US Markets Defy Global Weakness
US equity markets showed resilience on Monday as futures on major indexes pointed upward, defying declines in Asia and Europe. Anticipation of key interest rate decisions by major central banks, including the Federal Reserve, has fueled optimism. Bitcoin also reached a new record high, further boosting market sentiment.
Nasdaq and S&P 500 Futures Signal Gains
Contracts for the Nasdaq 100 rose 0.3%, signaling potential additional gains after the index achieved an all-time high on Friday. MicroStrategy Inc., a prominent player in Bitcoin investments, saw its premarket shares surge over 6%, driven by its imminent inclusion in the Nasdaq 100. Similarly, S&P 500 futures climbed 0.2%.
Asian and European Markets Struggle
The buoyancy of US stocks contrasts with struggles in other regions. Weaker-than-expected retail data from China dampened market sentiment in Asia, while European equities faltered under the weight of a shrinking private sector.
Federal Reserve Decision Could Propel US Stocks Further
Analysts expect the Federal Reserve’s anticipated quarter-point interest rate cut on Wednesday to provide a further boost to US equities, which have already rallied 27% in 2024. This growth is buoyed by expectations of favorable policies under President-elect Donald Trump and strong corporate earnings.
“Central banks have been supportive in 2024, reducing interest rates while the economy remained robust,” said Marija Veitmane, senior multi-asset strategist at State Street Global Equities, during an interview with
Bloomberg TV. She added, “Going forward, the focus will be on earnings growth, where the US continues to show strong potential.”
Rate Decisions Across the Globe
Following the Federal Reserve’s announcement, rate decisions from central banks in Japan, the Nordic region, and the UK will follow later in the week. Swaps traders anticipate three additional quarter-point rate cuts from the Fed over the next year, though predictions of a fourth have diminished in recent weeks.
Dollar Stability and Future Predictions
On the currency front, the Bloomberg Dollar Index held steady after six consecutive days of gains. Wall Street analysts suggest the dollar may peak in mid-2025, with President-elect Trump’s policies and Fed rate cuts likely contributing to its decline later in the year.
China’s Retail Struggles and Economic Concerns
Meanwhile, China’s retail sales rose 3% year-over-year in November, falling short of the 5% growth forecast by economists surveyed by Bloomberg. Analysts expressed concerns that Beijing’s consumption-boosting measures lacked substantive fiscal stimulus. “The data underscores the challenges China faces, as recent stimulus measures have prioritized optics over delivering meaningful economic improvements,” noted Charu Chanana, Chief Investment Strategist at Saxo Markets.
Europe Faces Economic and Political Hurdles
In Europe, French bonds underperformed after Moody’s downgraded the nation’s credit rating, intensifying pressure on the government. Germany faces its own challenges, with Chancellor Olaf Scholz likely to lose a confidence vote, potentially triggering new elections. Strategists at Brown Brothers Harriman emphasized that delays in forming a coalition government could stall fiscal support, placing additional demands on the European Central Bank.
Bitcoin and Cryptocurrencies Gain Momentum
Bitcoin gained over 3% at one point on Monday, breaking the $106,000 mark amid optimism over President-elect Trump’s pro-crypto stance. The broader cryptocurrency market also saw a lift, with Ether rising 1.8% to $3,924.89.
Key Events to Watch This Week:
- Tuesday: UK jobless claims and unemployment data
- Wednesday: UK and Eurozone consumer price indices, US rate decision
- Thursday: Japan and UK rate decisions, US revised GDP
- Friday: Japan CPI, China loan prime rates, Eurozone consumer confidence, and US personal income and spending data
Market Highlights as of 6:41 a.m. New York Time:
Stocks:
- S&P 500 futures up 0.2%
- Nasdaq 100 futures up 0.3%
- Dow Jones futures up 0.1%
- Stoxx Europe 600 down 0.3%
Currencies:
- Bloomberg Dollar Index unchanged
- Euro fell 0.1% to $1.0490
- British Pound rose 0.2% to $1.2647
- Japanese Yen fell 0.1% to 153.82 per dollar
Cryptocurrencies:
- Bitcoin rose 1.3% to $104,167.17
- Ether rose 1.8% to $3,924.89
Bonds:
- US 10-year Treasury yields fell two basis points to 4.38%
- German 10-year yields fell two basis points to 2.24%
- UK 10-year yields fell two basis points to 4.39%
Commodities:
- West Texas Intermediate crude fell 1.2% to $70.44 per barrel
- Spot gold rose 0.5% to $2,661.55 per ounce
Conclusion
US equity markets continue to show resilience and optimism, driven by anticipation of central bank rate cuts, robust corporate earnings, and favorable policy expectations under President-elect Donald Trump. While challenges persist globally, such as weaker retail data in China and economic hurdles in Europe, the US market's strong performance and Bitcoin's record highs highlight a positive outlook. The upcoming week’s central bank decisions and economic data will play a crucial role in shaping market dynamics as investors watch closely for signs of sustained growth and stability
Resources:
Bloomberg News. "US Stock Optimism Builds Ahead of Rate Decisions: Markets Wrap."
Bloomberg, 16 Dec. 2024,
www.bloomberg.com.
Federal Reserve. "Economic Data and Analysis."
Federal Reserve Economic Data (FRED), Federal Reserve Bank of St. Louis,
www.fred.stlouisfed.org.
"Global Market Insights and Updates."
Reuters, 2024,
www.reuters.com.
