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At the end of Wednesday, the Dow Jones Index (US30) fell by 0.22%. The S&P 500 Index (US500) is up 0.82%. The Nasdaq Technology Index (US100) jumped 1.85% to an all-time high. The US stocks extended early gains, reversing earlier session declines this week as inflation data offered no surprises and bolstered bets that the US Federal Reserve will cut rates next week. Markets rate the odds of a 25bp rate cut at the December 17–18 FOMC meeting at 95%. The US Consumer Price Index for November rose by 0.3% m/m and 2.7% y/y, which aligns with expectations. In addition, the Consumer Price Index, excluding food and energy, rose by 0.3% m/m and 3.3% y/y, which aligns with expectations.

Technology stocks led the gains, helped by low bond yields and bets that the incoming Trump administration may reduce sector regulation. Tesla (TSLA) jumped 3.6%, up nearly 70% since the November election, while Meta (META) added 5.3%, Nvidia (NVDA) jumped 2.6%, and Broadcom (AVGO) gained 5%.

At its December meeting, the Bank of Canada (BoC) cut its key interest rate by 50 bps for the second consecutive time, as expected by the markets. This brought the cumulative rate cut to 175 bps from this cycle’s peak of 5%. Nevertheless, the rhetoric of Central Bank policymakers suggests that there will be no more aggressive rate cuts next year, and officials have backtracked on the statement that borrowing costs will be reduced if the base case scenario continues. The sharp interest rate cut followed data that Canada’s GDP grew at a 1% annualized rate in the third quarter, below the Central Bank’s projections, and fourth-quarter growth risks also falling short of estimates.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 0.34%, France’s CAC 40 (FR40) closed higher by 0.39%, Spain’s IBEX 35 (ES35) fell by 1.47%, and the UK’s FTSE 100 (UK100) closed up 0.26%.

The Swiss National Bank (SNB) is expected to meet today. Most economists expect a 25bps rate cut, but some economists expect a 0.5% rate cut. This is even though the current rate is at 1%. The Swiss franc has declined slightly over the past few months, but mainly because markets expect a significant rate cut towards the lower boundary of zero. A 0.25% rate cut is already factored into the price, so it will only add volatility to currency pairs with the CHF. But if the SNB surprises and goes for a 0.5% rate cut, the franc could come under selling pressure.

WTI crude oil prices jumped 2.5% to $70.29 a barrel on Wednesday, driven by the European Union’s approval of a new package of sanctions targeting Russian oil flows, adding to supply concerns. However, gains were tempered as the US EIA reported a larger-than-expected increase in gasoline and distillate inventories, signaling weak domestic fuel demand. Adding to market uncertainty, OPEC cut its estimates for global oil demand growth in 2024 and 2025 for the fifth consecutive month, citing weak demand in China and rising non-OPEC+ supply. OPEC+ had earlier postponed plans to increase production, reflecting cautious market dynamics.

The US natural gas prices (XNGUSD) climbed above $3.25/MMBtu, the highest in more than a week, mainly due to projections of colder weather and increased heating demand. In addition, export liquefied natural gas (LNG) plants are receiving more natural gas, averaging 14.0 Bcf/d in December compared to 13.6 in November.

Asian markets were relatively flat yesterday. Japan’s Nikkei 225 (JP225) rose by 0.01%, China’s FTSE China A50 (CHA50) gained 0.44%, Hong Kong’s Hang Seng (HK50) fell by 0.77%, and Australia’s ASX 200 (AU200) was negative 0.47%.

Australia’s seasonally adjusted unemployment rate fell to 3.9% in November 2024 from 4.1% in the previous three months, defying market estimates of 4.2%. It was the lowest unemployment rate since March as the number of jobless fell by 27,000 to an 8-month low. Market sentiment shifted sharply after the data release, as the implied probability of a February rate cut fell to around 50% from 68% before publication.

• S&P 500 (US500) 6,084.19 +49.28 (+0.82%)
• Dow Jones (US30) 44,148.56 −99.27 (−0.22%)
• DAX (DE40) 20,399.16 +70.00 (+0.34%)
• FTSE 100 (UK100) 8,301.62 +21.26 (+0.26%)
• USD Index 106.65 +0.25 (+0.23%)
   

News feed for: 2024.12.12

• Australia Unemployment Rate (m/m) at 02:30 (GMT+2);
• Sweden Inflation Rate (m/m) at 09:00 (GMT+2);
• Switzerland SNB Interest Rate Decision at 10:30 (GMT+2);
• Switzerland SNB Monetary Policy Assessment at 10:30 (GMT+2);
• Switzerland SNB Press Conference at 11:00 (GMT+2);
• Eurozone ECB Interest Rate Decision at 15:15 (GMT+2);
• Eurozone ECB Monetary Policy Statement at 15:15 (GMT+2);
• US Producer Price Index (m/m) at 15:30 (GMT+2);
• US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• Eurozone ECB Press Conference at 15:45 (GMT+2);
• US Natural Gas Storage (w/w) at 17:30 (GMT+2).

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