SVET Markets Weekly Update (December 30, 2024 — January 3, 2025)
On Week 1, markets closed 2024 with the Nasdaq (+28%), the S&P (+25%), and the Dow (+13%) showing substantial YoY increases, while EU stocks ended the year with a modest +5.5% gain. At the same time, gold set a multi-year record by rising 27%, which is highly unusual for a period when stocks have also increased. Nonetheless, they were all outperformed by BTC, which achieved gains of 122%. Markets opened 2025 in the red as the dollar rose to 2-year highs, leading to sharp depreciation of the world’s major currencies, including the euro, pound, yuan, rupee, and yen. BTC and ETH stagnated but then began to recover, led by ETH, which saw significant inflows into its ETF.
On Monday, equities are down sharply, extending Friday’s tech selloff as pending home sales set a 3-year record and Dallas manufacturing rose for the first time in 2 years, while Chicago businesses continue to contract for a year in a row. Thin holiday trading amplified volatility. Large-cap tech stocks underperformed, while energy stocks gained. Despite the decline, major indices are set for above-average annual gains: the Nasdaq (+28%), the S&P (+25%), and the Dow (+13%). For comparison, EU stocks are closing the year with a +5.5% gain, with France (-3%), Britain (+5%), Italy (+12%), Spain (+14%), and Germany (+19%). China’s market rose +15%, Japan’s +20% (a record), South Africa’s +11%, and India’s +8%, while Brazil’s stocks dropped -10% and Mexico’s -15%. The gold price rose +27% in 2024. Natural gas surged over 20% overnight, reaching a 2-year high, driven by a cold snap. BTC (92K) and ETH (3.5K) sidetracked, showing some weakness as many traders continue to re-calibrate their upbeat prognosis after the Fed’s sharp policy pivot. YoY BTC added 122%.
Details
The Dallas Fed Manufacturing Index rose to 3.4 in December, its first positive reading in two years. Production and new orders showed some improvement, while employment and workweeks remained steady. Price pressures eased, but future production expectations moderated. 1Y trend: “Up” (Dal)The Chicago PMI fell to 36.9 in December, indicating a 13-moths contraction in Chicago’s economic activity. New orders declined sharply, with more than half of respondents reporting fewer orders. 1Y trend: “Down” (ISM)Pending Home Sales increased 6.90% YoY in November, setting 3-y record . This index has averaged -0.53% since 2002, reaching a high of 52.40% in April 2021 and a low of -36.80% in October 2022. 1Y trend: “Up” (NAR)
Crypto
El Salvador has increased its BTC holdings to over 6,000 BTC, making it one of the largest national holders of the cryptocurrency. This follows a recent $1 million purchase, despite a recent deal with the IMF. The country plans to continue acquiring BTC and may phase out its government-sponsored BTC wallet, Chivo. (source)
World Markets
European markets closed lower (Stoxx 50 -1%, Stoxx 600 -0.5%), with tech, industrials, and media stocks leading the decline. Inflation concerns and a hawkish ECB stance weighed on sentiment. Despite today’s dip, European stocks are set to post miserable gains for the year (Stoxx 600 +5.5%). 1Y trend: “Up”The Ibovespa closed flat, as a Supreme Court decision on fiscal amendments boosted investor confidence. While inflation concerns remain, the market reacted positively to improved fiscal data. Commodity producers gained, while losses in other sectors limited overall gains. The Ibovespa is set to post a 10.4% decline for the year. 1Y trend: “Down”
Currencies
The dollar index rose to 108.2, approaching a 2-year high. The Fed’s hawkish stance, coupled with dovish signals from other central banks and the prospect of lower imports under Trump’s policies, strengthened the dollar. 1Y trend: “Up”
Commodities
Gold prices held below $2,610 per ounce, with gains limited by the Fed’s hawkish stance. Resilient labor data and persistent inflation have led to expectations of fewer rate cuts. Despite recent declines, gold is set to end the year with a 27% gain, supported by safe-haven demand amid geopolitical tensions and central bank buying. 1Y trend: “Up”WTI crude oil prices rose above $71 per barrel, driven by expectations of stronger Chinese demand and colder weather. However, concerns about potential oversupply and geopolitical risks under the new administration are keeping prices in check. 1Y trend: “Side”Natural gas futures surged over 20%, reaching a 2-year high, driven by forecasts of a significant cold snap across the country. Strong demand and lower-than-expected inventory withdrawals supported the price increase. However, robust LNG exports and concerns about potential oversupply in the longer term may limit further gains. 1Y trend: “Up”
Comment: What’s Up With Gold?
