U.S. President Donald Trump giving an address by videoconference at the World Economic Forum annual meeting in Davos on Jan. 23, 2025.
Fabrice Coffrini | Afp | Getty Images
This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Bank of Japan hikes rates
The Bank of Japan on Friday hiked rates by 25 basis points to 0.5%, the highest level since 2008. Following the decision, the Japanese yen strengthened to 155.3 against the U.S. dollar as of 1:30 p.m. Singapore time. Earlier Friday, Tokyo released a report that showed core inflation in the country rising to a 16-month high at 3% in December on an annual basis, in line with expectations from a Reuters poll.
Record close for S&P
The S&P 500 closed at a fresh high on Thursday as investors liked what they heard from Trump regarding rate cuts. All major U.S. benchmarks are on a four-day winning streak. Positive Wall Street sentiment lifted Asian markets on Friday. Hong Kong’s Hang Seng index jumped more than 2%, but Japan’s Nikkei 225 edged down after the rate hike.
Trump’s Davos address
U.S. President Donald Trump addressed the World Economic Forum in Davos, Switzerland, virtually on Thursday. In his speech, Trump said he would “demand that interest rates drop immediately,” ask Saudi Arabia and OPEC to “bring down the cost of oil,” and called the European Union’s trade relationship with the U.S. very unfair.
Trump said he likes Xi “very much”
Trump said Thursday that he likes Chinese President Xi Jinping “very much,” according to the White House readout of his virtual interview at Davos. He floated the idea of working with Xi to end the war in Ukraine. Separately, a survey by the American Chamber of Commerce in China released Thursday found that 30% of U.S. companies in China are accelerating their plans to relocate manufacturing or sourcing, the highest proportion since 2022.
Crypto order signed by Trump
Cryptocurrency advocates got another boost from Trump on Thursday after he signed an executive order to promote the advancement of cryptocurrencies in the U.S. Most of the order focuses on establishing technology and rules around crypto. One of the critical pieces is the creation of a working group to consider a national digital asset stockpile.
Boeing projects huge loss
Boeing said Thursday that it likely lost about $4 billion in the fourth quarter, or a loss of $5.46 per share. Revenue will probably come in at $15.2 billion, lower than LSEG estimates. Boeing has not posted an annual profit since 2018. The aircraft maker began 2024 with a midair accident and ended it with a crippling labor strike and layoffs.
[PRO] Fink goes against pessimism in Europe
There’s severe “pessimism” about the future of Europe at Davos, according to Larry Fink, chief executive of BlackRock. However, Fink told CNBC on Thursday things might be “near a bottom” — and explains why he’s taking that view.
The bottom line
Markets are supposed to run on numbers: past performance, projections of profits, return on equity. But words are equally powerful in their capacity to move markets, as Trump’s virtual address to the World Economic Forum on Thursday demonstrated.
The price of U.S. crude and the global benchmark Brent dropped on Trump saying he’d “ask Saudi Arabia and OPEC to bring down the cost of oil.”
And after Trump said he would “demand that interest rates drop immediately,” the 2-year Treasury yield, which tends to track short-term interest rates, edged lower, while stocks ticked up.
In fact, the S&P 500 added 0.53% to close at a record closing high of 6,118.71. Its last all-time closing high was 6,090.27 in early December. The Dow Jones Industrial Average rose 0.92% and the Nasdaq Composite gained 0.22%. It was the fourth consecutive session in the green for all three indexes.
But unlike numbers — which are factual (most of the time, anyway) — words can be capricious.
“Trump’s Davos speech contained some ostensibly positive lines (he called for OPEC to lower oil prices, demanded central banks lower interest rates, and reiterated prior pledges to slash taxes and regulation) but there was very little either incremental or within his control,” Adam Crisafulli, founder of Vital Knowledge, said in a note.
That doesn’t mean Trump won’t carry through his declarations. It’s unwise, however, to bank on comments ungrounded by concrete action.
On the other hand, there are some words that have the heft of policy behind them and should be taken seriously by investors.
The U.S. Federal Reserve meets next week. While the chance of a rate cut then is near zero, according to CMEGroup’s FedWatch Tool, what Chair Jerome Powell says at his press conference is “likely to cause market volatility,” according to James Demmert, chief investment officer at Main Street Research.
Learning what to listen to, then, could be as important for investors as deciphering numbers.
— CNBC’s Alex Harring and Jesse Pound contributed to this report.
