Market Update Jan 2: Tech & AI Rally, Oil Dips, Yields Fall

Jan 02 - Daily Market Updates

Markets Daily — Broad Market Update

Global risk appetite is firm to start the year, with technology leadership back in focus and commodities diverging. Below is a concise look at what’s moving markets and what to watch next.

Market snapshot (as of 06:25 am ET)

S&P 500 futures: 6936.2
Nasdaq 100 futures: 25736.25
US 10-year Treasury yield: 4.155% (-1 bp)
Broad dollar index: +0.10%
WTI crude (front-month): 57.40

What’s driving the tone

Tech-led risk-on: Enthusiasm around artificial intelligence and semiconductor demand is lifting global equities. US futures are higher, and European benchmarks are testing new highs, while Asia’s session benefited from upbeat headlines tied to chips and AI infrastructure.
Metals bid, oil softer: Precious metals are extending last year’s strong run, while industrial metals are firmer on hopes for improving manufacturing demand. Crude is weaker as ample supply and cautious demand expectations outweigh headline risks.
Yields edge down: US Treasuries are slightly firmer in early trading, reflecting cooler inflation trends and expectations that major central banks will have room to ease later this year if growth moderates.

Equities

US: Mega-cap tech and semiconductor names are pacing gains in premarket trading, with data center suppliers and AI-adjacent hardware/software names outperforming. Cyclical sectors are mixed as investors balance the growth impulse from tech with still-tight valuations across parts of the market.
Europe: Broad strength across large caps, with chip equipment, industrials, and select financials firm. A softer oil tape is a mild headwind for energy shares.
Asia: High-beta tech and internet groups led advances. Select listings connected to AI chips and cloud infrastructure drew strong interest, underscoring ongoing capital expenditure plans tied to compute and networking.

Rates and credit

US Treasuries: The 10-year yield is hovering near 4.16%, down modestly on the session, with the curve little changed. Markets continue to price a gradual path toward easier policy later in 2026, contingent on labor and inflation data.
Credit: Primary issuance is expected to reopen as the calendar turns, with spreads remaining tight versus long-run averages—a sign of healthy risk appetite but a reminder that compensation for credit risk is slim if growth disappoints.

FX

The dollar is marginally stronger versus a broad basket as rate differentials remain supportive. High-beta currencies are stable to firmer on improved equity sentiment, while commodity FX is capped by softer crude.

Commodities

Energy: Crude is under pressure amid signs of comfortable supply and uneven demand growth. Refining margins are mixed; product cracks vary by region as winter demand patterns take hold.
Metals: Gold and silver extend gains, supported by lower real yields and ongoing diversification flows. Industrial metals such as copper and aluminum are firmer on hopes of steady capex in electrification, grid, and data center build-outs.

Sectors and themes to watch

AI and semiconductors: Momentum remains concentrated in compute, memory, and power/cooling infrastructure tied to data centers. Watch for updates on capacity expansions, supply constraints, and pricing power along the chip supply chain.
EVs and autos: Delivery and production updates are in focus. Investors are watching how US and Chinese manufacturers navigate pricing, inventory, and model cycles, as well as how software/autonomy roadmaps influence valuation.
Energy: Policy headlines and OPEC+ signals remain near-term catalysts, but physical balances and inventory trajectories are driving price action day to day.

Macro and policy backdrop

Inflation is trending lower from prior peaks, helping central banks pivot toward a more flexible stance. That said, policymakers remain data dependent, and the timing/scale of any rate cuts will likely hinge on labor market resilience.
Fiscal support varies by region, with targeted measures aimed at growth and industrial policy. Trade frictions and regulatory shifts remain watchpoints for cross-border flows and supply chains.

The day and week ahead

Data: Manufacturing surveys, early reads on global PMIs, and high-frequency labor indicators will shape rate expectations. Later in the week, look for minutes and speeches from key central banks for guidance on the pace of any 2026 policy recalibration.
Corporate: A steady stream of trading updates and guidance resets is expected as companies exit blackout windows. Watch capex commentary tied to AI infrastructure, grid upgrades, and logistics.

Positioning thoughts

Equities: Leadership remains narrow; consider balancing AI beneficiaries with quality cyclicals and defensives to mitigate concentration risk.
Fixed income: With yields off the highs and inflation easing, selectively extending duration may improve portfolio ballast, while staying discerning in lower-quality credit where spreads are thin.
Commodities and FX: Expect episodic volatility around policy and geopolitics; risk management and diversification remain key.

This material is for information only and does not constitute investment advice or a solicitation to buy or sell any financial instrument. Markets are volatile and subject to change. Consider your objectives and risk tolerance before making investment decisions.

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