The primary indicators for the U.S. market suggest a downturn at Thursday's opening, likely erasing the strong gains from the prior session. Investors may choose to secure profits following Nasdaq's milestone achievement, surpassing the 20,000 mark for the first time. Market optimism is tempered by a Labor Department report revealing producer prices in the U.S. rose more than anticipated for November.
According to the Labor Department, the producer price index for final demand increased by 0.4% last month, following a revised 0.3% rise in October. Economists had projected a modest 0.2% increase, in line with earlier figures from October. The year-on-year producer price growth accelerated to 3.0% in November, adjusted from a previous 2.6% in October, exceeding the forecasted rise to 2.6% from 2.4%.
While this data does not significantly alter expectations that the Federal Reserve will reduce interest rates in the upcoming week, it might lower the likelihood of further rate cuts in the early part of the next year. Additionally, the Labor Department released data revealing an unexpected increase in initial claims for U.S. unemployment benefits for the week ending December 7th.
On Wednesday, stocks saw substantial gains, rebounding strongly from earlier declines in the week. The Nasdaq particularly stood out, closing firmly above the 20,000 threshold, gaining 347.65 points or 1.8% to close at a new record high of 20,034.89. The S&P 500 rose by 49.28 points or 0.8% to close at 6,084.19. In contrast, the Dow Jones Industrial Average showed fluctuations throughout the day, ultimately declining by 99.27 points or 0.2% to close at 44,148.56. This marked its fifth consecutive session of losses, largely due to a slump in UnitedHealth (UNH) shares.
The broader market's strength was bolstered by consumer price inflation reported to align closely with economists' predictions. As per the Labor Department, the consumer price index rose by 0.3% in November after consistent rises of 0.2% in the previous four months, meeting expectations. The year-on-year consumer price growth edged to 2.7% in November from October’s 2.6%, in line with forecasts. Excluding volatile food and energy prices, core consumer prices also rose by 0.3% for November, reflecting months-long consistency and forecasts.
The consistency with predictions in reported data further cements confidence that the Federal Reserve will proceed with a 0.25% interest rate cut in the upcoming week. According to the CME Group's FedWatch Tool, there is currently a 98.6% probability that the Fed will reduce rates by 25 basis points at December's meeting.
Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management, remarked, "The incremental rise in the inflation rate (2.7% from 2.6%) won't dampen the holiday season—the Fed is anticipated to cut rates by another 25 basis points next week, potentially invigorating markets toward year-end." He also noted, "While headline CPI exceeded 3% at the year’s start, now consistently below 3%, the Fed is likely to overlook these monthly fluctuations and continue on their easing trajectory."
Precious metal prices surged, invigorating gold stocks and lifting the NYSE Arca Gold Bugs Index by 3.9% to surpass a monthly high. Airline stocks displayed notable strength, with the NYSE Arca Airline Index climbing 3.7%, nearing a one-month high. The tech sector, including semiconductors, networking, and software stocks, significantly bolstered the Nasdaq rally. Oil service, retail, and brokerage stocks also showed prominence, while healthcare stocks diverged from the positive trend.
**Commodity and Currency Markets**
Crude oil futures are slightly down, trading at $70.28 per barrel following a notable jump of $1.70 to $70.29 on Wednesday. Conversely, after a $38.30 surge in the previous session, gold futures have dropped by $17.40 to $2,739.30 per ounce.In the foreign exchange landscape, the U.S. dollar is currently trading at 151.92 yen, a slight decrease from the 152.45 yen at the end of New York trading on Wednesday. Against the euro, the dollar maintains stability, valued at $1.0496, unchanged from the previous day.
**Asia**
Asian equities presented a mixed performance on Thursday, despite a favorable inflation report that reinforced expectations of continued interest rate reductions by the Federal Reserve. Market participants are keenly awaiting the results from a significant policy meeting in China, where leaders will outline economic priorities for the upcoming year.
The dollar demonstrated stability in Asian markets, while gold rose for a fifth consecutive session, reaching a two-week high. Meanwhile, oil prices continued their upward trajectory amid potential for stricter sanctions on Russian crude.
