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Global market indices
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Fixed Income
Commodity sector news
Key data to move markets
Global macro updates

Global market indices

US Stock Indices Price Performance

Nasdaq 100 +2.09% MTD +27.00% YTD
Dow Jones Industrial Average -1.48% MTD +17.40% YTD
NYSE  -1.81% MTD +18.11% YTD
S&P 500 +0.86% MTD +27.56% YTD

The S&P 500 is -0.04% over the past week, with 8 of the 11 sectors down MTD. The Equally Weighted version of the S&P 500 is -1.49% this week, its performance is -2.19% MTD and +15.94% YTD.

The S&P 500 Communication Services is the leading sector so far this month, up +8.67% MTD and +45.85% YTD, while Utilities is the weakest at -6.40% MTD and +21.74% YTD.

This week, Communication Services outperformed within the S&P 500 at +5.29%, followed by Consumer Discretionary and Information Technology at +5.26% and -0.27%, respectively. Conversely, Utilities underperformed at -3.59%, followed by Health Care and Materials, at -3.18% and -3.08%, respectively.

US equity markets exhibited mixed performance on Wednesday. The Nasdaq Composite led the advance, surging +1.8% and crossing the 20,000 threshold for the first time, fueled by the ongoing AI rally and encouraging inflation data that reinforced expectations of a Fed rate cut next week. The S&P 500 also registered gains, rising +0.8%. In contrast, the Dow Jones Industrial Average edged lower, shedding approximately 99 points, or -0.2%, to close at 44,148.56, weighed down by weakness in healthcare stocks.

The Healthcare sector faced pressure amid reports that federal lawmakers are preparing legislation to dismantle pharmacy benefit managers. Shares of CVS, Cigna, and UnitedHealth, the operators of the three largest such entities, experienced declines of 5% or more.

In corporate news, Apple is reportedly developing a server chip specifically designed for AI applications, collaborating with Broadcom on the chip's networking technology, according to The Information.

The Hershey Company's main owner reportedly rejected a preliminary takeover offer from Mondelez International, potentially ending a pursuit that could have created a food industry giant with combined sales approaching $50 billion.

Finally, Walgreens Boots Alliance shares fell -5.6% as analysts expressed skepticism about the likelihood of a successful acquisition by Sycamore Partners. This decline followed a significant surge in the stock price on Tuesday, triggered by reports of potential takeover discussions between the two entities.

US stocks

Mega caps: The Magnificent Seven had a mostly positive performance this week. Alphabet +12.06%, Amazon +5.55%, Apple +1.43%, Meta Platforms +3.08%, Microsoft +2.65%, Nvidia -4.02%, and Tesla +18.67%.

Energy stocks underperformed this week, as the Energy sector itself was -2.03% due ongoing imbalances in the supply of oil. WTI and Brent prices are slightly up this week, +2.27% and +1.48%, respectively. The Energy sector’s YTD performance is +7.11%. Over the week BP +2.52%, Marathon Petroleum +1.04%, Apa +0.81%, while Baker Hughes -0.23%, Occidental Petroleum -0.88%, Hess  -1.13%, ConocoPhillips -1.28%, Chevron -1.33%, Shell -1.50%, ExxonMobil -2.07%, Phillips 66 -4.04%, Halliburton  -4.58%, and Energy Fuels  -5.91%.

Materials and Mining stocks had a mixed performance this week, with the Materials sector itself -3.08%, bringing the sector’s YTD performance to +5.29%. Sibanye Stillwater +4.18%, Yara International +2.17%, Newmont Corporation +2.10%, Albemarle +1.20%, Mosaic +0.19%, Freeport-McMoRan -0.09%, CF Industries -1.84%, and Nucor  -7.28%.

