News Recap • Week 48 2024

It was a somewhat slower week on the news front, further slowed down by the Thanksgiving-shortened trading week in the US. Happy turkey day to everyone who celebrated!

However, we did get a few key inflation updates from around the world, some interesting currency moves, and even more tariff talk from Trump. Before we dive into all of it, here’s a quick market recap.

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Market recap

Equities

• 🇺🇸 S&P 500 rose 1.06% for the week and set a new all-time high with its first weekly close above 6,000.
• 🇺🇸 Nasdaq Composite gained 1.13% for the week after a 0.83% jump on Friday.
• 🇪🇺 STOXX 600 inched up by 0.35% after having been down earlier in the week.
• 🇬🇧 FTSE 100 rose 0.31% in a very uneventful week.
• 🇩🇪 DAX gained 1.57% as the German stock market continues to perform surprisingly well amidst the country’s economic slowdown.
• 🇯🇵 Nikkei 225 fell 0.2% as it continues its months-long sideways action.
• 🇨🇳 Hang Seng moved up by 1.01% for the week.
• 🇨🇳 CSI 300 rose 1.32% and continues to look better than the Hang Seng index.
• 🇮🇳 Nifty 50 advanced 0.94% for its second straight week of gains, potentially putting in a bottom after its 7-week slide.

Currencies & Commodities

• The DXY dropped 1.59% after gaining 8% over the previous eight weeks.
• USD.EUR fell 1.49% to 0.945, again moving further away from parity.
• USD.DKK declined 1.48% but remains above 7 USD at 7.049.
• USD.GBP dropped 1.62% to 0.785.
• USD.JPY plummeted 3.23% to 149.707. More on that below.
• Gold remained volatile and dropped 2.41% for the week, giving back some of last week’s 5.97% gain.
• Crypto fell earlier in the week but finished strong with the overall market cap up by around 1.7% as of Sunday morning (CET). Ethereum is responsible for most of the gain, up by 10% for the week. Bitcoin is actually down by 1.6% while Solana has lagged with a 6.6% decline. Ethereum’s market dominance rose to 13.3% while Bitcoin’s dropped to 57.3%, its lowest level since September.

Ethereum has gained more than 50% since the US election (TradingView)

Other

• The VIX dropped 11.35% to 13.51, its lowest level since July, hinting at a calm (and perhaps complacent) market.
• The 10-year US treasury yield fell 5.09% to 4.18% but is still up significantly since the 3.6% reached in September. The 2-year declined 4.93% to 4.163%.

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US and EU inflation at 2.3% in October

US inflation

By now, the fight against inflation is seemingly close to over with the latest readings being close to 2% and far below the peak above 7% in mid 2022. However, analysts still watch for signs that inflation may be picking back up. On Wednesday, we got the latest update on the US central bank’s preferred inflation gauge: The Personal Consumption Expenditure (PCE) price index.

The headline PCE rose 0.2% in October and 2.3% year-over-year. Both numbers were in line with expectations but did show a slight uptick compared to the 2.1% annual rate measured in September.

Core PCE, which excludes food and energy, increased 0.3% in October and 2.8% annually. Also as expected.

Consumer spending rose 0.4% in October while personal income jumped 0.6%. The former was in line with expectations but the rise in personal income was well above the 0.3% rate forecasted.

The personal savings rate hit its lowest level since January 2023 at 4.4%.

Despite the slightly hotter inflation, markets upped the probability of a rate cut at the next Fed meeting in December. Before the PCE data came out, the 30-day Fed funds futures implied a 59% chance of a cut. After the release, the probability had jumped to 70%.

The US equity market fell slightly on Wednesday but not enough to indicate any concerns about the inflation situation. Crypto was already having a solid day but kicked into a higher gear after the release.

Euro zone inflation

On Friday we got the latest inflation data out of the euro zone. It showed an annual rate of 2.3% in November, up from 2% in October and 1.7% in September. The increase two months in a row may be mildly concerning but the inflation rate is still very close to the European Central Bank’s 2% target. The number was also in line with expectations.

Energy prices dragged the inflation rate down with a 1.9% year-on-year decline. However, the number was much smaller than the 4.6% and 6.1% declines seen in October and September.

The core inflation rate, which excludes energy and food prices, remained at 2.7% for the third month in a row.

Markets now expect a 25 basispoint rate cut at the ECB’s next meeting on December 12, although a 50 bps cut is still in play.

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More Trump tariffs?

Trump said he will add an additional 25% tariff on imports from Mexico and Canada, and 10% on China, in “one of many executive orders” when he takes office.

The Mexican peso declined 1% against the US dollar while the Canadian dollar lost 1.4% on the surprisingly hawkish stance. Both have been in a downtrend against the dollar for a long time though.