China's Shanghai Composite Index advanced by 0.9% to 3,461.50, following signals that China's policymakers may allow the yuan to lose value next year in response to possible trade conflicts with the U.S. The yuan remained stable above a one-week low as the central bank maintained a steady official midpoint. Hong Kong's Hang Seng Index increased by 1.2% to 20,397.05.
Japan's shares surged significantly, with technology stocks leading the charge following a robust performance in tech, pushing Amazon and Meta Platforms to new records overnight. The Nikkei 225 Index rose 1.2% to close at 39,849.14, breaking above the 40,000 mark for the first time since mid-October, while the Topix Index concluded 0.9% higher at 2,773.03. The yen remained depressed near a two-week low against the dollar as market participants reduced expectations for a Bank of Japan rate increase next week. Advantest climbed 5.1%, and SoftBank Group increased by 1.9% following reports of Apple partnering with Broadcom to develop a custom AI processing chip, interpreted as a significant collaboration.
South Korea's Kospi Index rose for a third consecutive day, closing up 1.6% at 2,482.12, driven by major technology stocks. Samsung Electronics surged 3.5%, and SK Hynix gained 2.5%.
In Australia, markets experienced modest declines as recent data showing a significant drop in the unemployment rate led traders to scale back expectations for rate cuts. The S&P/ASX 200 Index fell 0.3% to 8,330.30, marking a three-week low in its third consecutive session of losses. The broader All Ordinaries Index also dropped 0.3% to 8,586.90. Yet, Insignia Financial's shares soared by more than 11% on news that Bain Capital, a private equity firm, was in advanced buyout discussions for the wealth management company. In New Zealand, the S&P/NZX-50 Index decreased by 0.5%, ending at 12,692.72.
**Europe**
European markets witnessed modest gains during Thursday's trading after the European Central Bank confirmed its anticipated decision to trim benchmark rates by 25 basis points for the third straight meeting. Earlier, the Swiss National Bank enacted its most significant interest rate cut in nearly a decade, reducing rates by 50 basis points to tackle low inflation and a robust Swiss franc. European investors awaited French President Emmanuel Macron's appointment of a new prime minister. Macron aims for a political agreement enabling him to secure both a new prime minister and national stability, as suggested by a government spokesperson, noting the absence of a broader coalition beyond his centrist allies and the Republican conservatives at present.
The French CAC 40 Index edged up by 0.1%, with the UK’s FTSE 100 and Germany’s DAX Index each garnering 0.2%.
Bodycote saw upward movement after announcing plans to extend its current share repurchase from 60 million pounds to an additional 30 million pounds. Conversely, SThree, a specialist recruitment company, saw a 23% drop following a profit warning. Currys, a tech and electrical retailer, experienced a 12% surge after narrowing first-half losses and reaffirming its full-year targets. Hensoldt AG, a German provider of sensors and security solutions, faced volatile trading despite confirming its 2024 outlook and elevating targets for its medium-term strategy. Meanwhile, semiconductor giant STMicroelectronics appreciated nearly 1% after forming a strategic alliance with Quobly, a French startup in quantum computing.
**U.S. Economic News**
A new report from the U.S. Labor Department revealed an unexpected rise in first-time claims for unemployment benefits for the week ending December 7. Initial jobless claims increased to 242,000, up 17,000 from the preceding week's amended level of 225,000.Economists had anticipated a decrease in jobless claims to 220,000, down from the initially reported 224,000 for the prior week. Contradicting expectations, the Labor Department highlighted an increase in the less volatile four-week moving average, which rose to 224,250—an uptick of 5,750 compared to the revised average of 218,500 from the previous week.
Separately, the Labor Department unveiled data on Thursday showing that producer prices in the U.S. saw a more pronounced rise than forecasted in November. The producer price index for final demand showed a 0.4 percent climb in November, following an upward revision of 0.3 percent for October. Economists had projected a modest 0.2 percent increase, aligning with the initial upward movement reported for the preceding month.
Furthermore, the report noted an acceleration in the annual rate of producer price growth, which rose to 3.0 percent in November, up from an upwardly revised 2.6 percent in October. This exceeded expectations, as economists had forecasted the annual rate would rise to just 2.6 percent, adjusting from the originally reported 2.4 percent for the previous month.