European Stock Indices Price Performance

Stoxx 600 +1.90% MTD +8.55% YTD
DAX +3.94% MTD +21.77% YTD
CAC 40 +2.60% MTD -1.59% YTD
IBEX 35 +1.27% MTD +16.70% YTD
FTSE MIB +3.32% MTD +13.75% YTD
FTSE 100 +0.17% MTD +7.35% YTD

This week, the pan-European Stoxx Europe 600 index was +0.48%. It was +0.28% on Wednesday, closing at 519.95.

This month so far in the STOXX Europe 600, Autos & Parts is the leading sector, +5.96% MTD and -10.60% YTD, while Utilities is the weakest at -2.24% MTD and -1.35% YTD.

This week, Autos & Parts outperformed within the STOXX Europe 600 with a +4.77% gain, followed by Personal & Household Goods and Banks at +2.98% and +2.64%, respectively. Conversely, Retail underperformed at -4.43 %, followed by Utilities and Industrial Goods, -6.09% and +2.80% , respectively.

Germany's DAX index was +0.34% on Wednesday and closed at 20,399.16. It was +0.83% for the week. France's CAC 40 index was +0.39% on Wednesday, closing at 7,423.40. It was +1.64% for the week.

The UK's FTSE 100 index was -0.41 % this week to 8,301.62. It was +0.26% on Wednesday.

The Insurance sector demonstrated strong performance in Wednesday's trading, led by Aegon, which announced ambitious net-zero investment targets for 2030. Talanx also contributed to the sector's gains, having outlined medium-term targets aimed at accelerating earnings and dividend growth by 2027. The company also revealed its intention to increase its fiscal year 2024 dividend from €2.50 per share to €2.70 per share.

In the automotive sector, BMW is attracting investor attention following the supervisory board's proposal to appoint Nicolas Peter as the new Chairman after the 2025 Annual General Meeting, succeeding Norbert Reithofer. Continental announced that CFO Olaf Schick will be stepping down early from the executive board on 30^th September, 2025, and joining the board of management of Mercedes-Benz. Mercedes-Benz also unveiled plans for a management board reshuffle, with four new members joining and changes taking effect in 2025.

The Retail sector is lagging behind the broader market, with Inditex facing pressure after reporting 9-month net income attributable of €4.45 billion, falling short of the FactSet consensus estimate of €4.55 billion. Zalando also made headlines with its announcement of a €6.50 per share public takeover offer for About You Holding. Adding to the sector's woes, Adidas weakened after authorities raided its headquarters in Germany as part of a long-running tax investigation.

Real estate is experiencing significant declines ahead of the release of US inflation data and a series of central bank policy decisions expected today and next week.

In the healthcare sector, Carl Zeiss Meditec is in focus after reporting weaker-than-expected full-year results. The travel and tourism sector is also under pressure, with TUI disappointing investors by missing Q4 expectations.

Other Global Stock Indices Price Performance

MSCI World Index +0.17% MTD +20.43% YTD
Hang Seng +3.77% MTD +18.23% YTD

This week, the Hang Seng Index was +2.09%, while the MSCI World Index was -0.86%.

Currencies

EUR -0.78% MTD -4.89% YTD to $1.0497.
GBP +0.13% MTD +0.16% YTD to $1.2748.

The euro was -0.12% against the USD over the past week, while the British pound was +0.35%. The Dollar Index is +0.28% so far this week, +0.86% MTD, and +5.25% YTD, settling at 106.65.

The US dollar appreciated on Wednesday following the release of US consumer price data, which aligned with market forecasts. This reinforced expectations that the Fed will implement an interest rate cut at its upcoming FOMC meeting on 17^th - 18^th December.

The CPI for November indicated a 0.3% increase, marking the most significant gain since April, following four consecutive months of 0.2% growth. This figure was consistent with consensus expectations. Consequently, market sentiment, as reflected by CME's FedWatch tool, suggests a 98.6% probability of a 25 bps rate cut by the Fed, from 88.9% a day earlier.

