Global Market Highlights: December 5, 2024

Asia-Pacific markets

In Asia, markets delivered mixed performances. The ASX 200 posted slight gains, supported by tech stocks and improved Australian trade and household spending data. Japan’s Nikkei 225 opened higher but trimmed gains amid volatile currency movements. South Korean equities underperformed as political tensions escalated, with the opposition party moving forward on impeachment proceedings against President Yoon. Chinese indices traded cautiously as the PBoC drained liquidity and state media tempered expectations of rapid economic growth.

European markets

European bourses opened flat but gained momentum shortly after, climbing higher in morning trade. Despite a relatively quiet news flow and the widely expected collapse of the French government following a no-confidence vote, this upward movement occurred. The CAC 40 index, in particular, shrugged off political uncertainty as markets focused on improving sentiment carried over from gains on Wall Street. President Macron reportedly seeks to appoint a new prime minister before Saturday, avoiding a snap election.

Sectors across European markets exhibited a mildly positive bias, which expanded further as the session progressed. Tech, consumer discretionary, and communication sectors contributed to the gains, echoing the performance of their US counterparts, where the Nasdaq set fresh record highs. Notable corporate developments included Foxconn reporting 3.47% YoY revenue growth in November and projecting strong Q4 growth. TSMC and Nvidia are reportedly in talks to produce Blackwell chips at TSMC’s Arizona plant. EU antitrust authorities reiterated that a Google split remains a possibility, underscoring regulatory scrutiny on major tech firms.

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FX markets

Following weaker-than-expected US ISM Services data, the US dollar (DXY) remained vulnerable in currency markets. This drove yields lower, bolstering expectations for a Federal Reserve rate cut later this month. The euro gained against the dollar, despite the political upheaval in France, as markets focused on the prospect of a rolled-over 2024 budget and less restrictive fiscal policy. EUR/USD traded above 1.05, with the next resistance seen at the 21-day moving average of 1.0561. The Japanese yen strengthened on dovish remarks by BoJ’s Nakamura, while the British pound advanced for the third straight session, gaining traction after shrugging off earlier dovish headlines about Bank of England policy.

Fixed income markets

Fixed-income markets saw modest pullbacks from Wednesday’s rally. US Treasuries adjusted as expectations for a Fed rate cut this month solidified, while French paper remained calm despite the political turmoil, with the France-Germany yield spread narrowing to 81 basis points from Monday’s peak of 89. Bunds and Gilts traded within tight ranges, reflecting a wait-and-see attitude ahead of key US labor market data and next week’s inflation report.

Commodity markets

A large bank offloading contracts ahead of today’s OPEC+ meeting led to a modest upward bias in crude oil futures. Reports suggested OPEC+ plans to delay production increases by three months while extending collective cuts through 2026. Precious metals traded softer, weighed down by caution ahead of Friday’s US jobs report and next week’s CPI data. Copper prices rose on the back of a weaker dollar and improved risk sentiment, though Chinese media downplayed expectations of fiscal stimulus at the upcoming Central Economic Work Conference.

Crypto

Bitcoin broke the psychological $100,000 level for the first time, advancing further after US President-elect Trump named crypto-backer Paul Atkins to lead the SEC. This landmark development added to the cryptocurrency’s bullish momentum, reflecting broader optimism in digital asset markets.

US equity pre-market

Dow hits 45,000 milestone: The Dow Jones Industrial Average closed above 45,000 for the first time, joined by record highs for the S&P 500 and Nasdaq. Marvell Technology (MRVL) surged by 23% and Salesforce (CRM) rose by 11%, driving the gains. The Technology Select Sector ETF (XLK) climbed 1.8%.

Global economic & political updates

1. Fed Chair Powell signaled a slower pace for rate cuts, but a December cut remains likely. Economists predict the next adjustment by March 2025.
2. OPEC+ postponed its planned output increase until April 2025, citing weak demand.
3. Initial claims for the week ending Nov. 30 rose to 224,000 (+9,000 WoW).
4. A targeted shooting outside a Manhattan hotel resulted in the murder of UnitedHealthcare CEO Brian Thompson. Investigations are ongoing.
5. President-elect Trump nominated Kelly Loeffler (SBA), Paul Atkins (SEC), Gail Slater (DOJ), Jared Isaacman (NASA), and Jeffrey Yabuki.
6. Michel Barnier will step down after losing a no-confidence vote, becoming France’s shortest-serving PM.
7. Global billionaire wealth increased 17% to $14 trillion in 2024, while the U.S. added 9.5% more million-dollar 401(k) accounts.

