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As of Tuesday's stock market close, the Dow Jones Index (US30) decreased by 1.27%, while the S&P 500 Index (US500) was down by 1.47%. The Nasdaq Technology Index (US100) fell by 1.50%. Stocks went up first on Wednesday, with the S&P 500 Index (US500) rising to a 23-month high and the Dow Jones (US30) and Nasdaq (US100) indices setting new all-time highs. Stocks found support amid better-than-expected data on home sales and consumer confidence in the US, which bolstered prospects for a soft landing for the US economy. But by the end of the trading day, the stock market began to sell off. Over the past two weeks, sharp gains in stock indexes have driven them into overbought territory, prompting profit-taking and technical selling by fund managers and investors ahead of the Christmas holiday. The losses on Wall Street were massive, with about 95% of the companies in the indices down.

US home sales in November rose by 0.8% m/m to 3.82 million, which was stronger than expectations of a decline to 3.78 million. In addition, the Conference Board's US Consumer Confidence Index for December rose by 9.7 to a 5-month high of 110.7, exceeding expectations of 104.5. Philadelphia Fed President Harker's comments on Wednesday were somewhat hawkish and favorable to the US dollar when he said the Fed should start cutting interest rates, but "we shouldn't do it too quickly, and we're not going to do it all at once."

FedEx (FDX) fell by 12%, one of the biggest drops in the market, after it reported lower revenue and profit for the latest quarter than analysts expected. The company also expects its full fiscal year revenue to fall sharply from the previous year.

Equity markets in Europe traded flat yesterday. Germany's DAX (DE40) decreased by 0.07%, France's CAC 40 (FR40) was up by 0.12%, Spain's IBEX 35 (ES35) lost 0.06%, and the UK's FTSE 100 (UK100) raised by 1.02%.

Economic news for the Eurozone yesterday was mixed. Germany's Producer Price Index (PPI) for November declined by 0.5% m/m and 7.9% y/y, weaker than expectations of 0.3% m/m and 7.5% y/y. The GfK German Consumer Confidence Index for January rose by 2.5 to a 5-month high of minus 25.1, stronger than expectations of minus 27.0. Eurozone Consumer Confidence Index for December rose by 1.8 to a 5-month high of minus 15.1, stronger than expectations of minus 16.3. Eurozone new car registrations for November rose by 6.7% y/y to 886,000, marking the sixteenth consecutive month of growth in registrations.

In the UK, inflation unexpectedly slowed to 3.9% in November from October's 4.6%, reaching its lowest level since 2021. Weakening price growth is raising hopes that central banks around the world could abandon interest rate hiking campaigns and start cutting rates in 2024. Markets expect a rate cut from the BoE in May 2024.

The EIA's weekly oil inventories report released on Wednesday was bearish for crude oil prices (WTI). EIA crude inventories unexpectedly rose by 2.91 million barrels versus expectations of a 2.3 million barrel decline. But geopolitical risks keep a bullish bias for oil. Concerns about disruptions to Middle East oil supplies will support oil prices as more shippers avoid the Red Sea and send oil bypassing Africa due to attacks by Houthi militants on commercial shipping in the Red Sea.

Asian markets were mostly rising on Wednesday. Japan's Nikkei 225 (JP225) was up by 1.47% over yesterday, China's FTSE China A50 (CHA50) lost 0.66%, Hong Kong's Hang Seng (HK50) was up by 0.66%, and Australia's ASX 200 (AU200) raised by 0.65%.

At the opening on Thursday, Asian indices began to sell off, following the US indices. Tokyo's Nikkei 225 (JP225) fell by 1.5% after opening. Meanwhile, Japanese automaker Toyota led losses on the benchmark, falling as much as 3.9%. On Wednesday, the company said it was recalling 1 million vehicles due to a defect that could cause airbags to fail to deploy, increasing the risk of injury. It came amid news that Toyota's small-car subsidiary Daihatsu has suspended deliveries of all its vehicles in Japan and overseas after an investigation found improper safety testing on 64 models, including some made for Toyota, Mazda, and Subaru. Officials from Japan's transportation ministry searched Daihatsu's offices on Thursday.

• S&P 500 (US500) 4,698.35 −70.02 (−1.47%)
• Dow Jones (US30) 37,082.00 −475.92 (−1.27%)
• DAX (DE40) 16,733.05 −11.36 (−0.07%)
• FTSE 100 (UK100) 7,715.68 +77.65 (+1.02%)
• USD Index 102.43 −0.27 (−0.26%)
   

News feed for 2023.12.21:

• Hong Kong Inflation Rate (m/m) at 10:30 (GMT+2);
• Canada Retail Sales (m/m) at 15:30 (GMT+2);
• US GDP (q/q) at 15:30 (GMT+2);
• US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• US Natural Gas Storage (w/w) at 17:30 (GMT+2).

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