General Market Analysis – 19/01/26

US Stocks Drift Lower to Close out the Week – Dow off 0.2%

US equity markets edged modestly lower on Friday, with investors adopting a cautious tone ahead of a busy earnings calendar in the week ahead. The Dow Jones slipped 0.17% to close at 49,359, while the S&P 500 eased 0.06% to 6,940 and the Nasdaq also fell 0.06% to finish at 23,515. Bond markets saw yields move higher across the curve, with the 2-year Treasury yield rising 2.2 basis points to 3.586% and the 10-year yield climbing 5.3 basis points to 4.223%. The move supported the greenback, with the DXY index gaining 0.05% to 99.38. In commodities, oil prices pushed higher once again as ongoing supply concerns continued to underpin the market. Brent crude rose 0.58% to $64.13 a barrel, while WTI added 0.42% to settle at $59.44. Gold slipped back from record highs, falling 0.43% to $4,596.09 as higher yields weighed on the precious metal.

Geopolitics Set to Dominate Start of Trading Week Again
Traders are bracing for a volatile start to the week as markets digest fresh tariff threats from President Trump. The President warned of potential trade measures against European nations should they interfere with his plans regarding Greenland, raising the risk of heightened geopolitical and trade-related volatility as headlines cross the wires. The market reaction has been relatively limited so far, with little gapping on the Monday open. However, traders and investors alike are preparing for more updates in the days ahead, and if it does look like the tariffs – 10% from February 1 and 25% from June 1 – are going to be implemented, then risk trades and respective currencies are likely to take strong hits. The market is erring on the side of caution at the moment, as we have seen some threats pulled by Trump in the past. However, traders are preparing to ‘hit the sell button’ if the issue escalates.

Quiet Calendar Start to a Busy Trading Week
It’s set to be a relatively quiet start on the macroeconomic calendar to the trading week today. However, there is a full schedule of key data releases, earnings reports and central bank updates that should promote volatility as we move through the week. The Asian session has little on the cards today, and the market has so far ridden the Greenland issue relatively unscathed this morning. The London session also has very little to move the dial. However, there are some key data releases scheduled once North America comes in. US markets are on holiday today, which could see some exacerbated moves if risk products start to take a hit. However, the main focus for the day will be on Canadian markets, with key CPI data due out. The headline month-on-month number is expected to show a 0.4% decrease, while both the year-on-year Median and Trimmed CPI numbers are expected to drift down to 2.7%. Later in the day, we also have the Bank of Canada Business Outlook Survey due out, which could also see some reaction in the Loony and other Canadian products.

Explore all upcoming market events in the Economic Calendar.

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