The US dollar index reacted positively to this news, rising by +0.28% to reach 106.65. Conversely, the euro depreciated by -0.29% against the dollar, trading at $1.0497. The British pound also experienced a decline against the dollar, falling by -0.17% to $1.2728. 

Despite the dollar's strength, the pound reached a two-and-a-half-year high against the euro. This surge was attributed to a relatively hawkish stance from the BoE, coupled with political instability in France and Germany. The euro briefly touched 82.35 pence, its lowest point since March 2022, before recovering slightly to 82.50 pence.

Market expectations suggest that the BoE will maintain its current interest rate at its next meeting and exercise caution in its monetary policy throughout the coming year. Current market pricing indicates three 25 bps rate cuts by the end of next year.

In contrast, the ECB has cut interest rates by 25 bps to 3% at its meeting today. Analysts further predict that the ECB will continue this trend of rate reductions at each subsequent meeting, at least throughout the first half of 2025, and potentially beyond.

The ECB warned that growth will be weaker than previously forecast. The ECB dropped reference to policy being “restrictive” in its statement. This dovish outlook from the ECB is compounded by political uncertainties. The recent collapse of Prime Minister Michel Barnier's government in France has created uncertainty surrounding the country's 2025 budget, with officials resorting to temporary measures to extend 2024 spending limits until a new budget can be formulated next year. Adding to these concerns, Germany also experienced a collapse of its governing coalition last month.

The Japanese yen garnered attention following a Bloomberg report suggesting that the BoJ perceives minimal drawbacks to delaying its next interest rate hike. The dollar appreciated by +0.29% against the yen, reaching ¥152.38. Earlier in the day, the yen had strengthened in response to data indicating an acceleration in Japanese wholesale inflation, bolstering arguments for a potential BoJ rate hike in the near future.

Note: As of 5:00 pm EST 11 December 2024

Cryptocurrencies

Bitcoin +4.24% MTD +141.77% YTD to $101,941.00.
Ethereum +6.56% MTD +66.87% YTD to $3,836.79.

Bitcoin is +2.56% and Ethereum +0.25% so far this week. Bitcoin rallied past the $100,000 mark again on Wednesday after the November CPI was in line with forecasts, coming in with a 0.3% m/o/m rise from October and +2.7% y/o/y. Investors are betting that reading clears the way for the Federal Reserve to cut interest rates again next week, making other asset classes such as cryptocurrencies more attractive. Over $6.96 million in short liquidations within four hours on Wednesday contributed to the rally back over the $100,000 mark, reflecting strong market momentum. Ethereum has been supported by purchases of BlackRock and Fidelity Spot Ethereum ETFs. They purchased $500 million worth of Ether in the past two days, according to the crypto data tracking platform Arkham.

Note: As of 5:00 pm EST 11 December 2024

Fixed Income

US 10-year yield +10.0 bps MTD +39.4 bps YTD to 4.275%.
German 10-year yield +4.1 bps MTD +12.3 bps YTD to 2.132%.
UK 10-year yield +7.4 bps MTD +78.2 bps YTD to 4.321%.

US Treasury 10-year bond yields are +9.4 bps this week. US Treasury yields experienced an upward trend on Wednesday, reversing an earlier decline, as the Treasury Department conducted auctions of long-dated securities and government budget data revealed a widening deficit.

Initially, yields had fallen following the release of November's CPI data, which further solidified market expectations for a 25 bps rate cut by the Fed at its upcoming meeting next week. However, concerns about the long-term fiscal outlook weighed on the market as the US government reported a November budget deficit of $367 billion, representing a 17% y/oy increase.

As a result, the yield on the 10-year Treasury note rose +5.0 bps to 4.275%, while the yield on the more interest rate-sensitive 2-year note increased by +1.0 bps to 4.159%.