In the 20th and 21st centuries, gold prices experienced significant fluctuations. In 1914, the increase was +11.1%. This continued in 1915 with a +24.4% rise and +25.7% in 1916. However, following the end of WW1 major hostilities, there was a sharp decline in 1917, with prices dropping by -15.5%, and further decreasing by -23.5% in 1918.
The Roaring Twenties saw a resurgence in gold prices, with increases of +27.1% in 1919, +68.3% in 1920, +24.8% in 1921, and +33.9% in 1922. This was followed by sharp drops during the Great Recession, with declines of -11.3% in 1923 and -17.6% in 1924.
From 1934 until 1971, the official gold price was fixed at $35 per ounce due to the Gold Reserve Act. However, the 1970s brought an inflationary spike, starting with an increase of +38.6% in 1971, and culminating in an extraordinary rise of +144% in 1980.
Beginning with the historical Fed easing program in 2000, gold prices skyrocketed from approximately $500 in 2000 to around $1,800 by 2011. In 2008, there was a notable increase of +25.3%, heavily impacted by the financial crisis. In 2011, gold prices rose by +10.1%, influenced by the European sovereign debt crisis.
From 2012 to 2014, prices reversed due to the end of the Fed’s quantitative easing program. However, gold prices started to rise again after geopolitical tensions and governments’ bureaucratic mismanagement escalated from 2018 to 2024.
Notably, a 27% price spike in 2024 is concerning, as it mirrors trends from the pre-war period of the 1910s and the overheating of the 1920s, which were followed by some of the greatest calamities of the 20th century.
On Tuesday, equities continued to slip as data showed home prices rising while services remained on an improvement track. Additionally, profit-taking and concerns about future Fed rate hikes weighed on sentiment. The dollar continued to rise, marking its best YoY performance in 10 years. Natural gas prices corrected sharply downward after a spike caused by weather conditions. BTC and ETH remained unchanged at $93K and $3.3K, respectively, as the market entered a period of low liquidity.
Details
The S&P CoreLogic Case-Shiller 20-city home price index rose 4.2% YoY in October, exceeding expectations. New York led with the highest annual gain. Monthly prices declined 0.2%. 1Y trend: “Down” (SP)The Dallas Fed’s service sector index eased slightly to 9.6 in December. Revenues increased, while hours worked and capital expenditures softened. Employment rebounded, and price pressures intensified. 1Y trend: “Up” (CFed)
Crypto
Venture capital investment in crypto startups reached $13.6B in 2024, a recovery from 2023. Predictions suggest an increase to $18B in 2025, driven by declining interest rates and increased regulatory clarity. (source)
On Wednesday, at this rare moment of calm, when all major markets around the world are simultaneously closed for a New Year celebration and while BTC and ETH are also on hold, I share with you my overview of the world’s economy in the comments.
Comment: What’s Up With Stocks?
In 2024, the top stock markets’ performers are:
– Europe: North Macedonia saw a remarkable increase of 66%, driven by optimistic expectations regarding its potential acceptance into the European Union. Cyprus experienced a 58% rise, attributed to a sharp increase in tourist arrivals, as numerous other destinations became less accessible due to the ongoing war.
– Americas: Argentina led with 172% surge, while Venezuela followed closely with a 106% increase. These gains can be primarily explained by investors flocking to stocks in an effort to protect their assets from rapid depreciation caused by extreme inflationary pressures.
