Round up of today's market news *

North American News

Stocks Face Early Week Blues as U.S. Markets Open with a Bearish Tone

Major indices close lower as US stocks struggle at the beginning of the week.

A look at the closing levels shows:

Dow Jones Industrial average fell -41.08 points or -0.11% at 36204.43
S&P fell -24.87 points or -0.54% at 4569.77
Nasdaq fell -119.55 points or -0.84% at 14185.48

The small-cap Russell 2000 bucked the trend with rotation into that sector. That index rose 19.37 points or 1.04% at 1882.01.

Looking at the 11 S&P sectors, 4 were higher.7 were lower. Below is the list of the winners and losers today:

Winners:

S5REAS (Real Estate Sector): Up by 1.25 points, an increase of 0.53%, closing price at 239.19.
S5HLTH (Healthcare Sector): Up by 3.19 points, an increase of 0.21%, closing price at 1,535.75.
S5INDU (Industrial Sector): Up by 1.86 points, an increase of 0.20%, closing price at 918.94.
S5C0NS (Consumer Staples Sector): Up by 0.74 points, an increase of 0.10%, closing price at 747.80.

Losers:

S5TELS (Telecommunication Services Sector): Down by 3.21 points, a decrease of 1.37%, closing price at 231.03.
S5INFT (Information Technology Sector): Down by 42.91 points, a decrease of 1.31%, closing price at 3,235.72.
S5MATR (Materials Sector): Down by 6.21 points, a decrease of 1.19%, closing price at 516.64.
SPN (Energy Sector): Down by 2.98 points, a decrease of 0.46%, closing price at 641.39.
S5C0ND (Consumer Discretionary Sector): Down by 6.29 points, a decrease of 0.47%, closing price at 1,347.66.
S5UTIL (Utilities Sector): Down by 1.27 points, a decrease of 0.40%, closing price at 319.24.
SPF (Financials Sector): Slightly down by 0.03 points, a decrease of 0.01%, closing price at 599.45.

US October factory orders -3.6% vs -2.8% expected

US factory orders for October 2023

Lowest reading since April 2020
Prior was +2.8% (revised to +2.3%)

Details:

Factory orders ex-transportation for October -1.2% versus +0.8% last month (revised to +0.4%)
Durable goods order revised -5.4% versus -5.4% preliminary and +4.0% prior month
Durable goods ex-defense -6.7% versus -6.7% preliminary. Last month +5.0%
Nondefense capital ex-air -0.3% versus -0.1% preliminary. Last month -0.2%
Durable goods ex transportation 0.0% vs 0.0% preliminary. Last +0.2%

US household versus establishment employment surveys

Different pictures on the state of the jobs market

Here’s a great chart from BMO showing the consistent jobs growth in the establishment survey compared to the household survey showing net job losses since June.

On a 6-month moving average basis, this dragged the household survey’s payrolls growth to just 32k, and even the establishment survey’s 6-month moving average has slipped to effectively its lowest level since the pandemic. It’s no secret that labor is the benchmark lagging indicator, and as such, the trend in hiring holds marginally more weight than the outright level for monetary policymakers.

JP Morgan Private Bank says it’s time to lock in the long end

JP Morgan Private Bank is out with its outlook for 2024

JP Morgan Private Bank is out with its outlook for 2024 and they mostly paint between the lines, seeing inflation coming down and equities headed to new highs. If you’re looking for optimism

1. Inflation’s Cooling, but Stay Sharp:

“Inflation will likely settle,” the report states, but warns against complacency.Equities and real assets are recommended as hedges against this lingering inflation threat.”We expect developed world inflation will similarly settle between 2% and 2.5%, and with more variability than existed in the 2010s”

2. Bonds – The New Contenders:

“Bonds are more competitive with stocks,” the report declares, signaling a shift in the investment landscape.This isn’t just a subtle change – it’s a “rate reset,” and they’re urging investors to lock in these higher yields.They also warn “this is as good as it gets” for cash yields and urge clients to increase allocations to non-cash assets. “Holding more cash in the near term may not be a poor decision, but it likely isn’t the best one either.”

3. Equities – Marching to New Highs with AI’s Beat:

The report boldly claims, “Equities seem to be on the march to new highs.” Why? AI is the game changer here. The report doesn’t just see AI as a tech trend; it’s a fundamental reshaper of market dynamics. The report notes, “incorporating AI and machine learning into our processes could deliver more than $1 billion in impact this year.” It’s a significant bet on the transformative power of AI across sectors.