Despite these concerns, the Treasury Department witnessed strong demand for its $39 billion sale of 10-year notes, the second auction in a series of coupon-bearing debt offerings this week totaling $119 billion. The 10-year notes were sold at a high yield of 4.235%, slightly below pre-auction trading levels. The bid-to-cover ratio reached 2.7x, the highest since at least March 2022.

This follows solid demand observed in Tuesday's $58 billion auction of 3-year notes. The Treasury Department is scheduled to complete its debt offerings this week with a $22 billion sale of 30-year bonds on Thursday.

Market expectations for a 25 bps rate cut at the conclusion of the Federal Reserve's 17^th - 18^th December meeting have increased. According to the CME Group's FedWatch Tool, the probability of such a cut now stands at 98.6%, up from 78.1% a week ago.

Across the Atlantic, the German 10-year yield was +4.1 bps this week, while the UK 10-year yield was +7.1 bps this week. The spread between US 10-year Treasuries and German Bunds currently stands at 214.3 bps, 2.3 bps higher than last week.

Italian bond yields, a benchmark for the eurozone periphery, were -1.1 bps this week to 3.205%. Consequently, the spread between Italian and German 10-year yields is 107.3 bps, 8.2 bps narrower than last week.

French 10-year government bond yields edged slightly higher this week by +1.0 bps to 2.90%. The yield premium over German 10-year yields decreased by 6.1bps to 76.8 bps. 

Eurozone government bond yields exhibited mixed movements on Wednesday as market participants awaited the ECB monetary policy meeting scheduled for today. As expected the ECB cut key interest rates by 25 bps, accompanied by more dovish forward guidance. Furthermore, market expectations imply an ECB deposit facility rate of 1.82% by July 2025, down from its current level of 3.25%.

Germany's 10-year Bund yield edged higher by +0.9 bps to reach 2.132%. In contrast, the yield on Germany's 2-year government bond, which is more sensitive to short-term interest rate expectations, declined by -0.5 bps to 1.96%.

Italian government bonds outperformed their regional counterparts, with the 10-year yield briefly touching a 28-month low of 3.162% before settling at 3.205%, unchanged from the previous day.

The yield spread between French government bonds and German Bunds, a measure of the risk premium on French debt, remained relatively stable following President Emmanuel Macron's announcement of a 48-hour timeline for the formation of a new government. The spread widened slightly by +2.0 bps to 76.8 bps.

Commodities

Gold spot +2.89% MTD +32.55% YTD to $2,717.04 per ounce.
Silver spot +6.86% MTD +36.14% YTD to $31.88 per ounce.
West Texas Intermediate crude +0.50% MTD -4.58% YTD to $70.32 a barrel.
Brent crude -1.10% MTD -7.78% YTD to $73.57 a barrel.

Gold prices are +2.54% this week. Gold prices rose on Wednesday following the release of inflation data that met market expectations, strengthening the prospect of a Fed rate cut next week. Market participants are now awaiting the US Producer Price Index (PPI) data release later today for further clues on the future direction of monetary policy.

Spot gold appreciated +0.89%, reaching $2,717.04 per ounce. This upward trend is consistent with gold's traditional role as a safe haven asset in times of uncertainty, as the metal typically benefits from a low interest rate environment.

This week, WTI and Brent are +2.27% and +1.48%, respectively.

Crude oil prices experienced an upward trend on Wednesday, settling over $1 higher. This surge followed the EU's agreement on a new round of sanctions targeting Russia, potentially further constricting global oil supplies. 

The sanctions, the fifteenth package imposed on Russia since the onset of the conflict with Ukraine, were confirmed by the Hungarian EU presidency. While a "shadow fleet" has enabled Russia to circumvent the G7's $60 per barrel price cap on seaborne crude oil exports, these additional measures may limit Russia's ability to maintain its current level of oil exports. US Treasury Secretary Janet Yellen affirmed the US commitment to exploring further avenues for curtailing Russia's oil revenue. She indicated that decreased global demand for oil presents an opportunity to implement additional sanctions.

