The Dow Jones Industrial Average (US30) decreased by 0.97% at Monday’s close. The S&P500 Index (US500) was down 1.07%. The Nasdaq Technology Index (US100) fell by 1.28%. Stocks in the US closed sharply lower on Monday, extending the decline after Friday’s selloff. The decline had no specific news catalyst, although low holiday trading volumes added to market volatility. Large technology stocks remained under pressure, with Tesla losing 3.3%, Apple down 1.3%, and Meta decreased by 1.3%. In turn, Boeing shares fell by 5% after one of the company’s 737-800 aircraft operated by Jeju Air crashed over the weekend. Even so, 2024 has been an exceptional year for stocks, with the Nasdaq 100 up 28%, the S&P 500 up 25%, and the Dow up 13%, giving the indices their highest annual gains since 2021.The US dollar is up more than +6% year-to-date as traders have lowered expectations about the extent of Federal Reserve rate cuts next year, reacting to the Fed’s recent hawkish signals. Earlier this month, FOMC members lowered their 2025 interest rate forecast to 50 basis points from 100 due to volatile inflation and signs of resilience in the labor market. The dollar is also supported by expectations that President-elect Donald Trump’s policies — easing regulations, cutting taxes, raising tariffs, and tightening immigration — will boost the economy and inflation and help keep US yields elevated.European markets closed lower on Monday. Germany’s DAX (DE40) fell by 0.38%, France’s CAC 40 (FR40) closed down 0.57%, Spain’s IBEX 35 (ES35) gained 0.05%, and the UK’s FTSE 100 (UK100) lost 0.35% on Monday. In Spain, inflation data rose to 2.8% y/y in December, above the forecast of 2.6%, signaling continued inflationary pressures. This followed comments from European Central Bank official Robert Holtzmann, who suggested that interest rate cuts will slow in the future due to unsustainable inflation.Silver (XAG/USD) slipped below $29 an ounce, its lowest level since September, amid forecasts of a hawkish Fed stance and uncertain demand for industrial silver. Concerns about rising inflation have led the FOMC to forecast fewer rate cuts in the coming year, prompting markets to push down yields on non-yielding assets. Overcapacity in China’s solar panel industry forced PV companies to sign up for the government’s self-discipline program to regulate supply, limiting the outlook for silver demand from the leading industry. Pressure also came from the threat of a devaluation of the yuan in line with China’s looser monetary policy stance, which depressed silver prices for one of the world’s leading exporters.The US natural gas (XNG/USD) prices rose more than 20% on Monday to hit $4 per million barrels per ton, the highest since December 2022. The latest EIA report showed a withdrawal of 93 Bcf, down from the five-year average of 127 Bcf but up from last year’s 87 Bcf. Inventories now stand at 3,529 Bcf, 166 Bcf above the five-year average. In addition, LNG export demand remains strong at over 14.0 Bcf/d, while production fell slightly to 105.9 Bcf/d. Ukraine will cease to be a transit country for gas from Russia to the EU on January 1, threatening to further tighten supply for EU countries when demand is high.Asian markets were mostly down on Monday. Japan’s Nikkei 225 (JP225) fell by 0.96%, China’s FTSE China A50 (CHA50) gained 0.48%, Hong Kong’s Hang Seng (HK50) lost 0.24% and Australia’s ASX 200 (AU200) was negative 0.52% for yesterday. Chinese indices rose slightly at the opening of Tuesday’s trading session as official Chinese PMI data supported sentiment, marking the third month of growth in the manufacturing sector and the strongest increase in service sector activity in nine months. The index rose by 3.3% for the month, the first increase in three months. For the year, it rose nearly 18%. At the same time, China’s Central Bank (PBoc) promised to increase the amount of monetary easing in 2025.The Australian dollar held near $0.62 on Tuesday, near two-year lows and staying within a narrow trading range, which would end the year with significant losses. The Australian dollar will lose about 8.8% in 2024, mostly due to a stronger US dollar and also partly due to the Reserve Bank of Australia (RBA) taking a softer stance, signaling a shift to easing for the first time.On Tuesday, the New Zealand dollar slid to US$0.563. The Kiwi lost about 11% against the dollar in 2024 because of the Reserve Bank of New Zealand’s (RBNZ) dovish policy. The RBNZ is expected to cut the 4.25% money rate by 50 basis points in February, with rates expected to fall to 3% by the end of 2025. In addition, concerns over China’s sluggish economy and the threat of tariffs from the US are putting further pressure on the currency.
News feed for: 2024.12.31
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