The markets giveth and the market taketh away. Red proliferated the screens as profit taking unwound some of Friday’s aggressive rallies. There were no real catalysts to the move, just fears that markets were overbought and rate cut bets too optimistic.
Economic Indicators & Central Banks:
- RBA held the cash rate steady at 4.35% at the final meeting of the year. The board, flagged, however, that progress in bringing inflation back to target was slower than anticipated. They noted uncertainty over the global outlook due to the Chinese economy and overseas conflicts.
- Aussie: Markets are still pricing in some risk of further tightening from the RBA, and the inflation numbers for the last quarter of the year will likely be decisive for the February 6 meeting.
- China: Services PMI expanded at a quicker pace in November, which was the highest in three months, as demand strengthened in Asia’s largest economy.
Market Trends:
- Treasury yields closed just off session highs.
- Asia stock markets sold off, following on from a weaker close on Wall Street. China bourses underperformed, despite a stronger Services PMI.
- Stocks: Wall Street was underwater from the get-go and closed with modest declines. The US100 slumped -0.84% on weakness in big tech, including Meta on news CEO Zuckerberg was selling shares. Microsoft, Alphabet, and Nvidia also declined. Alaska Air dropped after announcing its acquisition of Hawaiian Air. US500 was off -0.54% and the US30 was down -0.11%.
Financial Markets Performance:
- The USDIndex was one of the few gainers on the day, rebounding to 103.642 (intraday peak of 103.852) following Friday’s drop to 103.268.
- EURUSD declined to 1.08, indicating apotential retest of 1.0760, as the buck is firmer versus all its G10 peers as rate cut speculation is keeping a lid on EUR and GBP.
- USDJPY steady above 146.50.
- Gold has corrected somewhat as the US Dollar found a footing and Treasury yields lifted. It is currently steady at $2030 – $2040 area.
- Oil remained under pressure as USOIL is currently trading below $74 as markets remain distinctly unimpressed by the voluntary output cuts announced by OPEC+. With growth data suggesting subdued demand that is leaving fears of a sizeable supply overhang through 2024 on the table.
- Bitcoin extended higher and breached $42,337 for the first time since early 2022 (roughly 153% higher this year).
- Key Mover: Copper (-0.95%), with next Support at 3.75.
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Andria Pichidi
Market Analyst
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