However, gains were tempered by data released by the Energy Information Administration (EIA), which revealed a larger-than-anticipated increase in gasoline and distillate inventories last week. This build-up in stockpiles exerted downward pressure on crude prices.

Dimming demand outlook: OPEC cuts oil growth forecast for fifth consecutive month. OPEC, in its monthly report released Wednesday, reduced its forecast for global oil demand growth in 2024 for the fifth consecutive month. This downward revision, the most significant to date, reflects growing concerns about the strength of China's economy and its role as the primary driver of global oil demand growth.

This weaker outlook presents a challenge for OPEC+. In response to falling prices and concerns about oversupply, OPEC+ recently announced a postponement of its planned output increase until April 2025.

OPEC now projects global oil demand to increase by 1.61 million barrels per day (bpd) in 2024, a significant reduction from the 1.82 million bpd forecast just last month. The organisation also lowered its 2025 growth estimate to 1.45 million bpd from 1.54 million bpd.

The 210,000 bpd reduction in the 2024 forecast marks the largest of the five downward adjustments made by OPEC since August. This reflects a notable shift from July's projection of 2.25 million bpd growth in world oil demand. OPEC attributed this latest revision to ‘bearish data’ received for Q3, particularly impacting the outlook for China, India, other Asian countries, the Middle East, and Africa.

While OPEC's demand growth forecast remains comparatively optimistic within the industry, the recent series of downward revisions brings it closer to the International Energy Agency's (IEA) more conservative outlook. The IEA, which represents industrialised nations, currently anticipates demand growth of 920,000 bpd in 2024 and is expected to update its forecast on Thursday.

EIA report: refinery strength drives continued decline in US crude stock. The EIA reported on Wednesday that US crude oil inventories declined for the third consecutive week, while fuel stockpiles increased in the week ending 6^th December. This trend occurred amidst sustained strength in refinery activity, typical for this time of year.

Specifically, crude oil inventories decreased by 1.4 million barrels, reaching 422 million barrels. Stocks at the Cushing, Oklahoma, delivery hub also experienced a decline, falling by 1.3 million barrels.

Despite a slight dip of 0.9 percentage points, US refinery utilisation rates remained robust at 92.4%. The four-week average utilisation rate stood at 91.6%, higher than the 89.4% recorded during the same period last year. Refinery crude runs decreased by 251,000 barrels per day (bpd) to 16.66 million bpd, while net US crude imports also fell by 170,000 bpd.

In contrast to the decline in crude oil inventories, gasoline stocks increased by 5.1 million barrels, reaching 219.7 million barrels. Distillate stockpiles, which encompass diesel and heating oil, rose by 3.2 million barrels to 121.3 million barrels.

The EIA report also indicated a slight w/o/w increase in gasoline product supplied, a proxy for demand, which reached 8.8 million bpd.

Furthermore, US field production of crude oil reached a record high of 13.6 million bpd last week.

Note: As of 5:00 pm EST 11 December 2024

Key data to move markets

EUROPE

Thursday: ECB Monetary Policy Meeting and Monetary Policy Statement.
Friday: German Trade Balance, French CPI, Spanish Harmonised Index of Consumer Prices, and Eurozone Industrial Production.
Monday: German HCOB Composite, Manufacturing and Services PMIs, French HCOB Composite, Manufacturing and Services PMIs, Eurozone HCOB Composite, Manufacturing and Services PMIs, and Eurozone Labour Costs. 
Tuesday: German IFO Business Climate, Current Assessment, and Expectations Survey, German ZEW Current Situation and Economic Sentiment Surveys, and Eurozone ZEW Economic Sentiment.
Wednesday: Eurozone Harmonised Index of Consumer Prices.

UK

Friday: GfK Consumer Confidence, GDP, Industrial Production, Manufacturing Production, and Consumer Inflation Expectations.
Monday: S&P Global/CIPS Composite, Manufacturing and Services PMIs.
Tuesday: Average Earnings, Claimant Count, Employment Change, and ILO Unemployment Rate.
Wednesday: CPI, PPI and RPI.