– Asia: Pakistan’s market rose by 78%, benefiting from a swift slowdown in inflation, accompanied by the central bank’s decision to cut interest rates by over 50% in 6 months. Sri Lanka saw a 50% increase, with similar dynamics at play as in Cyprus — a significant rise in tourist arrivals, coupled with a shift from inflation to deflation and a substantial cut in the local central bank’s rate. It was added by Kazakhstan’s stocks rising by 31% on sharp decrease of inflation and easing of banks policies, still, stocks rise was also stimulated by depreciating local currency.
– Africa: Zimbabwe’s stock market skyrocketed by 675%, while Ghana and Nigeria recorded increases of 56% and 35%. These trends mirror the situation in Venezuela, where rampant inflation has led investors to turn to stocks as a hedge against depreciation.
This sheds light on how the global economic landscape has unfolded following the disruptive “enclosure” policies enacted by bureaucrats in 2020, which led to severe inflationary challenges and the subsequent outbreak of conflict. In the EU, which historically relied on exports to China and imports from Russia, there are few examples of sustained stock market growth, aside from localized recoveries attributed to shifts in internal goods and services.
In the Americas, a significant capital flight occurred toward North America, as the rest of the region grappled with the impact of closed Chinese markets and shifting trade policies. Africa, traditionally reliant on external supplies for food and essential goods, continues to face the brunt of inflation, exacerbated by the ongoing war in Europe. Conversely, Asia, with its ample food supply and affordable energy sources — including those from Russia — has seen notable improvements in market quality.
Overall, the global economic framework remains largely unchanged from “globalization” times, with production and consumption concentrated predominantly in Asia, which sources resources and materials from various regions, including South America and Africa. These sourcing patterns are particularly vulnerable to disruptions, leading to more pronounced effects on South America and Africa when production is interrupted. North America, in contrast, focuses heavily on capital and services, while Europe appears increasingly uncomfortable, lacking an independent resource base to ensure uninterrupted internal consumption and growth, independent of Asia’s influence. The ongoing war compounds these issues further.
Looking ahead, the potential recovery of China could play a crucial role in the revival of South America, particularly Brazil, while Africa’s economic outlook may improve as well. Nonetheless, the EU situation and world’s food and energy supply chains will likely remain impacted by the sustained geopolitical conflicts. So, we can expect that capital continue to fly into N. American stock and money markets.
On Thursday, equities declined, with the Dow experiencing its 4th consecutive red day as manufacturing activity continued to decrease. Meanwhile, mortgage rates reached yearly highs due to the Fed’s renewed hawkishness, and jobless claims fell again, undermining the prospects for a change in Powell’s stance anytime soon. Tesla and Apple shares are underwater, while Nvidia and Meta Platforms gained ground. The Euro slid to a 2-year low due to the rise of the dollar and declining manufacturing activity, particularly in Germany and in France, where the downturn has been the most severe since 2020. This situation was compounded by a rise in natural gas prices to yearly highs after gas flows via Ukraine stopped on New Year’s Day. Manufacturing activity also slowed in China. Both BTC and ETH jumped by about 3% due to traders’ unfulfilled expectations, as stock markets opened in the green.
