The primary U.S. index futures are suggesting a positive opening on Friday, signaling a potential recovery for stocks after a predominantly negative session previously.
The technology-centric Nasdaq is poised to benefit significantly from an impressive 17.5% surge in Broadcom shares during pre-market trading. This rise follows Broadcom's announcement of better-than-expected fiscal fourth-quarter earnings and its optimistic forecast for continued robust demand for its custom AI chips.
Investor sentiment may also be buoyed by favorable expectations regarding interest rates ahead of the upcoming Federal Reserve meeting. It is largely anticipated that the Fed will decrease interest rates by 25 basis points, but traders will be keenly observing the accompanying statements for any hints on future rate reductions.
Recent data indicating persistent inflation has sparked concerns that the Fed might slow its pace of rate cuts next year more than previously anticipated. The CME Group's FedWatch Tool currently shows a 96.4% probability of a quarter-point rate cut next week, but only a 74.6% probability that rates will remain steady in late January.
On the topic of inflation, the Labor Department issued a report today revealing an unexpected increase in U.S. import prices for November.
After a brief early recovery on Thursday, stocks dipped later in the session, with the Dow closing lower for the sixth sequential session. The primary averages hit new session lows by the close: the Dow fell 234.44 points, or 0.5%, to 43,914.12; the Nasdaq descended 132.05 points, or 0.7%, to 19,902.84; and the S&P 500 dropped 32.94 points, or 0.5%, to 6,051.25.
The weakness on Wall Street appeared as traders sought to capitalize on Wednesday's robust performance, especially since the Nasdaq surpassed the 20,000 mark for the first time.
A less favorable sentiment was also fueled by a Labor Department report indicating that producer prices in the U.S. increased more than expected in November. The report detailed a 0.4% increase in the producer price index for final demand, following a revised 0.3% rise in October, exceeding economists' forecasts of a 0.2% rise.
Furthermore, the annual growth rate of producer prices accelerated to 3.0% in November from a revised 2.6% in October, again outpacing expectations for a rise to 2.6%.
Despite widespread assumptions that the Federal Reserve will lower interest rates next week, these figures have introduced concerns regarding the speed at which rates might be reduced early next year.
The market also saw a significant decline in gold stocks, evidenced by the NYSE Arca Gold Bugs Index's 3.8% plunge, following its highest close in over a month. Similarly, steel stocks experienced a 2.7% drop as per the NYSE Arca Steel Index. Airline and energy stocks also faced considerable pressure, while networking stocks emerged as a rare bright spot.
**Commodities and Currency Markets**
In commodities, crude oil futures increased by $0.37 to $70.39 per barrel, counteracting a previous decrease of $0.27. Gold futures fell sharply by $25.90 to $2,683.50 per ounce after a prior plunge of $47.30. On the currency side, the U.S. dollar is exchanging at 153.30 yen, up from 152.63 yen, while against the euro, it's trading at $1.0516, a slight increase from the previous $1.0468.
**Asia**
Asian markets finished the day mixed. This came after Chinese leaders committed to additional stimulus during a two-day Central Economic Work Conference in Beijing, setting the economic policy framework for the upcoming year. Top officials promised rate cuts and reductions in banks' reserve requirements to sustain economic expansion and stabilize employment and prices. However, the meeting fell short of detailing specific fiscal and monetary easing measures.
With attention also on the Federal Reserve's meeting next week, where a 25 basis point rate reduction is anticipated, the dollar index remained stable in Asian trading, with oil and gold on track for weekly gains.China's financial markets experienced notable declines due to investor dissatisfaction with economic policy updates. The Shanghai Composite Index dropped by 2.0% to 3,391.88, while Hong Kong's Hang Seng Index fell by 2.1% to 19,971.24.
In Japan, markets sharply retreated following a business survey suggesting a slight improvement in manufacturers' outlook, intensifying the debate on whether the Bank of Japan might increase its benchmark interest rate in the upcoming week. The Nikkei 225 Index decreased by 1.0% to 39,470.44 after achieving a two-month high the previous day. Similarly, the broader Topix Index ended the day 1.0% lower at 2,746.56. Notably, companies like Fast Retailing and Tokyo Electron saw losses between 2-3%, while Oji Holdings surged 11.2% due to a share buyback announcement.
In Seoul, stock markets ended higher after fluctuating throughout the session, ahead of a potential second impeachment motion against President Yoon Suk Yeol. The Kospi improved by 0.5% to 2,494.46, marking its fourth consecutive day of gains.
Australia's markets continued their downward trend for the fourth consecutive day, primarily led by losses in the mining sector. The S&P/ASX 200 Index declined by 0.4% to 8,296, influenced by diminished expectations of an interest rate cut in February. Similarly, the broader All Ordinaries Index fell by 0.4% to 8,550.30. Conversely, New Zealand's S&P/NZX-50 Index closed 0.5% higher at 12,754.26.
**Europe**
European stocks showed a mix of flatness and slight gains on Friday, poised to end a three-week winning streak as the Federal Reserve meeting looms. Data from Germany's Destatis revealed a continued, albeit slower, decline in wholesale prices in November, decreasing by 0.6% year-on-year following a 0.8% drop in October.
In France, consumer price inflation modestly increased as anticipated, with the consumer price index rising by 1.3% annually in November, aligning with preliminary estimates. EU-harmonized inflation edged to 1.7% from 1.6%.
Conversely, economic data from the UK indicated a second consecutive monthly contraction in GDP in October, presenting a challenge to the Labour government's economic strategies. The GDP fell by 0.1%, contrary to the expected 0.1% growth, impacting the pound and prompting speculations of expedited interest rate reductions by the Bank of England next year.
While the UK's FTSE 100 Index shows marginal gains, Germany's DAX Index has increased by 0.1% and France's CAC 40 Index by 0.2%. Notable market movements included Swiss Re's significant rise following its net income target announcement of $4.4 billion for 2025, and Munich Re's share jump after revealing a profit target of €6bn with expected group insurance revenues of €64bn.
Moreover, Pricer AB surged after its partner, JRTech Solutions, secured a deal with Sobeys in Canada for the installation of 5 million digital labels. In contrast, Portmeirion Group shares fell sharply in London due to a profit warning amid challenging market conditions. Tullow Oil also declined following Kosmos Energy's confirmation of preliminary discussions regarding a potential all-share offer for the London-listed company.
**U.S. Economic News**
Unexpectedly, import prices in the U.S. slightly increased in November as reported by the Labor Department. Prices rose by 0.1%, consistent with the revised uptick in October, contrary to the anticipated 0.2% decline. Concurrently, export prices remained unchanged in November after a revised 1.0% rise in October, defying predictions of a 0.2% decrease.
The material has been provided by InstaForex Company -
www.instaforex.com