Additionally, at 1 p.m. ET, the Treasury Department is set to disclose the outcome of this month's auction for $22 billion in thirty-year bonds, adding another layer of interest to current economic developments.
The material has been provided by InstaForex Company - www.instaforex.com
According to the Labor Department, the producer price index for final demand increased by 0.4% last month, following a revised 0.3% rise in October. Economists had projected a modest 0.2% increase, in line with earlier figures from October. The year-on-year producer price growth accelerated to 3.0% in November, adjusted from a previous 2.6% in October, exceeding the forecasted rise to 2.6% from 2.4%.
While this data does not significantly alter expectations that the Federal Reserve will reduce interest rates in the upcoming week, it might lower the likelihood of further rate cuts in the early part of the next year. Additionally, the Labor Department released data revealing an unexpected increase in initial claims for U.S. unemployment benefits for the week ending December 7th.
On Wednesday, stocks saw substantial gains, rebounding strongly from earlier declines in the week. The Nasdaq particularly stood out, closing firmly above the 20,000 threshold, gaining 347.65 points or 1.8% to close at a new record high of 20,034.89. The S&P 500 rose by 49.28 points or 0.8% to close at 6,084.19. In contrast, the Dow Jones Industrial Average showed fluctuations throughout the day, ultimately declining by 99.27 points or 0.2% to close at 44,148.56. This marked its fifth consecutive session of losses, largely due to a slump in UnitedHealth (UNH) shares.
The broader market's strength was bolstered by consumer price inflation reported to align closely with economists' predictions. As per the Labor Department, the consumer price index rose by 0.3% in November after consistent rises of 0.2% in the previous four months, meeting expectations. The year-on-year consumer price growth edged to 2.7% in November from October’s 2.6%, in line with forecasts. Excluding volatile food and energy prices, core consumer prices also rose by 0.3% for November, reflecting months-long consistency and forecasts.
The consistency with predictions in reported data further cements confidence that the Federal Reserve will proceed with a 0.25% interest rate cut in the upcoming week. According to the CME Group's FedWatch Tool, there is currently a 98.6% probability that the Fed will reduce rates by 25 basis points at December's meeting.
Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management, remarked, "The incremental rise in the inflation rate (2.7% from 2.6%) won't dampen the holiday season—the Fed is anticipated to cut rates by another 25 basis points next week, potentially invigorating markets toward year-end." He also noted, "While headline CPI exceeded 3% at the year’s start, now consistently below 3%, the Fed is likely to overlook these monthly fluctuations and continue on their easing trajectory."
Precious metal prices surged, invigorating gold stocks and lifting the NYSE Arca Gold Bugs Index by 3.9% to surpass a monthly high. Airline stocks displayed notable strength, with the NYSE Arca Airline Index climbing 3.7%, nearing a one-month high. The tech sector, including semiconductors, networking, and software stocks, significantly bolstered the Nasdaq rally. Oil service, retail, and brokerage stocks also showed prominence, while healthcare stocks diverged from the positive trend.
**Commodity and Currency Markets**
Crude oil futures are slightly down, trading at $70.28 per barrel following a notable jump of $1.70 to $70.29 on Wednesday. Conversely, after a $38.30 surge in the previous session, gold futures have dropped by $17.40 to $2,739.30 per ounce.In the foreign exchange landscape, the U.S. dollar is currently trading at 151.92 yen, a slight decrease from the 152.45 yen at the end of New York trading on Wednesday. Against the euro, the dollar maintains stability, valued at $1.0496, unchanged from the previous day.
**Asia**
Asian equities presented a mixed performance on Thursday, despite a favorable inflation report that reinforced expectations of continued interest rate reductions by the Federal Reserve. Market participants are keenly awaiting the results from a significant policy meeting in China, where leaders will outline economic priorities for the upcoming year.
The dollar demonstrated stability in Asian markets, while gold rose for a fifth consecutive session, reaching a two-week high. Meanwhile, oil prices continued their upward trajectory amid potential for stricter sanctions on Russian crude.
China's Shanghai Composite Index advanced by 0.9% to 3,461.50, following signals that China's policymakers may allow the yuan to lose value next year in response to possible trade conflicts with the U.S. The yuan remained stable above a one-week low as the central bank maintained a steady official midpoint. Hong Kong's Hang Seng Index increased by 1.2% to 20,397.05.
