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S&P Global — 6 January 2025

Daily Update: Januray 6, 2025

Capital Markets and Nervous Bulls in 2025

Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy

To be a bullish investor is to be an optimist, or at least to believe that most other investors are likely to remain optimistic for the foreseeable future. While 2024 began with concerns about a sharp economic downturn following a cycle of monetary tightening, it ended on a more optimistic note. Many companies returned to capital markets looking to raise funds through debt and equity issuance. Macroeconomic concerns waned, and the election of Republican Donald Trump signaled a more business-friendly administration in the White House. Looking ahead, 2025 shows signs of a bull run for capital markets. But concerns remain: A weak IPO environment and a slowdown in monetary easing could indicate less market confidence.

US debt and equity markets remain the preferred destination for global investors. Tepid growth and economic stagnation have kept Europe in check. India and Southeast Asia are attracting increasing foreign direct investment, but they lack the scale of developed markets. China is contemplating economic and demographic issues that have made some investors uneasy. Meanwhile, the US has enjoyed strong labor markets, cooling inflation and GDP growth. As a result, there was huge investor demand for US corporate bonds in 2024.

According to S&P Global Market Intelligence, US corporate bond issuance climbed to $1.56 trillion in the first three quarters of 2024 versus $1.16 trillion in the same period of 2023. Borrowing costs were notably lower at the higher ends of the credit spectrum. US high-yield issuance increased more than 70% year over year to $260 billion through the third quarter of 2024. This increased issuance was readily absorbed by the market.

Equity markets present a mixed picture. On the one hand, the S&P 500 closed at new highs 43 times during the first nine months of 2024, and equity issuance was up year over year, particularly in the US. However, global IPO activity has fallen over the past three years, despite a great deal of investor excitement about technology companies in the AI sector.

Looking to the rest of 2025, investor sentiment has improved markedly following the US presidential election, with risk appetite and expectations for higher equity market returns reaching their highest levels in three years. Investor surveys indicate firm confidence in US economic strength following the election and a low level of concern about the pace of monetary easing. The Federal Reserve has little incentive to rush interest rate cuts while demand remains strong and the unemployment rate remains low.

Despite the good news in capital markets, concerns about a potential bubble, particularly among technology hyperscalers, have generated caution. Short interest in technology stocks has surged, and the continuing weakness in the IPO market betrays a certain nervousness among otherwise bullish investors.

Today is Monday, Janaury 6, 2025, and here is today’s essential intelligence. 

Blue States Gear Up to Fight Trump's Rollback of Climate Policies in 2025

Sustainability Jan 6 2025

As they did under President-elect Donald Trump's first term, governors in blue states promise to use their legal resources and economic clout to protect climate goals and withstand deregulation efforts by the incoming administration. "The states are unstoppable, and we remain unconstrained by anything the person in the White House can do," Washington Gov. Jay Inslee (D) said Nov. 15, 2024, during the COP29 climate summit. "We're going to keep this ball rolling."

—Read the article from S&P Global Market Intelligence

Shifting Equity Sensitivities with S&P 500 Sectors

Broad-based benchmarks such as the S&P 500® and S&P SmallCap 600® demonstrated an upbeat response to the US presidential election, rising 6% and 11%, respectively, in November 2024. The spread in US size segments was more muted relative to S&P 500 sectors. Exhibit 1 presents the November 2024 cumulative total return of the S&P 500 versus different US equity size indices on the left-hand side and, on the right, compared to its 11 GICS® sector subindices.

—Read the article from S&P Dow Jones Indices

 

Japanese Banks Post Efficiency Gains as Interest Rate Hikes Boost Profits

Major Japanese banks logged gains in efficiency measured by their cost-to-income ratios over the 12 months ended Sept. 30, helped by improved profits. Mitsubishi UFJ Financial Group Inc., Japan's largest bank by assets, reduced its cost-to-income ratio by 5.50 percentage points to 49.89% over the 12-month period, according to S&P Global Market Intelligence data.

—Read the article from S&P Global Market Intelligence

Asia's Corn Market Prepares for Volatility in 2025 Amid US-China Trade Tensions

Asia's corn market is set for a dynamic year in 2025, influenced by a potential US-China trade war, changing consumption trends, and evolving trading relationships, likely disrupting the stable pricing trend established in the second half of 2024. In 2024, destination corn prices saw relatively rangebound movement, with Platts corn CFR Northeast Asia assessment fluctuating between $230-$252/mt in Q2-Q4, significantly narrower than the previous year's range of $237.5-$335.25/mt.

—Read the article from S&P Global Commodity Insights

Trump Executive Orders to Set Stage for Oil, Gas Regulations Rollback

US President-elect Donald Trump will attempt to drive a speedy overhaul of the regulatory environment for the oil and gas industry via high-profile executive orders, but the most significant effects of his policy agenda won't be felt for months or years, experts told S&P Global Commodity Insights. Trump, whose key energy campaign pledge was to "drill, baby, drill," has promised to make the US "energy dominant" in his second term.

—Read the article from S&P Global Commodity Insights

Listen: MediaTalk | Season 2 | Ep. 43 — Maturity vs. Convergence: Connecting Streaming, Cable Broadband, Wireless

Streaming, broadband and wireless used to be three distinct subsectors within media and communications. But increasingly, they are interconnected. In 2024, cable operators, led by Charter, began bundling direct-to-consumer streaming offerings into their video and broadband services. At the same time, cable operators continued to push into wireless. Meanwhile, streaming services prioritized profits over expanding content libraries, and wireless carriers sought to add lines among existing subscribers. All three subsectors showed signs of maturity in 2024, but they also found new ways to grow, setting the stage for fresh innovation in 2025.

—Listen and subscribe to the podcast from S&P Global Market Intelligence

Webinar: What's in Store for The Global Oil and Gas Industry in 2025 (Jan. 14, 2025)

Please join S&P Global Ratings sector leads for the oil and gas industry for a live interactive webinar on the key drivers and what we expect for in 2025. Look for our published outlook in advance of this webinar.

—Register for the webinar from S&P Global Ratings


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