Awaiting the tariff ruling, U.S. stock index futures all fell, Japanese stocks continued to reach new highs, debt exchange rates came under pressure, and metals soared. Spot silver broke through 90 US dollars for the first time, and tin and copper reached new highs.

# Source: Wall Street Insights

## By: Li Jia

US inflation data failed to further boost market expectations of interest rate cuts, leading to a collective decline in US stock index futures. The market is now focusing on the ruling on Trump's tariff policies and the release of Q4 earnings reports. The "Takashi market trade" continued, with the Nikkei 225 hitting a new record high for the second consecutive day, while the Japanese yen and Japanese government bonds came under pressure. Safe-haven sentiment driven by geopolitical tensions and developments in Powell's criminal case supported precious metal prices; spot silver topped the $90 mark for the first time ever, industrial metals performed strongly, and tin and copper hit new highs.

US inflation data did not further lift expectations of rate cuts, leaving the market waiting for corporate earnings data. The Japanese market remained the focus, with the metals sector leading gains in commodities.

On January 14, US stock index futures fell across the board, most European stock indexes rose at the open, Asian stock indexes climbed in unison, and the Nikkei 225 set a new all-time high for the second straight day. US Treasuries advanced, while Japanese government bonds faced pressure. The US dollar was broadly flat, and the yen neared the 160 level against the dollar. Commodity markets saw mixed performance: metals including gold, silver, tin and copper moved higher, while crude oil edged lower. Cryptocurrencies rallied, with Bitcoin climbing to a two-month high.

The market is closely watching the potential ruling by the US Supreme Court on Trump's global tariff policies, as well as the upcoming flurry of Q4 earnings reports from US corporations. Hironori Akizawa, fund manager at Tokio Marine Asset Management, commented:

> If the ruling deems the tariffs unlawful, they may not be revoked immediately, and alternative measures could be taken. Even if the tariffs are rolled back, the world will not return to its previous state.

Key market movements are as follows:

- Dow Jones Industrial Average Futures fell 0.23%

- S&P 500 Futures declined 0.2%

- Nasdaq 100 Futures dropped 0.18%

- Euro Stoxx 50 Index rose 0.16%

- FTSE 100 Index slipped 0.03%

- CAC 40 Index gained 0.31%

- DAX 30 Index advanced 0.13%

- Nikkei 225 Index closed up 1.5% at 54,341.23 points, hitting a new record high for the second consecutive day

- TOPIX Index finished 1.3% higher at 3,644.16 points

- KOSPI Composite Index rose 0.6% to 4,723.10 points

- The yield on the 10-year US Treasury note fell 2 basis points to 4.16%

- The yield on the 30-year Japanese government bond climbed 3.5 basis points to 3.515%

- The US dollar traded roughly flat; USD/JPY fluctuated around the 159 level

- Spot gold rose 1% to $4,632.93 per ounce

- Spot silver breached the $91 per ounce mark, surging 4.7% intraday

- LME copper prices hit an all-time high

- Bitcoin gained 0.9% to $94,898.64

- Ethereum jumped 3.8% to $3,331.21

US stock index futures retreated across the board. Overnight, the three major US stock indexes closed lower. Although core inflation cooled, it did not alter the Federal Reserve's key rate outlook. Interest rate markets still priced in the next rate cut in June this year.

News that Sanae Takaichi plans to call a snap general election boosted Japanese equities, while weighing on Japanese government bonds and the yen. Market speculation suggests that an early election could allow the currently popular Sanae Takaichi to secure more parliamentary seats, thereby enabling her administration to roll out larger-scale fiscal stimulus policies.

The Nikkei 225 extended its strong gains from the previous trading day to hit a fresh record high. Demand for Japan's 5-year government bond auction was weaker than the 12-month average, pushing the yield on this tenor to its highest level since the bond's launch in 2000. The yen hovered near its lowest level since July 2024, and the currency's persistent weakness may force the central bank to take swifter action to hike interest rates ahead of schedule.

The head of the MLIV Asia team stated:

> USD/JPY is expected to break through the 160 level and continue to climb higher. Reports that Prime Minister Sanae Takaichi plans to call a snap election were the initial catalyst. Now, the Federal Reserve's more hawkish stance on US interest rates and the Iran-driven rise in oil prices have dealt a triple blow to the Japanese currency.

US core inflation coming in below expectations briefly lifted market expectations of an earlier rate cut by the Fed. Geopolitical factors involving Venezuela, Greenland and Iran also boosted safe-haven demand, combining to drive up precious metal prices.

Spot silver topped the $90 per ounce mark for the first time in history, surging nearly 4% intraday, with persistent physical supply shortages also acting as a price driver. Spot gold moved higher as well, rising more than 1% to $4,637 per ounce.

Citigroup analysts raised their price forecasts for gold and silver over the next three months to $5,000 per ounce and $100 per ounce, respectively, this week.

Expectations of Fed rate cuts have supported industrial metal prices by boosting the outlook for the US economy and manufacturing demand. Among base metals, tin outperformed sharply, with LME tin prices rising 5% to $52,015 per tonne, hitting a new all-time high. Copper, aluminum and zinc also moved higher.

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