Details
The Manufacturing PMI fell to 49.4 in December, extending the contraction in factory activity. New orders declined, leading to lower output. Employment increased, but purchasing activity slowed. Input costs rose, leading to higher output prices. 1Y trend: “Down” (PMI)The average 30-year fixed-rate mortgage rate increased to 6.97% in the week ended December 27, reaching its highest level since early July and erasing all easing reached over the past year. This rise reflects the upward trend in long-term Treasury yields, driven by the Fed’s hawkish stance. 1Y trend: “Side” (MBA)Initial jobless claims unexpectedly fell to 211K in the 52nd week of 2024, the lowest level in eight months. This suggests a continued tight labor market, supporting the Fed’s stance on maintaining higher interest rates. 1Y trend: “Up” (DOL)
Crypto
Polymarket predicts an 85% chance of SEC approval for a Solana ETF in 2025, a significant increase from September. Approval is likely before August. Grayscale’s Solana ETF faces a key decision on January 23rd. (source)
World Markets
The HCOB Eurozone Manufacturing PMI edged lower to 45.1 in December, extending the contractionary streak. New orders declined sharply, leading to lower output and workforce reductions. Input costs fell, while business confidence remained muted. 1Y trend: “Side” (SP)China’s Caixin Manufacturing PMI edged down to 50.5 in December 2024. Output and new orders expanded at a slower pace, while foreign orders shrank. Employment declined, and input costs rose while selling prices fell. Business confidence weakened amid concerns about growth and trade. 1Y trend: “Down” (PMI)
Currencies
The British pound fell to an eight-month low, pressured by weak UK economic growth, a dovish BoE stance, and a stronger US dollar. Concerns about potential trade disruptions under the new US administration also weighed on the currency. 1Y trend: “Side”
Commodities
WTI crude oil futures climbed to $73.5 per barrel, reaching a 3-month high. Optimism about Chinese economic recovery on Xi’s New Year optimistic promises to revive the economy and a decline in crude oil inventories supported the price increase. 1Y trend: “Side”European natural gas futures surged to a 14-month high, driven by concerns over gas supply disruptions following the end of Russian gas transit via Ukraine. Cold weather across Europe is expected to increase demand, while concerns remain about refilling storage levels next year. 1Y trend: “Up”
On Friday, stocks rose, snapping a five-session decline as the ISM Manufacturing PMI showed signs of improvement. Tech stocks led the gains, with Nvidia and Tesla rising significantly. The Indian rupee dropped to an ATL again, while the Chinese yuan continued to depreciate as the CBC indicated its intention to loosen policies. BTC and ETH rose, with the latter leading the way with a 4% jump as corporate traders hopped on the ETH bandwagon after Trump’s victory. Inflows into ETH ETFs reached $2.1B.
Details
The ISM Manufacturing PMI rose to 49.3 in December, showing the softest pace of contraction in 10 months. New orders increased, leading to higher production. Input costs rose, and firms are investing to mitigate potential tariff impacts. 1Y trend: “Side”
Crypto
Inflows into ETH spot ETFs reached a new high in December, totaling $2.1B. Fidelity’s ETH Fund saw the highest inflows, followed by Grayscale and Bitwise. This surge in inflows suggests growing investor interest in Ethereum ETFs. (source)
World Markets
The FAO Food Price Index fell 0.5% in December 2024, driven by lower sugar, dairy, and vegetable oil prices. Meat prices rose slightly. The index averaged 122 points for 2024, 2.1% lower than in 2023. 1Y trend: “Up” FAOGermany’s unemployment rate remained at 6.1% in December, slightly below expectations. The number of unemployed increased slightly. The labor market has been impacted by the ongoing economic downturn. 1Y trend: “Up”
Currencies
The offshore yuan plunged past 7.35, its lowest level since 2007, as the PBoC signals a more accommodative monetary policy. This suggests the central bank may allow further depreciation to support economic growth amid concerns about slowing activity and deflationary risks. 1Y trend: “Up, Depreciating”The Indian rupee weakened to a record low (86), pressured by capital outflows and expectations of an RBI rate cut. Slowing economic growth and increased Chinese economic optimism have driven investors away from Indian assets. 1Y trend: “Up, Depreciating”
On Week 2, will feature key data releases, including the FOMC Minutes on Wednesday, followed by the Unemployment Rate on Friday. Other notable releases include and ISM Services PMI, JOLTs Job Openings and inflation data from both the Euro Area (YoY Flash and Unemployment Rate) and Germany and France (YoY Preliminary). Additionally, China will release its YoY Inflation Rate, while Japan will report on Consumer Confidence for December.
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SVET Markets Weekly Update (December 30, 2024 — January 3, 2025) was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.