4. Credit Stress – Contained but Crafty:

There’s a warning about “pockets of credit stress” that are likely to remain limited. It’s a heads-up to investors to stay vigilant in the credit arena, particularly in areas like real estate and private credit.

5.The Big Shift to a New Interest Rate World:

The report reminisces about a time when “nearly 30% of all global government debt traded with a negative yield.” But now, we’re in a new era with yields soaring past 4%. It’s a historic shift and a game-changer for investors, offering more choices “than at any time since the global financial crisis”.

6.Navigating Inflation with Equities and Real Assets:

Tackling inflation isn’t just about bracing for impact; it’s about being strategic. The report suggests equities, noting, “US consumer prices have risen almost 19%. S&P 500 earnings are up over 35%.” They also highlight the allure of real assets in this environment, stating, “as commodities and labor become more costly, existing buildings tend to appreciate”. Where to buy equities? “While we prefer the U.S. stock market in 2024, low valuations elsewhere suggest that prices already anticipate bad news for corporate profits,limiting the downside for stock performance.”

7. Credit Markets – Tight but Tolerable:

Higher interest rates are squeezing credit availability, but the report sees this as a manageable issue. They’re not expecting these stresses to spiral into a 2024 recession, a somewhat reassuring note for investors eyeing the credit landscape warily.

Ford vehicle sales fell 0.5% y/y in November

Auto sales will be an interesting story in 2024

Ford reported total sales of 145,559 vehicles in November, compared with 146,364 units last year, a drop of 0.5%. There may have been some impact from the strike but auto lots have decent inventory.

UBS warns on rising central bank interest rates as inflation steps down

UBS say that real central bank interest rates are tightening due to rapidly falling CPI

UBS have warned of central bank interest rates getting tighter despite European and US inflation numbers once again coming in lower than markets have been expecting.

UBS says that with CPI rates dropping so rapidly in effect real interest rates set by central banks are rising more rapidly.Real rates are interest rates minus the inflation rate (as a really brief explanation).In addition say the analysts, the full impact of past monetary tightening has yet to be felt.

Morgan Stanley warns on headwinds for stocks including weaker earnings, cautious firms

Say a durable recovery will take longer

Via a note to clients from Morgan Stanley, Michael Wilson, the firm’s chief U.S. equity strategist has warned on headwinds for further progress on stocks, citing a combination of:

weaker earnings revisions breadth
cautious corporate commentary
weaker leading survey data
a decelerating fiscal impulse

Said these are negatives for earnings, and they’ll likely persist into the new year, “before a durable recovery takes hold.”.

ICYMI – US Senators call for travel ban with China amidst rising respiratory iIlness cases

US Republican senators urge President Biden to restrict travel between US and China

ICYMI, on Friday five US Republican senators asked President Joe Biden’s administration to ban travel between the United States and China after a spike in Chinese respiratory illness cases.

In a letter to US President Biden the senators

“We should immediately restrict travel between the United States and (China) until we know more about the dangers posed by this new illness”

The Republican senators may be in danger of being accused of overreaction and ramping up fear. I imagine they’d argue that are being cautious. You can decide.

The admin responded:

“We are seeing seasonal trends. Nothing is appearing out of the ordinary. … At this time, there is no indication that there is a link between the people who are seeking care in U.S. emergency departments and the outbreak of respiratory illness in China.”

Commodities

Gold Futures: Extra gains on the cards

Open interest in gold futures markets resumed the uptrend and rose by around 12K contracts at the end of last week, according to preliminary readings from CME Group. Volume followed suit and advanced by more than 99K contracts after three consecutive daily pullbacks.

Gold poised to extend its rally

Gold prices advanced to new all-time highs past $2075 on Friday. The daily uptick was on the back of rising open interest and volume and leaves the door open to further gains in the very near term. On this, the next hurdle of note appears at the $2100 mark per troy ounce.

Gold peaking too early in the cycle?

The precious metal reverses lower after touching fresh record highs earlier in the day

Gold surged to a fresh all-time high in thin trading earlier today, touching $2,148 but has now dropped by more than $80 in a stunning reversal as we get into European trading. The fall sees gold sit 0.4% lower on the day to $2,062 and slumps back below the 2020 and 2022 highs around $2,070-75.

On the month, gold is still up by 1.4% at this stage but technicals are starting to look a little shaky especially if the above levels hold on the monthly chart. Traders have priced in a considerable amount of central bank easing for next year already and it might be tough to price in much more than that in the months ahead.

