Weekly Summary: 1/13/25-1/19/25
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Market Summary:
MAJOR INDICES:
SPX increased +2.91% ($5,996.66), DJI increased +3.69% ($43,487.83), and IXIC increased +2.45% ($19,630.20). RUT rose +3.96% ($2,275.88). The VIX decreased -18.27% (15.97).
SECTORS & STOCKS:
Energy (XLE) added +6.30%, and Healthcare (XLV) increased +0.39%. Symbotic Inc. (SYM) rose +16.30% ($29.76/share), while FTAI Aviation Ltd. (FTAI) fell -35.42% ($112.38/share).
INTERNATIONAL EQUITIES:
The MSCI EAFE ETF (EFA) increased +2.29% ($76.78), and the MSCI Emerging Markets ETF (EEM) rose +2.43% ($42.09). The MSCI China ETF (MCHI) added +5.72% ($46.21), while the MSCI India ETF (INDA) fell -0.06% ($51.18).
US MACRO:
DXY decreased -0.07% ($109.20), and the US 10-year Treasury Note yield fell -3.50% (4.6090%).
GLOBAL MACRO:
AUD/USD increased +0.89% (0.6208), and USD/JPY fell -1.23% (155.948). The Brazil 10-year yield added +2.36% (15.117%), and the UK 10-year yield fell -3.78% (4.655%).
COMMODITIES:
Gold increased +2.47% ($2,739.30), WTI Crude oil fell -1.04% ($78.00/barrel), and BTC increased +1.47% ($101,982.03).
(as of 9:59PM, 1/19/25)
Sources:
https://www.tradingview.com/markets/
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Context:
This week, markets were greeted with favorable PPI and Core CPI reports for December 2024, which both came in lower than forecasts. All three major indices rallied, with the DJI and SPX increasing the most since the election in November. The US 10-year yield, which had been creeping up to 5.00%, pulled back as 2025 rate cut hopes increased. XLE, the SPDR Energy sector ETF, increased the most among its peers as Schlumberger Limited (SLB) reported strong earnings that beat expectations and the Chevron Corporation (CVX) FTC case regarding board membership came to a decision. China’s economy beat GDP YoY growth expectations, reigniting sentiment. In commodities, Gold broke the $2700 mark as Trump’s future policies leave uncertainty around their impact on the US economy.
Sources:
Story of the Week: US aims to stop shadow tankers with new sanctions
The US imposed “broader” sanctions on Russian oil, targeting major Russian companies Gazprom Neft, Surgutneftegas, and others. This effort includes secondary sanctions, which punish any country in violation. India, which imported 88% of its oil from April-November 2024, had 40% of it come from Russia, making the sanctions a serious economic liability. Included in the sanctions were oil tankers, which caused rates for VLCCs (very large crude carriers) to increase by +112%. In response to the Russia-Ukraine war, the US imposed sanctions to try to limit the amount of revenue Russia makes off its oil. Russia worked around this with shadow tankers, which are old ships purchased from countries that aren’t participating in the sanctions (ex: UAE or Marshall Islands). The initial sanctions put a $60/barrel price cap on selling Russian crude oil. Anything higher than the price cap bans tankers from getting insurance from Western insurance providers like International Group. Insurance is required to comply with the U.N. International Maritime Organization, and if there isn’t any, those without it could face restrictions. The shadow tankers give Russia the ability to price their oil higher than the cap and still get insurance from other non-Western entities. As a result, Russia’s oil revenue actually increased 5% YoY, with the country making $16.4 billion/month in “the first 11 months of 2024”.
Sources:
https://oilprice.com/Latest-Energy-News/World-News/Supertanker-Rates-Double-After-US-Sanctions-on-Russian-Oil-Trade.html https://www.cnbc.com/2025/01/17/us-sanctions-on-russian-oil-india-impact.html
My Thoughts:
From an investing perspective, these new sanctions could justify a bear case for Indian exposure. With India’s reliance on Russian oil, its economy will have to find a way to work around the new US sanctions. India could explore other countries for oil, which will benefit oil companies in those regions by increasing demand. It will be interesting to see how India will deal with this, especially since its energy demand is very high due to its population.
The Week Ahead:
MACRO: S&P Global US Composite PMI on Friday (1/24)
PUBLIC MARKETS: Netflix (NFLX) and 3M Company Q4 earnings on Tuesday (1/21)
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