Dovish Fed Commentary Lifted Risk Assets
Key Points
- Miran's dovish comments reduced short-term rate expectations and supported risk assets, lifting U.S. equities and global markets.
- Jackson Financial's strategic partnership with TPG supplied capital, altered Jackson's near-term liquidity and capital structure and funded a captive reinsurer.
- Zymeworks reported positive Phase 3 HERIZON-GEA-01 results with an overall survival benefit in one arm, creating eligibility for regulatory milestones and prompting re-rating in biotech.
- Preliminary inflation reads for France and Germany left European markets sensitive and contributed to modest firming in major bourses.
Global Market Summary
US equities closed higher: the S&P 500 (SPX) rose 0.64%, the Nasdaq (^IXIC) gained 0.65% and the Dow (DJIA) climbed 1.02% as dovish Fed commentary supported risk assets. European bourses were modestly firmer with the FTSE (UKX) up 1.18%, the CAC (FRA40) up 0.32% and the DAX (DAX) up 0.09% as markets awaited preliminary inflation reads for France and Germany. Asia advanced with Shanghai (000001.SS) up 1.50% and the Nikkei (NKY) up 1.32%, while a jump in long-term Japanese yields was notable for fixed-income markets.
Top Movers
Top sector performers: XLB (+2.06%) and XLV (+2.03%) led gains, with industrials (XLI +1.32%) and tech (VGT +1.19%) also positive. Largest sector laggards were energy (XLE -2.31%) and communication services (XLC -0.48%). Notable stock movers included OS (+28.36%), SNDK (+26.74%) and WDC (+16.96%) at the top, while MH (-12.58%), SOFI (-7.51%) and AIG (-7.36%) paced declines.
Macro highlights
Fed Governor Stephen Miran said on January 6 that well over 100 basis points of rate cuts are likely in 2026, a dovish signal markets interpreted as lowering short-term rate expectations and supporting risk assets. Preliminary inflation releases for France and Germany were on the calendar, leaving European markets sensitive to the incoming prints.
News that moved markets
Jackson Financial and TPG announced a strategic partnership including a $500 million equity investment by TPG and a reciprocal $150 million cross-issuance, a move that provides capital to fund a captive reinsurer and alters Jackson's near-term liquidity and capital structure. Zymeworks reported positive Phase 3 HERIZON-GEA-01 results for Ziihera, including an overall survival benefit in one arm and eligibility for up to $440 million in regulatory milestones, a development that could re-rate Zymeworks (ZYME) and biotech peers. Several completed transactions were reported, including H.I.G. Growth Partners' sale of ProsperOps, Pixelworks' completed sale of its Shanghai semiconductor subsidiary to VeriSilicon, Park Place Technologies' merger with Service Express and Day One's acquisition of Mersana Therapeutics. Announced deals included Cerity Partners' merger with Austin Private Wealth and East Coast Power's acquisition of United Powerline Solutions.
Upcoming session watchlist
- IT Inflation Rate YoY Prel (DEC) — consensus 1.1% vs 1.1% prior, Jan 07, 10:00 AM | Shows headline inflation trend, informing domestic price pressure and near term inflation outlook.
- EA Inflation Rate YoY Flash (DEC) — consensus 2.1% vs 2.1% prior, Jan 07, 10:00 AM | Provides early estimate of headline inflation, informing near term inflation trend and price pressures.
- US ISM Services PMI (DEC) — consensus 52.3 vs 52.6 prior, Jan 07, 03:00 PM | Measures services sector activity and demand, informing near term growth and business conditions.
- CA Ivey PMI s.a (DEC) — consensus 49.5 vs 48.4 prior, Jan 07, 03:00 PM | Ivey PMI measures Canadian business activity and demand, indicating near term growth momentum.
Key Takeaways
- Favorable Fed remarks supported risk appetite, and U.S. equities closed higher with major indexes recording gains across the board.
- Materials and health-care led sector gains while energy and communication services lagged, driven by sizable individual stock moves.
- M&A activity was busy: Jackson Financial and TPG's capital partnership altered Jackson's liquidity and capital structure, alongside several completed and announced transactions.
References
- 1. https://seekingalpha.com/pr/20353744-jackson-financial-inc-and-tpg-inc-announce-long-term-strategic-partnership
- 2. https://www.marketscreener.com/news/ziihera-zanidatamab-hrii-combinations-achieve-unprecedented-results-in-first-line-her2-locally-a-ce7e59dfdc80f727
- 3. https://x.com/WhiteHouse/status/2008546722843422953
- 4. https://x.com/Barchart/status/2008440950734155810
- 5. https://x.com/RapidResponse47/status/2008611951820345733
- 6. https://x.com/Barchart/status/2008335947713167845
- 7. https://x.com/Barchart/status/2008358470320300442
- 8. https://x.com/ecb/status/2008465475714363509
- 9. https://x.com/Bank_of_Japan_e/status/2008448916661170207
- 10. https://finance.yahoo.com/news/fed-miran-says-over-100-135256504.html
- 11. https://x.com/BIS_org/status/2008479426644783247
- 12. https://x.com/Barchart/status/2008349645311812016
- 13. https://x.com/WhiteHouse/status/2008637195175755833
- 14. https://x.com/WhiteHouse/status/2008591332168847812
- 15. https://x.com/Barchart/status/2008331478636335314
- 16. https://x.com/Barchart/status/2008590636874936330
Get premium market insights delivered directly to your inbox.