Gold drops $50, back under $2100

Gold price sees sharp decline, dropping $50 and falling below $2100

Gold extended its Friday run to highs above $2140 during the early Asian morning.

Crude oil futures settle at $73.04, signaling a more bearish bias

Crude oil prices decline by $1.03 or 1.39% as it moves away from its 200-day moving average.
Crude oil futures are settling at $73.04.
That is down -$1.03 or -1.39%.

The high price for the day reached $75. The low price extended to $72.66.The low price of from the month of November reached $72.22. Moving below that level is needed to increase the bearish bias.

Last week the high prices spiked up to $79.56. That took the price above the 50% of the 2023 trading range at $79.30.However, momentum quickly faded and the price rotated not only below the 50% retracement level, but also its 200-day moving average at $78.05.The subsequent move to the downside also broke below the 61.8% retracement of the 2023 trading range at $75.59. That level is now an upside target (and risk level) for sellers looking for more downside momentum.

Saudi energy minister: OPEC+ cuts can ‘absolutely’ go beyond Q1

Some talk from the Saudi oil minister
Sees signs of demand improvement

Oil has caught a bid on these headlines.There is a sense in the market lately that OPEC has reached the limits of what it can accomplish and that there’s the threat of a war for market share in 2024 if US production continues to grow.

“I honestly believe that 2.2 million will overcome even the usual inventory build that usually happens in the first quarter,” he said. In separate news, Russia’s Putin will visit Saudi Arabia and the UAE this week.

Natural Gas sinks lower despite heightened tensions in Middle East

Natural Gas prices could return to $3 as cold season kicks in for Europe.
Natural Gas prices have fallen throughout November.
The US Dollar starts to turn after three weeks of continued weakness.

Natural Gas prices are sinking lower, despite soaring tensions in the Middle East. After an eventful weekend in the Gaza region, markets are heading into risk off with a flight to safe havens. Despite risk of a proxy war in the region, Gas prices are continuing their decline this Monday.

Morgan Stanley’s prediction: Brent crude oil to see strong support at mid $80s

Say even partial compliance with new OPEC+ cuts should prevent stockpile builds in Q1 2024

Morgan Stanley expects support for Brent crude oil in the mid $80s.

Analysts at the firm responsd to the OPEC+ agreement. They assess that the output cuts took a long time to negotiate, and while they are still not part of the formal quota, and only limited commitment by members of the cartel is being shown (Angola, for example), even partial compliance should be enough to prevent stockpile builds in Q1 of 2024.

EU News

European equity close: Modest losses as the new week begins

European stocks start the week lower

Closing changes on Monday:

STOXX 600 -0.1%
German DAX, +0.1%
France CAC -0.2%
UK FTSE 100 -0.3%
Spain’s IBEX +0.4%
Italy’s FTSE MIB +0.1%

Eurozone December Sentix investor confidence -16.8 vs -16.4 expected

Latest data released by Sentix – 4 December 2023
Prior -18.6

Germany October trade balance €17.8 billion vs €17.1 billion expected

Latest data released by Destatis – 4 December 2023
Prior €16.5 billion; revised to €16.7 billion

The German trade surplus expanded marginally in October, as exports declined by 0.2% on the month but imports slumped harder by 1.2% on the month.

Switzerland November CPI +1.4% vs +1.7% y/y expected

Latest data released by the Federal Statistics Office – 4 December 2023
Prior +1.7%
Core CPI +1.4% y/y
Prior +1.5%

SNB total sight deposits w.e. 1 December CHF 474.1 bn vs CHF 473.7 bn prior

Latest data released by the SNB – 4 December 2023
Domestic sight deposits CHF 464.1 bn vs CHF 465.3 bn prior

German businesses retain pessimistic view towards the year ahead – survey

35% of businesses polled had negative expectations for next year, according to the Cologne Institute for Economic Research

Only 23% of companies were optimistic about prospects for the year ahead
35% of businesses expect to employ fewer people next year
Only 20% of firms expect employment to increase in the year ahead

The survey also highlights the continued struggle in Germany’s industrial and construction sectors. For the former, only 25% of companies are expecting an increase in production while 38% were expecting a drop next year. For the latter, only 13% expect an increase in output while 54% expect a decline in output for the year ahead.

