Global equity markets started with low volatility into an eventful week of economic data and central bank meetings that will test investor optimism for an imminent interest rate cut. European equities fell slightly, while Asian markets remained mixed. Japanese stocks were a strong outperformer after news that Bank of Japan officials see no need to rush to end the world's last negative interest rate, saying there is insufficient evidence that wage growth is fueling inflation.
Following the JPY's recent strong gains, there was a sharp fall in Asian trading as markets assumed that a normalization of the BoJ's monetary policy is a little further away again. The USD gained slightly overall and US Treasury yields also pointed to modest gains after the recent sharp decline.
Traders will not be making any big bets today and are waiting for further economic data such as tomorrow's US inflation figures, the Fed's interest rate decision on Wednesday and US retail sales data on Thursday. The European Central Bank and the Bank of England will also make their final interest rate decisions for 2023 later this week (both on Thursday).
Stronger than expected US economic data, especially Friday's surprisingly good NFP report, has boosted optimism that the Fed can contain inflation without triggering a recession and kept the recent strong rally alive – although rate cut optimism has faded somewhat.
It will be the last busy week of the year before markets likely move into the lower volatility phase over the holidays. We expect little movement today – mostly sideways.
Most investors are still optimistic that the rally will continue and that equities can continue to do well in 2024 if central banks cut interest rates. We are seeing some profit taking in growth stocks as rate cut optimism has waned slightly.
Oil prices have fallen further as concerns about oversupply persist. Weak oil prices also show that oil traders remain skeptical that the economy will improve in the near future. While most assets showed little fluctuation, Bitcoin was a major exception and saw a sharp sell-off in Asian trading. Bitcoin fell by as much as 7.5% to $40,521 before recovering some of the losses. We are also seeing further weakness in gold at the start of the week, as yields are also rising.
👁 ROB'S MARKET OVERVIEW:
December 11, 2023
🌐/🇺🇸 Global/US Markets ➡️
Cyclical Stocks ➡️
Tech/Growth Stocks ➡️/↘️
Financial Stocks ➡️
Defensive Stocks ➡️
Energy Stocks ↗️/➡️
Materials Stocks ↘️
USD, CHF ➡️/↗️
JPY ↘️/➡️ (After sharp losses, additional losses of JPY limited)
⚒ Commodity Markets ↕️/↘️
Oil prices ➡️/↘️
Natural Gas prices ↘️ (plunge due to the mild temperature forecast for December)
Metal prices ↘️/➡️
Gold ↘️/➡️ (slight additional headwinds due to higher yields)
⚡️Cryptos ↘️/↕️/↗️ (some short-term headwind due to higher yields; Dip-Buying)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)