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The Markets – Dec 3rd, 2024
IN THE MARKETS
Stocks continued their upward momentum last week, with the Dow Jones Industrial Average, S&P 500, and S&P 400 MidCap Index reaching record intraday highs, joined by the small-cap Russell 2000 Index, which climbed to a new peak of 2,466.49 on Monday, surpassing its previous record set over three years ago. Trading activity remained robust ahead of the Thanksgiving holiday, during which markets were closed on Thursday and operated for a shortened session on Friday. Investor sentiment appeared influenced by domestic policy developments, notably President-elect Donald Trump’s nomination of hedge fund veteran Scott Bessent as Treasury secretary, a move welcomed by markets due to his perceived focus on economic stability, inflation control, and a measured tariff approach.
U.S. MARKETS
DOW & TECH
The Dow ended the week up 1.39% at 44,910.65 vs the prior week of 44,296.51.
The tech-driven Nasdaq ended the week up 1.13%, closing at 19,218.17 vs. the prior week of 19,003.65.
BY MARKET CAP
- Large-Cap: The S&P 500 ended the week up 1.06%, closing at 6032.38 compared to last week’s 5969.34.
- Mid-Cap: The S&P 400 mid-cap ended the week up 0.73%, closing at 3366.18 compared to last week’s 3341.77.
- Small-Cap: The Russel 2000 ended the week up 1.17%, closing at 2434.73 compared to last week’s 2406.67.
U.S. COMMODITIES / FUTURES OVERVIEW
THE VOLATILIY INDEX for 2024 (VIX)
VIX closed at 13.51 this week, an 11.4% decrease vs last week’s close of 15.24
INTERNATIONAL MARKETS
U.S. MARKET NEWS
Mixed economic data:
President-elect Trump’s announcement of plans to impose 25% tariffs on imports from Mexico and Canada and an additional 10% tariff on Chinese imports rattled automakers, with shares of Ford and General Motors (GM) plunging sharply on Tuesday—GM fell 8.99%—due to concerns over their reliance on cross-border trade with Canada and Mexico for parts and assembly. Despite this, the broader market remained resilient, as the S&P 500 extended its winning streak to seven sessions, its longest in over two months. Market sentiment was bolstered by news of a cease-fire agreement between Israel and Hezbollah, though energy stocks declined as oil prices retreated on reduced fears of wider conflict involving Iran. High trading volumes were further supported by a slew of economic data released midweek, including stronger-than-expected personal income and spending growth in October, as well as a surprising 2.0% rise in pending home sales. However, the manufacturing sector showed continued weakness, with durable goods orders missing expectations at 0.2% growth and core capital investment falling 0.2%.
INTERNATIONAL MARKET NEWS
Europe
The pan-European STOXX Europe 600 Index edged up 0.32% in local currency terms, shrugging off concerns about U.S. trade tariffs and interest rate uncertainty, while major regional indexes delivered mixed results. Germany’s DAX climbed 1.57%, the UK’s FTSE 100 rose 0.31%, but France’s CAC 40 declined 0.27%, respectively. In the eurozone, annual inflation rose to 2.3% in November from 2.0% in October, driven by base effects from last year’s lower energy prices, though core inflation remained steady at 2.7%, and services inflation ticked down slightly. Despite signs of easing underlying price pressures, markets anticipate a European Central Bank rate cut next month, though its scale remains uncertain. Meanwhile, German economic data revealed ongoing struggles, with retail sales dropping 1.5% in October, far worse than the forecasted 0.5% decline. However, the labor market displayed resilience, as unemployment rose by only 7,000 in November—well below expectations—keeping the jobless rate steady at 6.1%.
Japan
Japan’s stock markets recorded modest declines, with the Nikkei 225 slipping 0.2% and the broader TOPIX falling 0.6%, as geopolitical risks dampened global investor risk appetite and bolstered demand for safe-haven assets. The resulting yen appreciation, which strengthened to around JPY 150 per USD from the JPY 154 range the prior week, created challenges for Japan’s export-heavy industries. The yen’s gains were also fueled by hotter-than-expected inflation data, with the Tokyo-area core CPI rising 2.2% year over year in November, up from 1.8% in October, sparking speculation about the Bank of Japan’s potential rate hike timing, likely in December or January. Meanwhile, the yield on the 10-year Japanese government bond edged down to 1.06% from 1.08% but remained near a 13-year high amid anticipation of tighter monetary policy, as BoJ Governor Kazuo Ueda emphasized that rate hikes depend on economic and inflation trends meeting the bank’s forecasts.
China
Chinese equities advanced as optimism over potential government support outweighed concerns about possible U.S. tariff hikes. The Shanghai Composite Index rose 1.81%, the blue-chip CSI 300 gained 1.32%, and Hong Kong’s Hang Seng Index climbed 1.01%, according to FactSet. The People’s Bank of China injected RMB 900 billion into the banking system through its medium-term lending facility, maintaining the lending rate at 2%, as expected. However, with RMB 1.45 trillion in loans expiring next month, November saw a net liquidity withdrawal of RMB 550 billion. Liquidity pressures are expected to intensify as local government bond issuance rises toward year-end, prompting analysts to predict further economic support measures in 2025. Meanwhile, industrial profits fell 10% year over year in October, narrowing from September’s 27.1% drop, marking the third consecutive monthly decline. The slowdown in profit contraction reflected government support measures and growth in equipment and high-tech manufacturing sectors, according to the National Bureau of Statistics.
HIGHLIGHTED STORY
November 24, 2024
What We’re Showing:
Both bitcoin and gold have surged to new all-time highs in 2024. Even if bitcoin has rallied more (119% YTD compared to gold’s 27% YTD), today’s ratio of 35.2 between the cryptocurrency and the precious metal is still below its high of 37 reached in 2021.
Key Takeaways:
While bitcoin had already made new highs earlier in 2024, in November its price surged by more than 30% following Donald Trump’s presidential election victory.
Cryptocurrency investors are optimistic about Trump’s favorable views on digital assets, with the President-elect having said he aims to make the U.S. “the bitcoin superpower of the world” at campaign rallies. This has signaled that crypto regulation could become more lenient, after years of lawsuits and stringent regulation on crypto firms.
Alongside the positive political shift, spot bitcoin ETFs have attracted billions of funds from institutional and retail investors since launching earlier this year. As of November 19, BlackRock’s spot bitcoin ETF has seen more than $30 billion in net flows, with Nasdaq preparing to list options on BlackRock’s bitcoin ETF. Overall, 11 approved bitcoin ETFs manage just over $80 billion in assets to-date.
As bitcoin has surged, so has gold, but to a lesser extent. While the safe haven asset (gold) hit all-time highs of $2,790 on October 30, it has since dropped about 6% partially due to U.S. dollar strength.