SVET Reports
Monday's Markets Update (December 30, 2024)
On Monday, equities are down sharply, extending Friday's tech selloff as pending home sales set a 3-year record and Dallas manufacturing rose for the first time in 2 years, while Chicago businesses continue to contract for a year in a row. Thin holiday trading amplified volatility. Large-cap tech stocks underperformed, while energy stocks gained. Despite the decline, major indices are set for above-average annual gains: the Nasdaq (+28%), the S&P (+25%), and the Dow (+13%). For comparison, EU stocks are closing the year with a +5.5% gain, with France (-3%), Britain (+5%), Italy (+12%), Spain (+14%), and Germany (+19%) also posting positive results. China's market rose +15%, Japan's +20% (a record), South Africa's +11%, and India's +8%, while Brazil's stocks dropped -10% and Mexico's -15%. The gold price rose +27% in 2024. Natural gas surged over 20% overnight, reaching a 2-year high, driven by a cold snap. BTC (92K) and ETH (3.5K) sidetracked, showing some weakness as many traders continue to re-calibrate their upbeat prognosis after the Fed's sharp policy pivot.
Details
The Dallas Fed Manufacturing Index rose to 3.4 in December, its first positive reading in two years. Production and new orders showed some improvement, while employment and workweeks remained steady. Price pressures eased, but future production expectations moderated. 1Y trend: "Up" (Dal)
The Chicago PMI fell to 36.9 in December, indicating a 13-moths contraction in Chicago's economic activity. New orders declined sharply, with more than half of respondents reporting fewer orders. 1Y trend: "Down" (ISM)
Pending Home Sales increased 6.90% YoY in November, setting 3-y record . This index has averaged -0.53% since 2002, reaching a high of 52.40% in April 2021 and a low of -36.80% in October 2022. 1Y trend: "Up" (NAR)
Crypto
El Salvador has increased its BTC holdings to over 6,000 BTC, making it one of the largest national holders of the cryptocurrency. This follows a recent $1 million purchase, despite a recent deal with the IMF. The country plans to continue acquiring BTC and may phase out its government-sponsored BTC wallet, Chivo. (source)
World Markets
European markets closed lower (Stoxx 50 -1%, Stoxx 600 -0.5%), with tech, industrials, and media stocks leading the decline. Inflation concerns and a hawkish ECB stance weighed on sentiment. Despite today's dip, European stocks are set to post miserable gains for the year (Stoxx 600 +5.5%). 1Y trend: "Up"
The Ibovespa closed flat, as a Supreme Court decision on fiscal amendments boosted investor confidence. While inflation concerns remain, the market reacted positively to improved fiscal data. Commodity producers gained, while losses in other sectors limited overall gains. The Ibovespa is set to post a 10.4% decline for the year. 1Y trend: "Down"
Currencies
The dollar index rose to 108.2, approaching a 2-year high. The Fed's hawkish stance, coupled with dovish signals from other central banks and the prospect of lower imports under Trump's policies, strengthened the dollar. 1Y trend: "Up"
Commodities
Gold prices held below $2,610 per ounce, with gains limited by the Fed's hawkish stance. Resilient labor data and persistent inflation have led to expectations of fewer rate cuts. Despite recent declines, gold is set to end the year with a 27% gain, supported by safe-haven demand amid geopolitical tensions and central bank buying. 1Y trend: "Up"
WTI crude oil prices rose above $71 per barrel, driven by expectations of stronger Chinese demand and colder weather. However, concerns about potential oversupply and geopolitical risks under the new administration are keeping prices in check. 1Y trend: "Side"
Natural gas futures surged over 20%, reaching a 2-year high, driven by forecasts of a significant cold snap across the country. Strong demand and lower-than-expected inventory withdrawals supported the price increase. However, robust LNG exports and concerns about potential oversupply in the longer term may limit further gains. 1Y trend: "Up"