Wall Street Declines, Gold and Oil Rise, Crypto Increases In 2025, would Indian markets follow suit?

Global Stocks Begin 2025 with Mixed Performance as Investors Take Profits in wall street
Dow Ends Day Down 150 Points, Oil and Gold See Gains

January 3, 2025 – Wall Street kicked off the new year with a volatile trading session, as investors took profits from notable 2025 gainers, including tech giants Apple and Tesla. The S&P 500 and Nasdaq Composite both fell by 0.2% on the day, while the Dow Jones Industrial Average fell more than 150 points, or around 0.4%.

Despite a strong start to the day—at one point the Dow had gained over 300 points—stocks turned lower as the session progressed. All three major indexes are now on track to end the week with losses. Year-to-date, the Dow is down 1.4%, the S&P 500 has fallen by 1.7%, and the Nasdaq Composite has lost 2.2%.

The expected “Santa Claus rally” in the final days of 2023 and the first two days of 2024 did not materialize, disappointing investors who had hoped for a year-end boost. The focus now shifts to upcoming developments in U.S. politics, particularly the inauguration of President-elect Donald Trump, which could shape market sentiment in the months ahead.

Oil Prices Rise as Market Eyes China’s Economic Outlook
Meanwhile, oil prices saw a notable jump, with Brent crude futures rising 2% to around $76 per barrel, while U.S. West Texas Intermediate (WTI) climbed 2.3% to $73 per barrel. The increase was attributed to renewed investor optimism regarding China’s economic recovery and potential for rising demand.

Despite a largely range-bound market since October, oil has started the year on a strong note, with investors also watching for key data releases, including U.S. manufacturing numbers and updates on Chinese demand. Baker Hughes’ oil rig count will also be a key indicator.

Gold Hits 2-Week High Amid Safe-Haven Buying
Gold prices also surged, reaching their highest levels since mid-December. Spot gold rose 1.2% to $1,650 per ounce, driven by safe-haven buying as market uncertainty persisted. Investors positioned themselves ahead of the Federal Reserve’s interest rate outlook and the potential for new trade tariffs from President-elect Trump.

Gold had its highest year performance since 2010 at the end of 2023, when it gained a strong 27%. The metal’s appeal has been bolstered by a combination of interest rate cuts, central bank buying, and ongoing geopolitical tensions.

Cryptocurrency Market Rebounds
Cryptocurrencies also saw a rebound to start the new year. Bitcoin’s 2024 gains reached around 4% after a 3% increase. The rise was fuelled by the confidence of investors as well as the change in attitude in the larger market. As with other assets, the cryptocurrency market is closely watching developments surrounding Trump’s upcoming administration.

Dollar Strengthens, Other Currencies Struggle
The U.S. dollar strengthened against major currencies, hitting its highest level in over two years. The dollar index climbed as investors positioned for a strong start to the year, particularly in anticipation of Trump’s leadership. In comparison, the Japanese yen hit a five-month low, while the British pound, euro, and euro all declined versus the US dollar.

Outlook for 2025
As the first trading week of the year continues, investors remain focused on key political events, economic data, and central bank policies. While oil, gold, and cryptocurrencies have seen positive movement, Wall Street faces a more uncertain outlook as it grapples with profit-taking and geopolitical risks.