Pre-Market Pulse 15th January – Red Sea tensions continue to rise with British attacks on Yemen

Overnight – Red Sea tensions continue to rise with British attacks on Yemen

Equities closed barely changed on Friday, after wavering between modest gains and losses, as mixed bank earnings offset cooler-than-expected inflation news that buoyed hopes for interest-rate cuts from the Federal Reserve.

On Friday, data showed U.S. producer prices unexpectedly fell in December as the cost of goods such as food and diesel fuel declined, while prices for services were unchanged for a third consecutive month, in contrast to Thursday’s hotter-than-expected consumer inflation reading. Expectations for a rate cut of at least 25 basis points by the Fed in March moved up to 79.5%, according to CME’s FedWatch Tool, from 73.2% in the prior session. Friday’s data also sent Treasury yields lower, although recent comments by some central bank officials have pushed back on any potential rate cuts.

Oil prices spiked on the British retaliation to Houthi attacks on container ships in the Red Sea, with strikes on Yemen. The situation a veritable tinder box which will need to be monitored closely over the coming weeks.

Uranium continued its strong run, settling at another fresh 16 year high of 104.50

The US will be closed for Martin Luther King Day tonight and reopen Tuesday

US Earnings

• Bank of America fell 1.06% after its fourth-quarter profit shrank as the lender took $3.7 billion in one-off charges, while Wells Fargo’s warning of a 7% to 9% drop in net interest income in 2024 sent the bank’s shares down 3.34%.
• Citigroup rose 1.04% after reporting a $1.8 billion fourth-quarter loss and saying it expected further job cuts.
• JPMorgan Chase edged 0.73% lower after reporting its best ever annual profit and forecasting higher-than-expected interest income for 2024.