Japan's shares surged significantly, with technology stocks leading the charge following a robust performance in tech, pushing Amazon and Meta Platforms to new records overnight. The Nikkei 225 Index rose 1.2% to close at 39,849.14, breaking above the 40,000 mark for the first time since mid-October, while the Topix Index concluded 0.9% higher at 2,773.03. The yen remained depressed near a two-week low against the dollar as market participants reduced expectations for a Bank of Japan rate increase next week. Advantest climbed 5.1%, and SoftBank Group increased by 1.9% following reports of Apple partnering with Broadcom to develop a custom AI processing chip, interpreted as a significant collaboration.
South Korea's Kospi Index rose for a third consecutive day, closing up 1.6% at 2,482.12, driven by major technology stocks. Samsung Electronics surged 3.5%, and SK Hynix gained 2.5%.
In Australia, markets experienced modest declines as recent data showing a significant drop in the unemployment rate led traders to scale back expectations for rate cuts. The S&P/ASX 200 Index fell 0.3% to 8,330.30, marking a three-week low in its third consecutive session of losses. The broader All Ordinaries Index also dropped 0.3% to 8,586.90. Yet, Insignia Financial's shares soared by more than 11% on news that Bain Capital, a private equity firm, was in advanced buyout discussions for the wealth management company. In New Zealand, the S&P/NZX-50 Index decreased by 0.5%, ending at 12,692.72.
**Europe**
European markets witnessed modest gains during Thursday's trading after the European Central Bank confirmed its anticipated decision to trim benchmark rates by 25 basis points for the third straight meeting. Earlier, the Swiss National Bank enacted its most significant interest rate cut in nearly a decade, reducing rates by 50 basis points to tackle low inflation and a robust Swiss franc. European investors awaited French President Emmanuel Macron's appointment of a new prime minister. Macron aims for a political agreement enabling him to secure both a new prime minister and national stability, as suggested by a government spokesperson, noting the absence of a broader coalition beyond his centrist allies and the Republican conservatives at present.
The French CAC 40 Index edged up by 0.1%, with the UK’s FTSE 100 and Germany’s DAX Index each garnering 0.2%.
Bodycote saw upward movement after announcing plans to extend its current share repurchase from 60 million pounds to an additional 30 million pounds. Conversely, SThree, a specialist recruitment company, saw a 23% drop following a profit warning. Currys, a tech and electrical retailer, experienced a 12% surge after narrowing first-half losses and reaffirming its full-year targets. Hensoldt AG, a German provider of sensors and security solutions, faced volatile trading despite confirming its 2024 outlook and elevating targets for its medium-term strategy. Meanwhile, semiconductor giant STMicroelectronics appreciated nearly 1% after forming a strategic alliance with Quobly, a French startup in quantum computing.
**U.S. Economic News**
A new report from the U.S. Labor Department revealed an unexpected rise in first-time claims for unemployment benefits for the week ending December 7. Initial jobless claims increased to 242,000, up 17,000 from the preceding week's amended level of 225,000.Economists had anticipated a decrease in jobless claims to 220,000, down from the initially reported 224,000 for the prior week. Contradicting expectations, the Labor Department highlighted an increase in the less volatile four-week moving average, which rose to 224,250—an uptick of 5,750 compared to the revised average of 218,500 from the previous week.
Separately, the Labor Department unveiled data on Thursday showing that producer prices in the U.S. saw a more pronounced rise than forecasted in November. The producer price index for final demand showed a 0.4 percent climb in November, following an upward revision of 0.3 percent for October. Economists had projected a modest 0.2 percent increase, aligning with the initial upward movement reported for the preceding month.
Furthermore, the report noted an acceleration in the annual rate of producer price growth, which rose to 3.0 percent in November, up from an upwardly revised 2.6 percent in October. This exceeded expectations, as economists had forecasted the annual rate would rise to just 2.6 percent, adjusting from the originally reported 2.4 percent for the previous month.
Additionally, at 1 p.m. ET, the Treasury Department is set to disclose the outcome of this month's auction for $22 billion in thirty-year bonds, adding another layer of interest to current economic developments.
The material has been provided by InstaForex Company - www.instaforex.com