The 10% tariff on China, on the other hand, was actually a lot lower than the 20 to 30% expected by the market. It calms some fears of an aggressive trade war and a slowing Chinese economy. Perhaps China is a buy again?

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Strong yen and hotter Tokyo inflation

The core inflation rate in Tokyo rose to 2.2% year-over-year in November from 1.8% in October. Analysts had forecast a 2.1% rate. The inflation uptick increased the likelihood of another rate hike at the Bank of Japan’s next policy meeting later this month. Markets now see a 60% chance of a 25 basis point hike.

Simultaneously, both the ECB and the Fed are expected to deliver another round of cuts at their next meetings. The Japanese yen gained 3.23% for the week and hit a six-week high against the US dollar.

Although not yet critical, all of this resembles the late-July setup shortly before the yen carry trade unwinding that caused a market crash around the world.

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In other news

Macro

• India’s economy grew by 5.4% in its second fiscal quarter. This was far below the 6.5% forecast by economists and even further below the Reserve Bank of India’s own expectation of 7%. It was also the lowest growth rate since the last quarter of 2022.
• The minutes from the US Fed’s last meeting on November 6 - 7 show confidence in the labor market and expectations of further rate cuts. Fed officials are comfortable with the current pace of inflation but only expect rates to come down gradually over time. Markets currently see a 66% chance of another 25 basis point rate cut at the next meeting in December.
• The 2020 election interference case against Donald Trump was dropped after U.S. District Judge Tanya Chutkan granted special counsel Jack Smith’s motion to dismiss the Jan 6-related indictment.
• Paul Atkins emerged as the top contender for SEC chair in Trump’s new administration.
• Donald Trump called out the BRICS countries in a post on X, requiring a commitment that they will neither create a new BRICS currency nor back any other currency to replace the US dollar.
• China kept its medium-term loan rate unchanged at 2.0% as expected. Wang Tao, chief China economist at UBS Investment Bank, expects the rate to be lowered to 1.2% in 2025 and 1% in 2026.
• A Reuters poll showed that China’s home prices are expected to rise 1.6% in 2026 after a 2% decline in 2025.
• South Korea made a surprise rate cut, lowering its benchmark lending rate by 25 basis points to 3%. At the same time, the Bank of Korea lowered its GDP outlook from 2.4% to 2.2% for 2024. The full-year growth projection for 2025 was cut from 2.1% to 1.9%.
• Israel and Hezbollah agreed to a permanent ceasefire. Oil prices fell on the news.

Other

• Brazilian lawmaker Eros Biondini proposed allocating up to $18.6 billion for a strategic Bitcoin reserve. It would be equivalent to 5% of the country’s international reserves as of September.
• OpenAI secured a new investment from SoftBank in a tender offer that simultaneously allows employees to sell shares worth $1.5 billion.
• Foreign smartphone sales in China have dropped a massive 44% from a year ago, from an estimated 11.15 million units to 6.22 million. And that’s despite an overall increase in phone sales of 1.8% to 29.67 million in October.
• A report showed that the US is considering lighter sanctions on China’s chip industry than previously feared. Global chip manufacturers like ASML and Tokyo Electron jumped on the news.
• China discovered one of the largest gold deposits on Earth, worth more than $80 billion.
• Coffee bean futures hit the highest level since 1977 after a 70% increase this year alone. The price increase is attributed to concerns over a global supply shortage and market uncertainty over the impact of incoming EU laws on deforestation.

Coffee beans have been a great investment this year (TradingView)

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Earnings

• Zoom beat Q3 expectations on both revenue and earnings. The former came in at $1.18 billion vs $1.16 billion expected resulting in adjusted earnings of $1.38 per share vs $1.31 expected. The company also gave guidance that was slightly above the official expectations. And yet, shares fell 6.3% on Tuesday after the report. They’re still up 50% since bottoming in August though.
• Crowdstrike delivered earnings of 93 cents per share, well above expectations for 81 cents. Sales at $1.01 billion also exceeded expectations. But the company’s earnings guidance fell slightly short of expectations. Shares declined 4.6% on Wednesday after the report but has been in a strong uptrend since early August.
• Dell reported earnings of $2.15 per share, beating analysts’ expectations for $2.06. Q3 revenue was a slight miss though. More concerning was the company’s forecast for weaker server demand. Shares plummeted more than 12% on Wednesday after the report but are still up by almost 67% for the year.
• Hewlett-Packard reported a 1.7% increase in revenue resulting in a slight beatwhile earnings met expectations at 93 cents per share. The biggest disappointment seemed to be the company’s profit guidance of 70 to 76 cents per share, well below analysts’ estimate of 85 cents. Shares fell 6% on the news but are still up 25% for the year.

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