News and analysis

The New York Stock Exchange (NYSE) and Nasdaq, which are the world's most important trading platforms, end the year at even higher levels than we expected. Lower borrowing costs by leading central banks, as well as a particularly fruitful Q3 earnings season, Black Friday and Cyber Monday sales results contributed much to the S&P 500 broad market indicator's climbing to record tops above 6,000, with the Nasdaq 100 index touching the area around 22,000 for the first time ever, compared to nearly 4,770 and 16,667, respectively, at the starting line of 2024. This means the annual performance is nearing 27% for the broad market barometer and 32% for the tech-heavy measure on average. Even if we may halve our potential 2025 percentage growth bets, the output from this moderated inertial scenario would give us 6,850 for the S&P 500 and 25,500 for the Nasdaq index, even though a bolder extrapolation is quite possible.

As an example, the road map made by Capital Economics before Christmas supposed the S&P 500 may finish 2025 at 7,000. This forecast came out despite the researchers' belief that the Federal Reserve's policy could be "a bit less accommodative” than they had previously projected, while mostly attributing the recent one-off slide in the S&P on the next day after the latest meeting of the U.S. financial regulator to a correlating sell-off in public bonds. It appears that the market crowd agrees with this statement, since the bulls have recovered so quickly. Monetary drivers are probably not decisive in this context. What could be more important is the extent of sensitivity of the American economy to trade battles with China and other rival economies under the upcoming Republican administration. Trump 2.0 is a "recipe for volatility" in 2025, says Piper Sandler, as its analysts are feeling the current situation may mirror the early 1980s when Ronald Reagan inherited great and sticky inflationary pressures accompanied by policy dysfunction and surging federal spending. The investment bank marked the risks of recent rate cuts "gone too far, too fast" while tariffs may push prices higher.

Goldman Sachs believes the Trump administration will implement targeted tariffs on imported automobiles and certain imports from China, as well as a 15% corporate tax rate for domestic manufacturers. They expect that the cumulative impact of these policy changes on corporate profits may roughly offset one another on net, so that Goldman projects the S&P 500 index to rise to 6,500 by the end of 2025. Morgan Stanley also stressed its base case for the S&P 500 price target at 6,500 on "earnings growth broadening".

The uncertainty surrounding fiscal policy under Trump is added to chances for a potentially negative impact. And so, the first 100 days of Trump's presidency will reveal a seriousness of his purpose to drive to much lower corporate taxes and a more effective government. However, we note that even the difficult progress of legislative initiatives during Trump’s first term on a stage of a divided Congress did not prevent the stock market from further rallying in 2017-2019, and now the Republicans have a clear majority in both the House and the Senate. As the first post-election phase of the so-called Trump trade has gone, its next phase when a revolutionary Republican agenda is going to be implemented step-by-step in practice will be a good stress test for markets. Yet, a protective mood may be united with residual enthusiasm to provide the bullish dynamics at least in the course of the first half of 2025 when about two-thirds of the way to our annual targets could be passed already. A corporate agenda of strong forecasts' transformation into reality can also be helpful on this stage. But the second half of the year may become more data dependent to create volatility in case of weaker-than-expected policy results.

We should not forget that the large tech corporations with American roots are not so closely related to revenues from the United States, selling a lion's share of their products and services to Asia and countries of the “Global South”. The top techs, led by NVIDIA, Apple, Microsoft, Meta, Google, Amazon, Broadcom etc., could play a quasi safe-haven role, especially as new China's stimulus hopes for a record-breaking 3 trillion Yuan (more than $400 billion) in special treasury bonds for 2025 are going to improve the global market sentiment, starting from giant beneficiaries of this policy. The economic growth in China is a very important factor for the country's domestic consumption, including products by transnational companies and local supply chains. Whether the growth pace in China will be sustainable or not will determine the prospect of achieving our target levels for the Wall Street indexes and its flagships in the second part of the year.

