banning corporate ownership of single-family homes, a policy that advocates for housing affordability have long supported. While Trump doesn’t have the power to implement such a ban, the news initially caused an 8% drop in Blackstone shares, which later recovered slightly to a 4.5% loss.
The U.S. Dollar Index (DXY) fluctuated after a two-day winning streak, with silver and gold both posting modest losses after reaching a week’s high the day before. Meanwhile, major currencies were mostly under pressure, with the Antipodean currencies (Australian dollar and New Zealand dollar) dropping. Crude oil remained weak, near a two-week low, while cryptocurrencies and Asia-Pacific shares also faced downward pressure. Wall Street closed mixed.
Even though the U.S. Dollar bulls pause after a two-day rally, aiming for a second consecutive weekly gain, GBPUSD struggles to recover due to weak UK activity data and rising geopolitical risks. Meanwhile, EURUSD faces pressure from mixed inflation data in the Eurozone and concerns over Greenland and Ukraine, as the pair hovers near a weekly low after a two-day losing streak. Similarly, USDJPY stalls its two-day rally and posts modest losses as Japan’s real wages decline and demand for Japanese Government Bonds (JGB) softens, posing challenges for the Bank of Japan (BoJ) in its rate hike plans.
Whether driven by weak market sentiment, a firmer USD, or ongoing China-related concerns, commodity-linked currencies remain under pressure and attract sellers. The downside is reinforced by cautious comments from Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser, weak Australian trade data, and softer crude oil prices. As a result, AUDUSD records its biggest daily drop in three weeks, NZDUSD extends its decline to a third straight day, while USDCAD rises for an eighth consecutive session to reach a one-month high.
Silver price falls for a second straight day after posting its first negative weekly performance in six weeks, as bulls pause following a massive 150% year-on-year rise. The pullback in the bright metal is mainly driven by a firmer USD, China-related concerns, weaker market sentiment, and early-year consolidation after a strong 2025 rally. Still, sellers remain far from full control, as market participants look for clearer signals before taking fresh risks amid continued strong interest in silver.
Gold falls for a second consecutive day as markets brace for key U.S. data and a firmer USD, which tempts sellers after the bullion’s 65% yearly gain. Meanwhile, crude oil fails to benefit from rising geopolitical tensions as concerns grow that President Donald Trump may push for higher energy output, and OPEC+ remains hesitant on its production cut targets. As a result, the black gold overlooks a surprise draw in U.S. weekly oil inventories.
The market’s cautious mood and a firmer USD weigh on cryptocurrencies despite rising institutional interest in digital assets. Meanwhile, Wall Street closed mixed after President Donald Trump’s comments and mostly upbeat U.S. data challenged the dovish Federal Reserve (Fed) bias, which, along with China-related concerns and earlier Japan developments, also pressured Asia-Pacific shares.
With a wave of top-tier data and rising geopolitical tensions, global financial markets are set for another active day on Thursday. Swiss inflation, Eurozone data releases, and Canada trade numbers may drive market activity ahead of key U.S. reports, including Jobless Claims, Goods Trade Balance, and Nonfarm Productivity. The U.S. Dollar’s (USD) strong rise, supported by upbeat employment signals despite mixed data, could pressure cryptocurrencies, while major equities may trade mixed unless rising risk aversion hits U.S. shares. Gold, Silver, and Japanese Yen (JPY) could see some strength, whereas crude oil remains under pressure amid ongoing supply concerns.
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