16/12/2024  

Market Insights: Global Trends, Central Bank Decisions, and Key Sector Performances

Global Economic and Monetary Policy Developments

Global economic developments were marked by easing inflation and initial steps toward more accommodative monetary policies in key economies. The European Central Bank (ECB) cut its deposit rate by 25 basis points (bp) for the fourth time this year, taking its benchmark rate to 3.00%. Since June the ECB has delivered 100bp of cuts as inflation has fallen back towards its 2% target. China’s economic slowdown prompted a cut in loan prime rates to stimulate activity, while Japan’s central bank maintained ultra-loose policies amid weak domestic demand.

Focus will remain on monetary policy decisions and macroeconomic data releases. The U.S. Federal Reserve will release its next policy decision on December 18, and an interest rate cut of 0.25% is widely anticipated. However, expectations for Fed policy beyond this week are less certain. More rate cuts are coming, but changes in the size and pace of projected future rate cuts could move markets significantly. The Bank of England is expected to announce its interest rate decision amid high inflation (December 19th), with markets watching for signs of easing. U.S. GDP revisions and inflation data (PCE) (December 19th) will provide insights into consumer trends and economic resilience. In Asia, Japan’s inflation data will clarify the BOJ’s future stance, and China’s continued policy responses to its economic challenges will remain critical.

Equity Markets

The Nasdaq Composite surpassed 20,000 points for the first time, buoyed by tech-sector gains. Tesla achieved multi-year highs, driven by strong demand in China and anticipation of a new affordable model in 2025. Broader markets showed mixed performance: the Nasdaq gained 0.3%, while the S&P 500 and Dow Jones Industrial Average posted weekly losses of 0.6% and nearly 7%, respectively. Defensive sectors underperformed as investors favored growth stocks, especially in the technology and communications services sectors.

In Asia, regional equities declined amid weak Chinese retail data and Korean political uncertainty following the impeachment of President Yoon Suk Yeol.

Commodities and Currencies

Gold rose nearly 2% early this past week, but ended the week by losing claimed gains. Oil prices reached the top of recent range highs gaining almost 6% last week. The U.S. Dollar Index remained stable, gaining 0.5% the past week.

Cryptocurrency

Cryptocurrencies rallied, with Bitcoin surpassing $100,000 for the first time since December 5 and Ether seeing significant inflows into spot ETFs.

Outlook

Investors face a busy week ahead with central bank meetings from the Federal Reserve, European Central Bank, and Bank of Japan. Key U.S. economic data, including November retail sales and the Personal Consumption Expenditures (PCE) index, will provide further insight into the state of consumer spending and inflation trends. Markets are closely watching for signals on monetary policy trajectory into 2025.

Events

IMPORTANT DISCLAIMER

The information in this report is of a general nature only. It is not a piece of personal financial advice. It does not take into account your objectives, financial situation, and personal needs.

a-Quant is not responsible for your actions and recommends you contact a licensed financial advisor before acting on any information contained in this general information report.