ECB’s de Guindos: Recent inflation data is good news

Remarks by ECB vice president, Luis de Guindos

It’s been a ‘positive surprise’
But it is too early to declare victory
Increase in wages can still have an impact on inflation
Monetary policy stance will be data-dependent

Asia-Pacific-World News

China-EU Summit to take place on Thursday this week

The Chinese foreign ministry confirms that the summit will be held on 7 December in Beijing

This will be the first in-person summit between China and EU leaders since 2019. We will see Charles Michel, Ursula von der Leyen and Josep Borrell representing the EU while China will be represented by Xi Jinping and Li Qiang.

The summit is expected to last for two days with the EU stating that they want to discuss “the state of EU-China relations and international issues, including Russia’s war of aggression against Ukraine and the situation in the Middle East”.

China infectious disease spike: health authorities recommend reducing large gatherings

National Health Commission mandated medical institutions to expand services.

China’s health authorities have recommended reducing large gatherings in public places.

China’s National Health Commission (NHC) held a press conference on Saturday.

Via media outlet Global Times:

acute respiratory diseases that are currently prevalent in China are all caused by known pathogens
no new infectious diseases caused by new virus or bacteria have been detected
NHC has required all types of medical institutions at all levels to fully open pediatric outpatient services:
- required to increase the number of midday, evening, and weekend outpatient services, extend service hours, expand hospital bed capacity, and continuously optimize … medical processes to facilitate people’s seeking medical treatment
National Influenza Center under the Chinese Centre for Disease Control and Prevention (China CDC) says … current antiviral drugs are effective against influenza viruses
China CDC has been conducting surveillance of mutations
NHC suggested reducing large gatherings in public places … public venues … could require … dynamically divert passenger flow in a timely manner to avoid high levels of people gathering

Australian data for inventories, home loans and job advertisements

A solid rise in inventories

Data from Australia.

Australia Company Gross Operating Profits (Q3) -1.3% q/q

expected -0.5%, prior -13.1%

Business inventories q/q 1.2%, this large build in inventories will adding notably to economic growth in Q3 (i.e. GDP)

expected -0.6%, prior -1.9%

Company Profits Pre-Tax 1.6% q/q

prior -14.6%

Also monthly data, housing finance for October:

Home Loans +5.6% m/m

expected +1.1%, prior -0.1%

Owner Occupier Loan Value +5.6% m/m

prior +0.8%

Investment lending for homes (Oct) +5% m/m

prior +2%

ANZ Indeed Job Advertisements for November -4.6% m/m

prior -3.4%
has declined 8.4% over the last three months, but remains high compared to historical levels

Australia Melbourne Institute monthly inflation for November +0.3% m/m (prior -0.1%)

The Melbourne Institute Inflation Gauge is produced by the Melbourne Institute of Applied Economic and Social Research at the University of Melbourne.

+0.3% m/m vs. -0.1% prior
4.4% y/y vs. 5.1% prior
- 4.4% y/y is its slowest in 19 months

The y/y benefitting from base effects but the monthly rising after its October drop.

For the trimmed mean (this is a measure of core, or underlying inflation):

+0.2% m/m in November
3.8% y/y (prior 5.0%)
- y/y slowest in 17 months

RBA’s December decision: cash rate likely to hold, questions arise for future increases

If economic conditions align with forecasts, further rate moves would be harder to justify.

In brief from a Westpac preview of the upcoming RBA decision.

Westpac is forecasting that the Reserve Bank of Australia is unlikely to raise thecash rate at its December meeting.

As described in the minutes of the November meeting, the staff forecasts were “predicated on there being an additional one to two increases in the cash rate over coming quarters”. The peak in rates assumed in the forecasts is “around 4½ per cent” according to the RBA’s latest Statement on Monetary Policy (SMP).
One of these increases was already delivered following the November meeting. The question the RBA will be grappling with in coming months is what they need to see to turn one-and-a-half into two.

WPAC highlight the February meeting:

By the time of the February meeting, the RBA will have the full December quarter inflation data as well as the September quarter national accounts and other key data. We reaffirm our view that the RBA Board would raise the cash rate at that meeting if it sees further upside surprises to inflation or fresh evidence suggesting that inflation will decline more slowly than it intends. If things play out broadly in line with their forecasts, though, further moves would be harder to justify. In that case, it would be likely that the RBA would hold the cash rate steady. Currently we believe this is the more likely outcome.

