Macro update
Markets tread cautiously:
Asian equities edged lower and the United States (US) dollar firmed as investors adopted a wait-and-see approach ahead of the US jobs report and a potential Supreme Court ruling on Trump-era tariffs, due around 3pm, which could spark volatility.
Tariff ruling a key wildcard:
Markets are braced for a Supreme Court decision on the legality of global tariffs, with traders warning that overturning them could push Treasury yields higher, trigger up to $150bn in refunds and unsettle risk sentiment.
Jobs report in focus:
December non-farm payrolls (NFPs) are forecast to increase by around 60,000 after November’s 64,000 gain, reinforcing the “no hire, no fire” narrative and keeping expectations for the Fed firmly on hold this month.
Rates and dollar steady:
Despite Federal Reserve (Fed) officials signalling only one cut, markets continue to price at least two rate reductions this year, with the dollar index near a one-month high and 10-year Treasury yields hovering around 4.18%.
Equities mixed across regions:
Japan’s Nikkei 225 jumped 1.5% on strong Fast Retailing results, European futures edged higher, while US markets closed mixed as weakness in tech was offset by defence stocks hitting record highs on expectations of higher military spending.
Mining M&A in the spotlight:
Rio Tinto and Glencore confirmed talks on a potential all-share merger that could create the world’s largest mining group with a combined market value of around $207bn, adding a corporate catalyst to an otherwise cautious market backdrop.
Dow Jones aims for record high
The Dow Jones Industrial Average is seen heading back up towards its Wednesday record high at 49,621, just shy of the psychological 50,000 mark.
Immediate upside pressure should remain in play while Thursday’s low at 48,792 underpins on a daily chart closing basis.
Short-term outlook:
Bullish, targets the 50,0000 mark while above 48,792.
Medium-term outlook:
Bullish while above the 2 January low at 47,853, targeting the 50,000 region.
Dow Jones daily candlestick chart