Under the dual pressure of geopolitical turmoil and tariff concerns, gold broke through 4500, the US dollar approached 99, and the three major US stock indices all hit new highs.

Market Overview: Risk Aversion Intensifies, Gold and the US Dollar Rise in Tandem

This week’s market performance shows clear risk-off characteristics. Gold rose by 0.7% to $4,509 per ounce, successfully reclaiming the $4,500 level amid geopolitical fluctuations. The US Dollar Index increased by 0.3% to 99.1, approaching the psychological threshold of 99.5. This phenomenon reflects a market re-pricing of geopolitical risks, with investors favoring increased allocations to traditional safe-haven assets.

Meanwhile, the cryptocurrency market remains steady. Bitcoin trades around 90551 USD, up 0.19% over 24 hours; Ethereum also advances 0.25%, currently at 3090 USD. Latest data shows Bitcoin’s current price has climbed to 96.72K, with a 24-hour increase of 1.91%; Ethereum is at 3.35K, with a 24-hour performance improving to 1.88%. Both indicate strong technical support.

US Stocks Continue Strong Momentum, Dow and S&P Reach Year-to-Date Highs

Last Friday, US stocks rallied across the board, with all three major indices hitting new closing highs for the year. The Dow Jones rose by 0.48%, the S&P 500 increased by 0.65%, and the Nasdaq gained 0.81%. The rally is driven by sustained optimistic earnings expectations for companies.

According to LSEG data, Wall Street analysts expect the S&P 500 components to see overall earnings growth of about 13% in 2025, with expectations for 2026 potentially exceeding 15%. Notably, this week marks the start of the major bank earnings season; whether profit growth can be realized remains a core bullish argument. Additionally, chip leader Intel surged over 10%, its largest single-day gain since September; Tesla, under Elon Musk, rose over 2%; Meta increased more than 1%; and Apple ended its consecutive decline streak.

European markets also broadly advanced, with France’s CAC 40 leading at a 1.44% gain; the UK FTSE 100 and Germany’s DAX 30 rose by 0.8% and 0.53%, respectively.

Labor Market Stumbles, Job Growth Significantly Below Expectations

US Labor Department data released last Friday shows December non-farm payrolls increased by only 50,000 jobs, well below the market expectation of 60,000. This weak performance highlights corporate caution amid import tariffs and increased AI investments.

Details are even more disappointing. Private sector jobs added were 37,000, far below the expected 64,000; manufacturing jobs decreased by 8,000; weekly hours worked fell to 34.2 hours. The only bright spot was an unexpected drop in the unemployment rate to 4.4%, with average hourly earnings rising by 0.3% month-over-month. Federal Reserve officials, including Barkin, later stated that while employment data shows moderate growth, the sluggish hiring environment warrants continued attention. The labor market appears to be in what economists call a “pause” mode—neither hiring nor firing.

This employment report directly impacts market expectations for Fed policy. The interest rate swap market immediately reacted, with the probability of a rate cut in January dropping to zero, and traders now expect the first Fed rate cut to be delayed until June. The yield on the 2-year US Treasury rose by 5 basis points to 3.538%, while the 10-year yield fluctuated higher and then back down.

Nick Timiraos, a reporter dubbed the “Fed whisperer” for The Wall Street Journal, later wrote that this employment data provides ample reason for the Fed to hold steady at its meeting on January 27–28, but the weak hiring figures also keep debates about the health of the labor market far from settled.

Tariff Uncertainty Remains, Supreme Court to Announce Ruling on Wednesday

The case challenging the legality of Trump administration’s global tariffs remains unresolved. The US Supreme Court did not issue a ruling last Friday but is expected to announce its decision on the case during the scheduled oral arguments on January 14 (Wednesday). This will include a ruling on the legality of Trump’s broad tariff policies.

Conservative and liberal justices appeared to question the legality of Trump’s invocation of the 1977 National Emergency Act during the November 5, 2023, hearing. This legal uncertainty is brewing market ambiguity and is a potential driver behind the strength in gold and the US dollar.

