The U.S. stock market futures suggest a positive opening on Thursday, indicating a potentially optimistic start to the new trading year following a downturn at the close of 2024. Investors seem poised to seize opportunities by acquiring stocks at reduced valuations, given the downward trading trend observed at the year's end.
Both the S&P 500 and the Nasdaq indices have been in decline for four consecutive trading sessions. The Nasdaq, in particular, marked its lowest close in a month on New Year's Eve. There is an anticipation of a market upswing fueled by optimism surrounding the upcoming inauguration of President-elect Donald Trump for his second term later this month.
Nevertheless, trading volumes might be lighter than usual, as some market participants might be extending their break following the New Year's holiday observed on Wednesday.
On the economic front, the U.S. Labor Department has reported an unexpected decrease in first-time unemployment claims for the week concluding on December 28th.
During the earlier session on Tuesday, stocks exhibited indecisiveness, initially, before trending mostly downward. The tech-centric Nasdaq spearheaded this slide, closing at its lowest level in a month. Specifically, the Nasdaq decreased by 175.99 points, or 0.9%, closing at 19,310.79, while the S&P 500 contracted by 25.31 points, or 0.4%, to settle at 5,881.63. The Dow experienced a smaller decline, diminishing by 29.51 points, or 0.1%, to 42,544.22.
This weakness extended the pronounced downward trend over the two preceding sessions, as some traders capitalized on the robust gains of the year. Despite recent declines, the major indices still achieved remarkable gains for 2024, with the Nasdaq surging nearly 30% over the year. The Dow rose close to 13%, and the S&P 500 recorded its second consecutive year of over 20% gains, increasing by more than 23%.
Sectors such as semiconductors and software were among the poorest performers, contributing to the Nasdaq's decline, whereas oil stocks climbed alongside crude oil prices.
The recent market pullback reflects concerns about 2025's prospects, following a period of volatility. This period of fluctuation was influenced by the Federal Reserve's projection for fewer rate cuts in 2025 earlier in the month. Trading remained relatively quiet as traders took an early break for New Year's festivities.
**Commodity and Currency Markets**
Crude oil futures have risen by $0.91, reaching $72.63 per barrel, following a $0.73 increase, reaching $71.72 on Tuesday. Gold futures, having risen by $22.90 to $2,641 per ounce in the previous session, are now up by $12.40, totaling $2,653.40 an ounce.
In currency markets, the U.S. dollar trades at 157.02 yen, compared to 157.24 yen on Wednesday, and is valued at $1.0325 against the euro, down from the previous day's $1.0356.
**Asia**
Asian markets commenced the New Year with restraint, following a very successful 2024 for global stock markets. Regional markets felt selling pressures after the U.S. markets experienced a downturn on Tuesday, closing 2024 with an atypical decline despite a vigorous trading year.
The S&P 500 and Nasdaq 100 both dip for a fourth straight session in this year-end pullback. This comes amid rising bond yields and expectations for increased interest rates. The dollar index remains near multi-year highs in Asian trading, having gained over 2.5% in December.
Gold sees modest gains as traders await decisions concerning the Federal Reserve's interest rate plan and the fiscal and tariff strategies of President-elect Donald Trump. Oil maintains its year-end gains, with Brent crude nearing $75 per barrel after industry data reflected a decline in U.S. oil inventories last week.
Chinese and Hong Kong markets fell sharply, amid substantial uncertainty regarding U.S.-China relations moving into the New Year. Concerns are rising that bilateral relations may deteriorate during Trump's second term. Additionally, weaker Chinese manufacturing activity data underscores a challenging economic outlook, prompting calls for more substantial policy support. The Caixin/S&P Global manufacturing PMI for China dropped to 50.5 in December, from 51.5 in the prior month, falling short of analysts' expectations.
Shanghai's Composite Index plummeted by 2.7% to 3,262.56, driven by increasing uncertainties from the overseas economic climate and global trade. Hong Kong's Hang Seng Index plunged by 2.2% to 19,623.32, despite China's commitment to implementing more proactive economic policies in 2025 to achieve a growth target of approximately 5%.Alibaba Group Holding faced a 1.3% decline after agreeing to divest its shares in Sun Art Retail Group Ltd. to the private equity firm DCP Capital.
Japanese financial markets remain closed until January 6, while New Zealand's markets are also on holiday hiatus.
In Seoul, stock markets finished slightly lower, influenced by data revealing a contraction in factory activity in December. Additionally, political uncertainties loom as impeached President Yoon Suk Yeol continues to resist arrest for a third consecutive day.
Bank of Korea's Governor, Rhee Chang-yong, emphasized in his New Year's address the need for a nimble approach to monetary policy easing this year, given the prevailing political and economic uncertainties.
Australian markets, on the other hand, ended higher as trading resumed post-New Year holiday, with the benchmark S&P/ASX 200 Index rising 0.5% to 8,201.20 and the broader All Ordinaries Index also increasing by 0.5% to 8,465. The gains were driven by strong performances in mining, energy, and gold sectors, buoyed by robust commodity prices. This positive sentiment overshadowed recent data indicating the first decline in Australian house prices in 22 months as of December.
**Europe**
European stock markets displayed varied performances on Thursday as trading resumed post-New Year. In the UK, house prices experienced a 4.7% year-on-year rise in December, accelerating from a 3.7% increase in November and surpassing economists' forecast of 3.8%, according to Nationwide Building Society data. However, on a monthly scale, house price growth moderated to 0.7% from 1.2% in November.
The French CAC 40 Index dropped by 0.4%, while Germany's DAX Index saw a 0.2% increase, and the UK's FTSE 100 Index climbed by 0.7%. Rising commodity prices benefitted mining and energy stocks, with notable gains from Antofagasta, Glencore, and BP Plc in London. Vestas Wind Systems experienced a surge following the announcement of multiple supply orders in Europe totaling over 1.2 gigawatts of capacity in the latter half of December. Additionally, Europe's leading debt collector, Intrum AB, saw significant gains after a US court approved its restructuring plan. Vodafone experienced a slight rise after finalizing the €8 billion sale of its Italian operations to Swisscom.
**U.S. Economic News**
According to a Labor Department report released on Thursday, first-time claims for U.S. unemployment benefits slightly decreased in the week ending December 28. Initial jobless claims fell to 211,000, marking a 9,000 decrease from the previous week's revised figure of 220,000. This decline surprised economists who had anticipated claims to rise to 222,000 from the originally reported 219,000 for the prior week. The decrease in jobless claims brings them to their lowest level since the week ended April 27, 2024, at 209,000.
Later in the day, the Commerce Department will release its report on November's construction spending at 10 am ET, with expectations for a 0.3% increase following a 0.4% rise in October. Additionally, the Energy Information Administration is set to release its oil inventory report for the week ending December 27 at 11 am ET, projecting a decline of 2.8 million barrels after a 4.2 million barrel drop the previous week. At the same time, the Treasury Department will detail this month's auctions of three-year and ten-year notes and thirty-year bonds.
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