Dow Jones Forecast: DJIA set for strong weekly gains ahead of Trump's inauguration

US futures

Dow future 0.69% at 43450

S&P futures 0.91% at 5992

Nasdaq futures 1.84% at 21476

In Europe

FTSE 1.52% at 8516

Dax 1.28% at 20888

US treasury yields dip & USD fell, lifting sentiment
US earnings season has booted the mood
GBP/USD falls further after weak retail sales
Oil rises for a 4^th straight week

US stocks post strongest weekly rise since November

U.S. stocks are heading higher on Friday with the S&P 500 and the Dow Jones set to book the strongest weekly advances since November, and as investors wait for further clues regarding Tump’s policies next week.

Stronger-than-expected earnings from major banks as they kicked off earnings season and signs that underlying inflation is cooling have boosted risk sentiment this week, helping the S&P 500 and the Dow Jones log steep weekly rises.

U.S. Treasury yields have dipped this week, with the benchmark 10-year note now at a weekly low of 4.58%. However, the market will likely be on edge at the start of next week when Trump takes over the White House on Monday. In his inauguration speech, he could provide further insights into his plans on tax cuts, trade tariffs, and looser regulation.

Trump's policies are expected to be inflationary and could spark a trade war, impacting global markets. However, some concerns regarding Trump’s policies have been priced in.

Heading towards the end of January, the Federal Reserve will meet again and is not expected to cut interest rates. The market sees the first rate cut from the Fed potentially coming in June.

Corporate news

Apple is set to open almost 1% higher, recovering from yesterday's losses when it suffered its last day since August. Apple sold off yesterday on news that it was dethroned as China's biggest smart for sale phone seller in 2024 as local rivals Vivo and Huawei overtook the iPhone maker.

Microsoft is set to rise modestly after the software giant announced that it is adding AI tools to its consumer Microsoft 365 bundle, lifting the price in the US for the first time since introducing subscription over a decade ago.

Rivian is set to pen almost 3% higher after reports that German automobile giant Volkswagen is considering ways to deepen its partnership with the US EV maker.

Dow Jones forecast – technical analysis.

The Dow Jones has recovered from the 41,750 January low, rising above the 100 SMA and 43,400 resistance, the late December high. A rise above here create a higher high and put the bulls back in control. The 50 SMA at 43,580 comes into focus ahead of 44k. Immediate support is at 42,750 the 100 SMA; below that, support can be seen at 42,250, ahead of the 41,750 support zone. A break below here creates a lower low, and bears could gain momentum.

FX markets – USD steady, GBP/USD falls

The USD is holding steady at the end of the week as attention turns to Trump’s inauguration. However, the greenback is still on track to end the week at a low, snapping a six-week winning run. The dollar has surged in recent weeks on the back of rising treasury yields, reflecting expectations of inflationary policies from Trump. Treasury yields eased this weak after softer US inflation data.

EUR/USD is holding steady around the 1.03 level with ECB- Fed rate divergence priced in. Data today confirmed Eurozone inflation remained at 2.4% YoY in December, in line with expectations. Core inflation remained at 2.7%. The ECB is still set to cut rates at the end of the month. Yesterday, the ECB December meeting minutes showed policymakers saw inflation reaching the 2% tater level sooner than expected.

GBP/USD is falling after UK retail sales were weaker than expected. They fell 0.3% month on month in December, down from 0.1% growth in December and below the 0.4% rise forecast. The data adds to the glum figures received across the week, which showed the UK economy group by a weak than expected 0.1% in November. The glum economic data has been coming in since Labour announced the biggest tax rises since 1993 in her October budget.

Oil rises for a 4th straight week

Oil prices are holding steady below $78 after yesterday's losses, but are still on track to book gains of 2.7% across the week, marking the fourth straight weekly increase.

Oil has been boosted across the week as investors assessed the impact of U.S. sanctions, which have heightened expectations of oil supply disruptions.

Supply concerns, renewed hopes of US interest rate cuts, and crude stockpile draw have helped support oil prices.

Meanwhile, data from China was also encouraging. The world's top oil importer fulfilled its government's ambitions of 5% growth for the year. China posted Q4 GDP of 5.4% its strongest reading since Q2 of 2023.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.