Tuesday's Markets Update (December 26, 2023)

27 Dec 2023 by rate3

On Monday, the Nasdaq and other major stock indexes closed higher, extending an eighth straight week of gains, driven by reduced price pressures and expectations of interest rate cuts in 2024. Intel's shares rose by 5.2%, while Apple faced a setback following a sales ban on its smartwatches. Home prices continued to rise due to tight supply and increased competition among buyers. Meanwhile, the price of BTC decreased by more than 3% due to after-Christmas profit-taking, and ETH followed with a 3% drop.

Details

Texas manufacturing sentiment improved in December, with the Federal Reserve Bank of Dallas general business activity index rising to -9.3 from -19.9. Production and new orders showed signs of recovery, while prices paid for raw materials increased, leading to higher output charges.

Home prices, as measured by the S&P CoreLogic Case-Shiller 20-city index, rose 4.9% YoY in Oct 2023, the most since Nov 2022, due to low housing supply. Eased mortgage rates and a more dovish Fed may further boost home prices, with Detroit, San Diego, and New York leading gains.

Commodities

Wheat futures are expected to close the year nearly 15% lower due to ample supplies from key producers and supply risks from the war in Ukraine. A good harvest in Russia is set to lift available wheat for export to a record high of 50 million tonnes, while robust crops in South America further contribute to global supply. However, damaged infrastructure in Ukraine limits exports from Europe's bread basket and restricts the decline in prices.

Lithium carbonate prices hit a low of below CNY 97,500 per tonne due to oversupply and reduced demand from electric vehicle manufacturers in China. Forecasts now suggest a lithium deficit may not return until 2028, with global supply expected to increase by 40% in 2024, exacerbating the surplus.