The US dollar weakened against most major currencies at the opening of trading today as markets began the new year cautiously.
Weak US Treasury futures reflected risk-off sentiment, driven by ongoing geopolitical concerns and investors reassessing their strategies for 2025.
Key Themes for 2025
Investors are closely monitoring China’s economic trajectory, the Federal Reserve’s (Fed) policy outlook and the leadership changes under President-elect Donald Trump.
These factors are expected to shape market dynamics in the coming months and influence asset allocation decisions globally.
Commodities Gain Momentum
Crude oil prices edged higher, driven by data from the American Petroleum Institute (API) showing a decline in US crude inventories for the sixth consecutive week.
Crude oil stocks were reported to have fallen by 1.4 million barrels, reflecting tightening supply conditions.
Gold prices also rose, supported by safe-haven demand amid geopolitical uncertainty and subdued risk appetite in the early trading session of the new year.
China Growth and Policy Developments
President Xi Jinping highlighted China’s strong economic performance throughout 2024, with growth forecast to be around 5% for the full year.
Meanwhile, the People’s Bank of China (PBOC) announced enhanced liquidity support to stabilize the economy, sending government bond yields to historic lows.
However, Chinese banking stocks were pressured by dividend payments and continued gloomy investor sentiment.
US Homeland Security Resurfaces
The New Year’s Day attacks in New Orleans have raised concerns about US homeland security, adding to the complexity of the policy landscape facing the Trump administration as it takes office.
With less than a month to go before the official inauguration, markets continue to monitor possible changes in security and fiscal policies.
2025 Outlook
As 2025 begins, market sentiment is expected to remain sensitive to geopolitical developments, monetary policy signals, and growth dynamics in major economies.
Investors need to be prepared for increasing uncertainty, with investment opportunities expected to emerge amid global adjustments.