New Zealand data shows Q3 terms of trade fell 0.6% q/q

NZ’s terms of trade decreased in Q3 as export prices fell more rapidly than import prices

Exports prices q/q fell more rapidly than did import prices:

Export Volumes -5.5% q/q

expected -3.8%, prior 6.8%

Export Prices -1.4%q/q

expected -1.5%, prior -0.6%

Import Prices q/q -0.8%

expected 1.0%, prior -1.0%

BOJ board member Noguchi said only a possibility the 2% inflation target is in sight

BOJ’s Noguchi emphasizes the need for sustained wage increases to reach inflation target

Bank of Japan policy board member Asahi Noguchi spoke over the weekend, with comments meant to convey there is no imminent policy pivot in sight:

“It’s true the impact of elevated global inflation is reaching Japan’s economy with consumer inflation exceeding the BOJ’s 2% target since the spring of 2022
but the rise (in inflation) is mostly due to cost-push factors amid higher import prices,”
To achieve our 2% inflation target, we must see price rises backed by sustained wage increases”
“While annual spring wage negotiations this year achieved wage hikes unseen in 30 years, we’ve only just reached a stage where the possibility of achieving our target has come into sight”

Cryptocurrency News

Dogecoin breaks key $0.088 barrier ahead of tenth birthday, 87% DOGE holders at profit

Dogecoin price has crossed key resistance at $0.088076, with early 87% DOGE wallets sitting on unrealized profits.
DOGE tokens worth $11.94 billion were moved by whales in transactions greater than $100,000 last week.
Dogecoin on-chain metrics support a bullish outlook.

As Dogecoin (DOGE) approaches its tenth anniversary on Wednesday, the Shiba-Inu-themed meme cryptocurrency has surpassed a crucial resistance level at $0.088076, reaching the highest level since mid-April.The recent upswing in the memecoin’s value has driven many Dogecoin holders towards profitability, and whale transactions – or moves made by large-wallet investors totalling more than $100,000 – also climbed during the last week, further supporting DOGE price gains.

Week Ahead: Altcoin plays for traders as Bitcoin crosses $42,000

Bitcoin price hit $40,000 over the weekend as investors anticipate a spot BTC ETF approval in January. Bitcoin trades around $42,000 and shows no signs of stopping. This publication will focus on two things:

What to expect this week.
The outlook for Bitcoin and if the fourth cycle is any different.

Altcoin sectors to focus this week

Monday, December 4:

BNB Greenfield Upgrade
BITTREX End of Service
OSMO Co-Founder Teased Significant Announcement

Tuesday, December 5:

PSTAKE 600k ATOM Governance Ends
APE LOTM Season 2 Ends
AR Hardfork
LSK V4 Mainnet
COINBASE POLY Delisting
GTA 6 First Trailer Revealed (Gaming tokens might rally – MANA, ENJ, APE, AXS etc)

Wednesday, December 6:

Aptos and READYgg Game Release
SCRT Proposal To Reduce Inflation From 15% To 9%
CGPT Launch of Cross-Chain Swap Aggregator (AI coin trend – AGIX, RNDR, FET)
ZEN V.4.11 Upgrade (privacy coins focussed: XMR, SCRT)
FET Demo Showcasing at AI Summit NY From Dec 6-7
DOGE birthday (December 6, 2013)

Thursday, December 7:

MATIC Polygon Connect
LINK Staking V0.2 Early Access
COINBASE Perp listing of MATIC & BCH
KAVA Kava 15 Mainnet
US NFP Preview

Friday, December 8:

BLOCKFI Debt Proof Submission
SUSHI End of V3 Rewards Program
US Unemployment Numbers & NFP (13:30 GMT) Reaction
ENJ NFT & Token Migration

Sunday, December 10:

zkSync Phase 2 Out of 4, 40% Token Burn

Weekend News: Bitcoin nears $40,000 in solid weekend rally. ETF approval remains the catalyst

Bitcoin up 2% on the weekend

Enthusiasm is quietly building around bitcoin as risk trades improve and interest rates fall. Liquidity is improving and the industry appears to have cleaned up following the fines and Binance and the collapse at FTX.

The major catalyst that bitcoin bulls are watching is for a US ETF approval, which looks to be a foregone conclusion. All indications are that it will be approved, with only the timeline in dispute. Recent reporting highlights a window opening up for approvals in the first week of January.

Until it’s approved, I don’t see any reasons for the bulls to sell.Beyond that, there will be need to be a new catalyst or some huge inflows into those ETFs to keep the momentum going. One source of modest momentum is the weakening of the US dollar, something that also boosted gold to a record high on Friday.

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Round up of today’s market news

ByBilals Tech