Global Markets recovered from last week’s slump due to the dovish stance of the Federal Reserve (Fed) indicating a shallow rate cut trajectory in 2025. Market optimism resurfaced with a soft inflation report and lesser-than-expected jobless claims indicating a strong and resilient U.S. economy. The Fed is now expected to implement only two 25 bps rate cuts in 2025. U.S. dollar and treasury yields appreciated due to uncertainty in global economy.

The United States House and Senate averted a government shutdown by passing a stopgap spending legislation over the weekend. South Korea’s legislature voted to impeach acting President Han Duck-soo due to his refusal to appoint a judiciary to continue to impeachment proceedings of his predecessor President Yoon. Finland called on NATO to defend critical European infrastructure against suspected Russian sabotage after undersea power and data cables were found to be sabotaged. An additional international flashpoint possibility emerged due to the suspicion of the role of Russian sabotage in the Azerbaijan Airlines crash.

Global Updates
  • The MSCI All Country World Index recovered this week from last week’s selloff due to the dovish comments by the Federal Reserve Chair Jerome Powell. U.S. equities received significant inflows in a ‘Santa Claus’ rally driven by the positive inflation report and the passing of a stopgap funding bill averting a government shutdown in the U.S.A.
  • Canadian economy recorded 0.3% GDP growth in October driven by increased productivity in manufacturing and oil and gas extraction. A contraction in Canadian GDP is indicated for November.
  • French Prime Minister François Bayrou pledged to reduce the budgetary deficit in France to 5%.
  • Danish pharmaceutical company Novo Nordisk recovered from last week’s selloff caused by the disappointing outcomes from the drug trials for its obesity drug CagriSema.
  • The Japanese Nikkei and Topix indices were elevated by investor optimism regarding its auto industry and corporate growth.
  • The world’s leading manufacturer of mini motors Nidec Corp. has initiated a $1.6 billion takeover of the machine tool builder Makino Milling Machine Co.
  • China’s industrial sector recorded a 7.3% drop in profits in November for the fourth straight month. Business confidence remains subdued in China due to its troubled property sector.
  • German food delivery company Delivery Hero’s stock lagged weighed after the Taiwan Fair Trade Commission vetoed the sale of its Taiwanese subsidiary Foodpanda to Uber.
U.S. Equity
  • The S&P 500, Dow Jones index & Nasdaq indices recovered this week from the dip in markets last week, following the dovish comments by the Federal Open Market Committee (FOMC). The Fed’s preferred inflation gauge, the Personal Consumption Expenditure (PCE) Price Index, came in at 2.4% for November. The 0.1% inflation in November was lower than expected. Core inflation excluding food and energy was also 0.1% for November.
  • The U.S. Labor Department reported a fall of 1,000 claims to a less than expected 219,000 jobless claims for the previous week. The fewer claims are consistent with analysts’ expectations of a healthy U.S. labour market. Sales of new single-family homes was rose by 5.9% in November, at a higher-than-expected t 664,000 homes
  • S. retail holiday spending rose by 3.8% rose by 3.8% year-on-year from November 1 to December 24 and, online retail sales rose by 6.7% as per Mastercard SpendingPulse data. The new orders for durable goods fell by 1.1% in November to $285.1 billion.
  • Apple stock gained following the ‘outperform’ rating assigned to the security by Wedbush analysts due to expectations of multi-year AI development, upgradation and product demand.
  • United States Steel stock dipped following the news that Nippon Steel has postponed its $14.9 billion acquisition plans for the company to the first quarter of 2025.
  • Energy storage company KULR Technology Group’s stock gained following the company’s $21 million investment in bitcoin.
  • Toyota Motor’s U.S. traded stock gained driven by news of the company’s plans to double its Return on Equity (ROE) to 20%
  • Video platform Rumble’s stock gained after the company received a $775 million investment from the cryptocurrency company Tether.
  • Office products supplier Xerox acquired printer maker Lexmark in a $1.5 billion deal.
  • Major banks and business groups have filed a lawsuit against the Fed for the regulatory requirements imposed on them including stress test procedures and transparency norms.
Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index was in line this week.
  • The U.S. 10-year Treasury yield rose to a six-month high at 4.599% and the yield on the 2-year note remained in line at 328% over the week. Treasury Yields remained high even as markets continued to digest the outcome of the FOMC meeting and incorporated lower rate cut trajectory for 2025.
  • The U.S. Dollar Index rose mildly to 108.16 this week.

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