Corporate news

1. American Airlines (AAL) rose 6% in pre-market trading after announcing an exclusive credit card deal with Citi (C), ending its Barclays partnership. We expect the deal, effective January 2026, to boost payment growth by 10% annually. AAL also revised its Q4 earnings forecast upward.
2. TSMC and Nvidia partnership: Taiwan Semiconductor Manufacturing Company (TSM) is in talks with Nvidia (NVDA) to manufacture its new Blackwell AI chips at TSMC’s Arizona facility, though packaging will remain in Taiwan.
3. American Eagle falters: American Eagle (AEO) fell 13% following weak holiday guidance and a reduction in full-year sales growth to 1% (down from 2-3%). Q3 revenue dipped 1% to $1.29 billion, below estimates, though its Aerie brand reported 5% same-store sales growth.
4. JetBlue trims routes: JetBlue (JBLU) announced plans to eliminate unprofitable routes, including Miami and some European connections. Despite this, shares climbed 8% yesterday on strong November and December bookings.
5. Vodafone merger approval: UK regulators conditionally approved Vodafone’s (VOD) $19 billion merger with Three, requiring $13.97 billion in 5G investments and three years of tariff commitments.
6. Apple to invest $1B in Indonesia: Apple (AAPL) committed to a $1 billion factory investment in Indonesia to comply with local manufacturing requirements after an iPhone 16 ban earlier this year.
7. Shell-Equinor joint venture: Shell (SHEL) and Equinor (EQNR) formed the UK’s largest independent oil and gas producer, targeting 140,000 barrels per day by 2025.
8. Interpublic expands into analytics: Interpublic Group (IPG) acquired Mumbai-based Intelligence Node, a retail analytics firm, for nearly $100 million, enhancing its e-commerce capabilities.
9. Foxconn’s strong growth: Foxconn (TPE:2354) reported November revenue of $20.75 billion, its second-highest on record for the month, anticipating robust Q4 growth.
10. Cyber Monday breaks records: U.S. shoppers spent a record $13.3 billion on Cyber Monday, up 7.3% YoY. Mobile devices accounted for 57% of sales, compared to 33% five years ago.

Earnings recap

1. Toronto-Dominion Bank (TD): Revenue of $11.36B (+16.2% YoY) beat estimates; EPS of $1.26 (-7.4% YoY) missed.
2. Synopsys (SNPS): Revenue of $1.64B (+2.3% YoY) exceeded expectations; EPS of $3.40 (+13.3% YoY) beat estimates.
3. Bank of Montreal (BMO): Revenue of $6.56B (+5.3% YoY) outperformed; EPS of $1.39 (-33.8% YoY) missed.
4. Kroger (KR): Revenue of $33.63B (-0.95% YoY) missed; EPS of $0.98 (+3.2% YoY) met expectations.

Upcoming earnings

1. Lululemon (LULU): Est. Revenue $2.36B (+7.1% YoY); EPS $2.69 (+6.3% YoY).
2. Veeva Systems (VEEV): Est. Revenue $685M (+11.1% YoY); EPS $1.54 (+14.9% YoY).
3. Samsara (IOT): Est. Revenue $310.6M (+30.8% YoY); EPS $0.04 (flat YoY).
4. Ulta Beauty (ULTA): Est. Revenue $2.61B (+4.9% YoY); EPS $5.47 (+7.9% YoY).

IPO watch

1. zSpace, Inc. (ZSPC): Educational AR/VR solutions provider with $44.2M in revenue (+22.7% YoY).
2. Shepherd Ave Capital (SPHA): Cayman Islands blank check company.
   • Jinxin Tech (NAMI): Chinese ed-tech firm with $53.5M in revenue (+60.6% YoY).

Looking ahead

The market awaits US Challenger Layoffs, weekly jobless claims, and key speeches from central bank officials, including Fed’s Barkin, BoE’s Greene, and ECB’s Patsalides. Traders are closely monitoring tomorrow’s US Non-Farm Payrolls report for further insights into the Federal Reserve’s policy trajectory. The OPEC+ meeting remains a focal point for energy markets, with potential implications for global oil prices. Geopolitical developments, such as Israel’s cabinet discussions on a Hamas deal and China’s sanctions on US military firms, add another layer of complexity to the global market outlook. Given the current data and market sentiment, U.S. markets may experience modest fluctuations today, with investors closely monitoring economic reports and corporate earnings for further cues.