US

Thursday: Initial and Continuing Jobless Claims and PPI.
Monday: NY Empire State Manufacturing Index and S&P Global Composite, Manufacturing and Services PMIs. 
Tuesday: Retail Sales and Industrial Production.
Wednesday: Building Permits, Housing Starts, Federal Reserve Monetary Policy Decision, Monetary Policy Statement, and FOMC Economic Projections.

JAPAN

Thursday: Tankan Large Manufacturing Outlook.
Tuesday: Imports, Exports, and Merchandise Trade Balance Total.

CHINA

Monday: Industrial Production and Retail Sales.

Global Macro Updates

Shelter inflation moderates in November CPI report. November's core CPI data aligned with expectations, increasing by 0.3% month-over-month, consistent with the previous three months and consensus forecasts. The annualised core CPI also met expectations, remaining at 3.3%. Headline CPI rose by 0.3% m/o/m, in line with predictions, while the annualised headline CPI held steady at 2.7%.

Analysts highlighted the moderation in shelter inflation as a key takeaway from the report, suggesting that a reacceleration of inflation remains unlikely. While the shelter index increased by 0.3% m/o/m and contributed approximately 40% of the overall increase in the all-items index, both rent and owners' equivalent rent (OER) rose by a more modest 0.2%. This represents a slight deceleration from October's readings and fell below some analysts' expectations.

Other notable components of the report included an acceleration in the food index, which rose by 0.4% compared to 0.2% in October. Used vehicles continued their upward trend, increasing by 2.0%, albeit at a slower pace than October's 2.7% rise. Airfares moderated significantly, rising by 0.4% following a 3.2% surge in the previous month. Apparel prices increased by 0.2% after a 1.5% decline in October, while car insurance costs rose by 0.1%, offsetting a 0.1% decline in the previous month.

China is mulling weaker yuan in 2025 to counteract higher US tariffs. The USD/CNH exchange rate experienced a sharp appreciation of as much as 330 pips following a Reuters report, citing sources familiar with the matter, that Chinese authorities are contemplating allowing for a weaker yuan in 2025 in anticipation of potentially higher tariffs during a second Trump administration. This potential shift in currency policy reflects Beijing's recognition of the need for more substantial economic stimulus to mitigate the risks associated with escalating trade tensions.

Reinforcing this perspective, the Politburo's statement released on Monday indicated that China would adopt a ‘moderately loose’ monetary policy next year, marking the first time such a stance has been articulated in 14 years. Notably, the statement omitted the customary phrase emphasising the ‘need for a basically stable yuan,’ which was last included in the July statement. A weaker yuan would enhance the competitiveness of Chinese exports by making them more affordable, thereby counteracting the impact of higher tariffs and effectively creating looser monetary conditions within the country.

The Reuters report indicated that the PBoC is unlikely to explicitly declare a departure from its managed exchange rate regime. Instead, it is expected to emphasise a greater role for market forces in determining the yuan's value. According to one source, the PBoC has considered the possibility of allowing the yuan to depreciate to 7.5 per US dollar as a measure to offset potential trade shocks. This level is notably weaker than the current analyst consensus forecast of 7.37 by the end of 2025.

China has also started taking pre-emptive retaliatory tariff measures against the US. Earlier this week, as noted by Bloomberg news, President Xi Jinping opened an investigation into Nvidia and banned the export of several rare materials with military applications. China has limited sales to the US and Europe of key components used to build drones. There are also signs that Chinese exporters are attempting to front-load their exports to the US before Donald Trump’s inauguration on 20 January 2025. Although China’s exports in November grew at only 6.7% compared to October’s 12.7% growth, analysts are expecting a further ramp up in exports before Trump officially takes office on 20 January 2025.

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