Geopolitical tensions are fueling commodity surges, and the global markets are facing growth slowdown pressures.

Middle East Tensions Rise, Energy and Precious Metals Surge

Iran’s largest social protests in three years enter their 12th day, with demonstrations continuing to spread nationwide. The Iranian leadership immediately implemented nationwide internet restrictions in an attempt to block organized actions by the public. Meanwhile, Reza Pahlavi, son of Iran’s former king and exiled opposition figure, called on people to continue protesting. U.S. President Trump then issued a strong statement warning that if protesters in Iran suffer casualties, the U.S. will respond with action.

The escalation of Middle East geopolitical risks has triggered market risk aversion, leading to a rise in oil prices. WTI crude oil surged 3.55% intraday, breaking through the $58.0 level, closing at $58.4 per barrel. Gold also rebounded from lows, rising 0.48% during the day to $4477.8 per ounce. The safe-haven demand also pushed the US dollar index up 0.12% to 98.8, though the rebound was relatively moderate.

Global Stock Markets Mixed, Defense and Energy Stocks Gain

The performance of the three major U.S. stock indices was mixed. The Dow Jones rose 0.55%, the S&P 500 edged up 0.01%, while the Nasdaq Composite declined 0.44%. Tech stocks came under pressure, with Apple down 0.5%, marking its seventh consecutive day of decline; Meta fell 0.4%; Microsoft and Cisco each dropped over 1%; Nvidia(Nvidia) declined 2.2%.

Defense budget expansion boosted related sectors. Trump announced a significant increase in defense spending to $1.5 trillion by 2027, about a 50% increase, driving military stocks higher—Northrop Grumman rebounded 2.3%, Lockheed Martin rose 4.3%. Energy stocks also benefited from rising oil prices, with Chevron up 2.6% and ExxonMobil up 3.7%.

In China, the Golden Dragon Index rose 1.09%. European markets were relatively stable, with the UK FTSE 100 down 0.04%, France CAC 40 up 0.12%, and Germany DAX 30 up 0.02%.

Cryptocurrency Weak Performance, New Data Reflects Supply-Side Optimism

Bitcoin fell 0.22 over 24 hours, currently trading at $91,071; Ethereum declined 1.87%, now at $3,106. (Latest data: Bitcoin at 96.83K, up 1.98% over 24 hours; Ethereum at 3.36K, up 1.88% over 24 hours). The overall crypto market remains under pressure, in line with risk asset sell-offs.

Forex Market: Yen Under Pressure, Euro Depreciates

The US dollar index continued its upward trend, reaching 98.8, up 12 basis points from the previous trading day. USD/JPY rose slightly by 0.03%, reflecting the yen’s relative weakness amid safe-haven flows. EUR/USD declined 0.15%, pressured by the strong dollar. Notably, the yen remains under depreciation pressure near the 1100 level, closely related to divergent expectations about Federal Reserve policy outlook.

Fixed Income Market Yields Slightly Rise

The U.S. 10-year Treasury yield is at 4.16%, up 1 basis point from the previous day, reflecting a reassessment of inflation expectations.

Hong Kong Night Market Remains Strong, Hang Seng Futures Up 171 Points

Hong Kong night futures closed at 26,312 points, 163 points above the previous Hang Seng Index close of 26,149; indicating continued bullish sentiment. The China Enterprises Index night futures stood at 9,097, up 58 points. The day’s trading volume was 14,701 contracts.

Macro Focus: Policy Uncertainty and Labor Market Concerns

Trump does not disclose Fed nominee, market expectations diverge

U.S. President Trump revealed in an interview that he has decided on a candidate for the next Federal Reserve Chair but has not disclosed the name. When asked about current Chief Economist Haskett, Trump said, “I don’t want to say,” but emphasized Haskett is “one of my favorites.” Predictive markets via Kalshi show Kevin Waugh with a 41% chance of being chosen, Kevin Haskett 39%, and Christopher Waller 12%. Any appointee will face strong presidential pressure to cut rates.

U.S. consumer expectations turn pessimistic, short-term inflation pressures rise

Latest New York Fed survey data show signs of deteriorating consumer confidence. One-year inflation expectations jumped from 3.2% in December last year to 3.42%, a significant increase. Three- and five-year expectations remain at 3%. More concerning is the sharp deterioration in unemployment expectations—consumers now believe the probability of finding a new job after unemployment has fallen 4.2 percentage points to 43.1%, the lowest since the New York Fed began surveys in mid-2013. The expected probability of missing debt payments in the next three months rose 1.6 percentage points to 15.3%, the highest since the COVID-19 outbreak in April 2020.

Weekly initial jobless claims rise, signaling potential labor market slowdown

The U.S. Department of Labor reported that for the week ending January 3, initial unemployment claims reached 208,000, an increase of 8,000 from the previous week, below the expected 212,000. The four-week moving average was 211,750, down 7,250 from the prior week. Continuing claims were 1.914 million, up 56,000 week-over-week, above the market expectation of 1.90 million, indicating increased difficulty for laid-off workers to re-enter employment.

UN lowers global growth forecast, trade friction a key variable

The United Nations released its economic forecast on Thursday, lowering this year’s global growth rate to 2.7% (from 2.8% last year), with a projected rebound to 2.9% in 2027, still well below the pre-pandemic average of 3.2% from 2010-2019. The U.S. economy is expected to grow 2% this year (up slightly from 1.9% last year), reaching 2.2% in 2027. China’s economy is forecasted to grow 4.6% this year and 4.5% in 2027, down from the previous estimate of 4.9%. The report notes that macroeconomic policy support may buffer tariff impacts, but trade growth and economic activity could further slow in the short term.

Geopolitics and Strategic Adjustments

Iran’s Foreign Minister shows strength but leaves room for negotiations, Tehran prepares for conflict

Iranian Foreign Minister Amir Abdollahian said Thursday in Beirut that Tehran is prepared for any possible scenario of war but does not seek conflict and remains willing to negotiate on the basis of mutual respect. Abdollahian claimed that past actions by the U.S. and Israel against Iran have failed, and any new attempts will follow the same pattern. He led an economic delegation to Lebanon for two days, during which he held consultations with senior Lebanese officials on regional developments.

Macron urges European strategic autonomy, warns of U.S. strategic shifts

French President Macron warned at the annual diplomatic conference that the U.S. is gradually distancing itself from some allies and diverging from international rules in trade and security areas. Macron pointed out that the current international order faces a crisis of disorder, multilateral mechanisms are hindered, and the world is at risk of major power rivalry and division. He emphasized that Europe should neither submit to power politics nor remain solely in moral condemnation but should strengthen its own capabilities and influence amid chaos, enhancing strategic autonomy. France and Europe need to safeguard security, economic interests, and values, and through diplomatic actions, consolidate partnerships and uphold multilateralism. This statement comes amid U.S. military arrests of Venezuelan leaders and Trump’s threats to seize Greenland.