Geopolitical Tensions Rise, Trump Takes a Hardline Foreign Policy Stance

Over the weekend, several new developments occurred in geopolitical affairs. Trump hinted that surprise military actions could become the main mode of US foreign intervention in the future, stating that military operations against Mexican drug cartels will “begin very soon.” Additionally, Trump again threatened to interfere in Iran, claiming the US is ready to “help” at any time, and insisted that the US must acquire Greenland regardless of difficulties. These comments have heightened geopolitical risk premiums, directly boosting safe-haven demand for gold and the US dollar.

US Mortgage Rates Hit Multi-Year Lows, Housing Market Gets a Boost

Driven by Trump’s order to purchase $20 billion worth of mortgage-backed securities, US mortgage rates fell below 6% for the first time in years last Friday. According to data from Mortgage News Daily, the average 30-year fixed mortgage rate dropped to 5.99%, the lowest since February 2023, down 22 basis points from Thursday’s 6.21%. The 15-year fixed mortgage rate also declined sharply to 5.55%. As of Friday, the 30-year mortgage rate has decreased by over 100 basis points in the past year, providing substantial support to the real estate market.

Japan Political Uncertainty, Yen Plunges Near Year-Low

Japanese Prime Minister Fumio Kishida is reportedly considering dissolving the House of Representatives at the start of the parliamentary session on January 23, with a general election possibly held in early or mid-February. With Kishida’s approval ratings remaining at historic highs, a victory would help advance his fiscal easing agenda.

This political outlook has caused a sharp impact on the yen. USD/JPY rose by 0.67%, with the yen falling to a session low of 157.96, approaching the near one-year low. This level is comparable to the record set on January 15, 2025; if the yen continues to weaken, it will approach the 2025 low of 158.87 recorded on January 10. Yen depreciation benefits Japanese stocks and exporters but increases costs for importers and currency holders.

Global Commodities and Forex Markets

Apart from gold and the US dollar, energy markets also saw modest gains. WTI crude oil rose by 0.65% to $58.8 per barrel, still influenced by geopolitical risks and supply expectations.

In the forex market, EUR/USD declined by 0.19%, reflecting the dollar’s relative strength amid rising risk aversion. Bond markets showed the 10-year US Treasury yield holding steady around 4.17%, as mixed employment data and policy expectations offset each other, leading to a wait-and-see stance.

Hong Kong stocks: The Hang Seng Index night session futures closed at 26,408 points, up 167 points from the previous close of 26,231; the premium was 176 points, with a trading volume of 13,105 contracts. The China Enterprises Index futures closed at 9,119 points, up 70 points from the previous close.

Corporate Developments: Accelerating Investment in Tech and Energy

OpenAI and Japan’s SoftBank Group jointly invested $1 billion in infrastructure company SB Energy to support OpenAI’s data center operations. Both will contribute $500 million each to transform SB Energy into a data center developer and operator. This investment is part of OpenAI’s “Stargate” plan, which aims to invest $500 billion over four years in US AI infrastructure. OpenAI has selected SB Energy to build and operate a 1.2 GW data center in Texas.

In energy, analysts expect that if Chevron can increase oil production in Venezuela, annual cash flow could increase by up to $700 million. TD Cowen analysts note that Chevron is currently the only US oil major operating in Venezuela, with “unique growth opportunities” compared to peers. Increased production efforts could add $400 million to $700 million annually, about 1%–2% of its operating cash flow. Trump’s policies aimed at controlling Venezuela’s oil supply are creating new opportunities for Chevron.

Key Events This Week

• TSMC will release earnings on Thursday (January 15), with market focus on revenue and outlook
• US Supreme Court expected to announce its ruling on Trump tariffs case on Wednesday (January 14)
• Switzerland to publish December Consumer Confidence Index
• Eurozone to release January Sentix Investor Confidence Index
• Japan stock market will be closed on Monday

Market outlook remains uncertain, with key variables including the legal resolution of tariff policies, geopolitical developments, and whether corporate earnings meet expectations.