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On Wednesday, the US equity market saw modest gains, extending the Santa Claus Rally that began nearly eight weeks ago. The S&P 500 notched its fourth consecutive daily increase and is now just 0.3% below its record high. Meanwhile, the Dow Jones Industrial Average hit another all-time high, while the Nasdaq also experienced gains. Declining Treasury yields supported both equities and bonds, with the VIX volatility index reflecting diminished market apprehension. Small-cap equities, notably in the retail sector, performed strongly, contributing to positive market sentiment. Additionally, the US dollar weakened against the euro. European equity markets also closed slightly higher on the first trading day of the week, with the Stoxx 50 remaining above its multi-year highs, amid continued support that the macroeconomic backdrop is suitable for key central banks to start cutting interest rates next year.
Summary for 28.12.2023
Asian equity markets touched five-month highs, benefiting from the optimistic sentiment surrounding aggressive rate cuts that fuelled a rally in US shares and bonds. MSCI's Asia-Pacific index, excluding Japan, gained 10% in two months, reaching its highest level since August with an additional 0.3% increase. The Nikkei, saw a 0.4% decline due to a rebound in the yen limiting December gains. Meanwhile, Chinese shares, impacted by economic worries and US tensions, were up 0.5% on Thursday but down 4% for December.
US equity futures show little change as investors reflect on a robust year, with the Dow and S&P 500 set to finish up more than 13% and 24%, respectively, and the Nasdaq Composite up 44.3%.
Oil prices rose in early Asian trade as concerns over escalating tensions in the Middle East outweighed easing worries about transport disruptions in the Red Sea. Brent crude futures gained 0.3% to $79.85, and US WTI crude futures rose 0.3% to $74.35. Despite shipping firms returning to the Red Sea, ongoing concerns about Middle East tensions, particularly involving Iran, supported oil prices. The market is expected to closely watch developments and may attempt further gains in the early new year.
The dollar index held below 101 on Thursday, its weakest in five months due to growing expectations of Federal Reserve interest rate cuts. Analysts cite cooling inflation and the Fed's aim for a soft economic landing as key factors. Markets predict a nearly 90% chance of a March rate cut, contributing to the dollar's annual decline of about 2.6%, the first since 2020. The Chinese yuan experienced notable gains against the weakening dollar.
On Boxing Day, UK shopper numbers increased by 4%, particularly in London, indicating a strong start to post-Christmas sales. Central London stores saw a notable 10.6% footfall increase, possibly due to holiday tourists. However, overall shopper numbers remained 14.9% lower than pre-pandemic levels, reflecting economic challenges. GlobalData estimated a 2.9% decline in total Boxing Day retail sales at £3.68 billion. Mastercard data showed a 2.6% YoY rise in sales from Nov. 1 to Dec. 24.
The New York Times has filed a lawsuit against OpenAI and Microsoft, accusing them of using millions of its articles without permission to train chatbots. The newspaper claims that OpenAI and Microsoft are infringing on its copyright and attempting to benefit from its journalistic investment. The Times is seeking unspecified damages, estimated in the "billions of dollars," and wants the chatbot models and training sets that incorporate its material to be destroyed. OpenAI and Microsoft argue that using copyrighted works for training AI falls under "fair use."
Tesla is projected to achieve a record quarter in electric vehicle (EV) deliveries, reaching around 1.82 million vehicles for 2023, a 37% increase from 2022. While falling short of Elon Musk's ambitious 2 million annual target, Tesla faces challenges such as the loss of US tax credits and Germany's EV subsidy termination in 2024, potentially requiring further price cuts. The company's high-growth era may be transitioning to a "low-growth period," with increasing regulatory scrutiny and market dynamics.
Apple has secured a temporary reprieve from a US sales ban on its latest smartwatches, including the Apple Watch Series 9 and Ultra 2, amidst a patent infringement dispute with medical device maker Masimo. An appellate court granted Apple a stay until January 10th, allowing the potential resumption of sales. Apple's software update addressing the infringement is under US customs review, with a decision expected by January 12th.
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