The world's key decentralized digital currency has long ceased to be a Cinderella who wanted to be able to dance at her first ball in top markets. Yet, the U.S. President-elect Donald Trump and a circle of his close associates including the charismatic Elon Musk suddenly became shining representatives of some fairy godmother for Bitcoin. Crypto fans were so imbued with Trump's plans iterated and reiterated on the point of Bitcoin's extensive use as a full-fledged tool to form the American reserves in a glimmer of hope for paying off public debts by Bitcoins in the future, that BTCUSD price explosion above $100,000 was the shortest walk it ever had. Thus, Bitcoin openly crossed the line to gain access into high society forever, and no missing shoe in the course of a temporary retracement would turn its magic carriage into a simple pumpkin, with its "noble birth" being confirmed for the rest of the decade at least.

A favourable regulatory framework and increasing demand for the purposes of accumulating income, saving money and alternative cross-border payment against a whole heap of restrictions and losing credibility by fiat currencies led by the Greenback are compelling even heavy traditional investors to join reluctantly to the speculative fever club resulting in more or less aggressive buying any local dips in Bitcoin. Violent pitching of a Bitcoin boat took place on Thursday when it attempted to approach a $100,000 milestone once again. A broader altcoin market became very unstable at that moment as well. Well, it's just O.K. if the former Cinderella was certainly tired from dancing too long on the upper deck to take breath and went down for a while.

It may take some time to change the glass slippers for normal shoes to go on with a more regular party. However, we all saw how quick and sharp Bitcoin was when bouncing twice from the area around $92,500 to above $99,500 and nearly touching $100,000 again. This circus trick of extremely high activity first happened on December 20 and then was repeated on December 24, and so this sliding down and recovering back manoeuvres became just a matter of a few days. For me, this means that daring jumps above $105,000 could not be ruled out in January, of course, but the time factor is slowing down for the nearest weeks, thanks to the Federal Reserve's pause in its cutting rates cycle, which helps to strengthen market positioning in U.S. Dollars. More growth in both gold and crypto assets could be subdued, with a respite being used by market enthusiasts for a more solid bottoming to set roots for buying more Bitcoins for longer.

Technically, I believe that any decline to a lower range between $85,000 to $90,000, if this move ever happens, would immediately spark up investing interest by a much wider circle of both corporates and small traders. As a result a plunge to $80,000 or below is surely not my baseline scenario, and we may totally forget about quotes like $50,000 or $60,000 in 2025, like if this was before the founding of our current civilization. Another fundamentals behind much higher pricing of alternative means of payment, led by crypto, are implausible monetary road maps by major central banks, which could be called shaky at best, a long history of too weak financial discipline with printing too much money by leading countries, in contrast with a relatively pure financial planning, as blockchain technology is transparent limiting minting better than the governments with catastrophically raising for debt ceiling continuously. As my lowest estimate for a possible Bitcoin retracement is around $80,000, then personally my expectations for Bitcoin rally extensions are ranging from $120,000 to even $150,000 in 2025. It's just going to take a little time to get used to new realities at the beginning of the new year. Shortly thereafter, it may go forward again.

Monero (XMR) has gained 1.4% to $190.70, outperforming the broader crypto market, where Bitcoin (BTC) is up by just 0.2% to $95,441. Earlier on Thursday, Bitcoin touched $100,000 but dropped 4.7%, while Monero retreated only 1.0%, showcasing resilience that may suggest the coin is undervalued.

In November and December, altcoins generally surged over 60%, yet Monero has lagged with a 48.0% increase, peaking at $232.40 on December 16. The altcoin has repeatedly attempted to breach the $225.00 resistance but has consistently pulled back to strong support at $175.00. This combination of perceived undervaluation and robust support makes Monero more resistant to negative market shocks.

Given this setup, another attempt to test the $225.00 resistance level appears plausible, provided broader market conditions remain supportive.

Dogecoin (DOGE) is up 6.3% this week, trading at $0.3335 and outperforming the broader cryptocurrency market, where Bitcoin (BTC) has gained 3.3% to $98,360. DOGE’s correction found support at $0.3000, although prices briefly dipped as low as $0.2622 before recovering.

The resurgence in DOGE can be attributed to Bitcoin's recovery and its ongoing association with Elon Musk, which continues to bolster investor sentiment. As long as Bitcoin remains above the $90,000 mark, DOGE is likely to maintain support above $0.3000 and could potentially rally further to $0.4000.

However, further upside for DOGE appears limited unless Bitcoin alleviates its extreme overbought conditions.