Morning Note: A round-up of market news.
Market News
US equities saw a little profit-taking last night – S&P 500 (-0.4%); Nasdaq (-0.3%) – as investors braced for the Federal Reserve’s final policy decision of the year. A 25 basis points rate cut is priced in. Officials may pencil in three cuts for next year, according to most economists, one fewer than policymakers forecast in September. Some options traders are betting that the market’s view is too hawkish. The 10-year Treasury yields 4.39%, with T. Rowe Price saying yields may climb to 6% for the first time since 2000 on Donald Trump’s inflationary policies. Gold held steady at $2,645 an ounce.
Big tech was mixed, with Tesla up for the ninth time in the past ten sessions while Nvidia moved further into correction territory. The Dow has been falling for nine straight days. This is its longest losing streak since 1978.
In Asia this morning, gains in Hong Kong (Hang Seng, +0.9%) and mainland China (Shanghai Composite, +0.6%) offset declines in Japan (Nikkei 225, -0.7%). Honda (-3.4%) and Nissan (+24%) are exploring a potential merger, which may eventually include Mitsubishi Motors (+17%).
The UK 10-year gilt yield moved up to 4.52%, its highest since 1990 versus Germany, as the market reduces its forecast on Bank of England rate cuts after wage inflation jumped. Inflation (CPI) for November came in at 2.6%, as expected. Sterling trades at $1.2684 and €1.2080, while the FTSE 100 is currently trading 0.1% higher at 8,204.
M&A dealmaking regained momentum this year, with global transaction values surging 16% to $3.1tn. M&A bankers are now waiting to see whether a second Trump term will turbocharge or temper the nascent recovery.
We will resume our Morning Note on Monday 6 January 2025 and would like to wish all of our clients and readers a wonderful time over Christmas and the New Year. Thank you for your support during 2024 and we look forward to the coming year.
Source: Bloomberg