TODAY’S GAME PLAN: from the trading
desk, this is not research
TODAY’S ECONOMIC DATA: ET 9:45 Chicago PMI, 10:00 a.m US November Pending Home Sales, 10:30 Dallas Fed Manf.
Highlights and News:
- Jimmy Carter, the 39th president of the United States, passed away at the age of 100 on December 29, 2024. He
was the longest-living former U.S. president. - Commercial aviation has suffered its deadliest year since 2018 after the Jeju Air Co. disaster in South Korea
and last week’s downing of an Azerbaijan Airlines plane.
Global markets edged lower in light holiday trading as the year-end rally in technology stocks faltered. The S&P 500 and Nasdaq 100 futures signaled further weakness
after a retreat on Friday, with a pullback in major tech stocks like Tesla and Nvidia. Treasuries rose, the euro strengthened, and Spanish inflation data supported expectations of gradual ECB rate cuts. Boeing dropped following a Jeju Air 737-800 crash in
Korea, and oil prices remained steady amid concerns about the 2025 outlook. Gold is set for one of its best annual gains, while the US dollar is on track for its strongest year since 2015.
EQUITIES:
U.S. equity futures were lower, with the Nasdaq 100 set to decline for a third consecutive session amid faltering tech stocks. The so-called Magnificent Seven cohort of U.S. tech giants
has driven a 25% advance in the S&P 500 this year, prompting concerns about the concentration of gains in a small group of names. However, few are predicting the rally will end, and none of the 19 strategists tracked by Bloomberg expect the S&P 500 to decline
next year. Boeing shares dropped 4.8% in premarket trading following a Jeju Air 737-800 crash, with preliminary investigations focusing on potential bird strikes or landing gear failure. Axsome Therapeutics fell 13% after announcing mixed results from its
Phase 3 trial for Alzheimer’s-related agitation, while Tesla led losses among tech stocks, down 1.7%. In contrast, gains were seen in energy firms like EQT Corp (+2.8%) and VeriSign (+4.7%).
Futures ahead of the bell: E-Mini S&P -1.2%, Nasdaq -1.3%, Russell 2000 -0.8%, DJI -0.8%.
European stocks dropped as the Stoxx Europe 600 Index tracked earlier declines in Asia and the U.S., weighed down by thin trading volumes and concerns over inflation
and ECB policies. Industrials and tech sectors led losses, with Siemens Healthineers falling after Siemens AG deferred decisions on its unit. Spain’s CPI rose to 2.8%, fueling speculation that the ECB might delay rate cuts if energy prices or euro depreciation
increase inflation risks. After peaking at a 10% gain in September, the Stoxx 600 halved its annual gains amid political uncertainties and U.S. tariff threats, while the S&P 500 surged 25%. Stoxx 600 -0.4%, CAC -0.3%, FTSE 100 -0.3%.
Asian equities ended a five-day rally, with Japan leading the losses as its Topix Index fell from a five-month high on the year’s last trading day. The MSCI Asia Pacific Index dropped
0.6%, its steepest decline in a week, driven by losses in major Japanese companies like Toyota and Sony. Markets in Australia and India also fell, while China’s CSI 300 gained slightly, and Hong Kong’s Hang Seng Index dipped on weak tech performance. Analysts
attributed the declines to cautious sentiment following overnight U.S. market weakness. With thin trading expected due to year-end holidays, Asian stocks are poised for their first quarterly loss of 2024, trimming annual gains to 7%. Topix -0.6%, Nikkei -0.9%,
China’s CSI 300 +0.45%; Kospi -0.22%
FIXED INCOME:
Treasuries edged higher, with long-end yields retreating slightly from year-to-date highs. The 30-year yield, near 4.80%, had peaked at 4.824% earlier, close to its
intraday high for the year. Yield spreads were mixed, with the 2s10s spread slightly flatter at under 30 basis points. Economic data releases for the day include the Chicago PMI, pending home sales, and Dallas Fed manufacturing activity.
METALS:
Gold prices were steady in thin holiday trading, as markets await key U.S. economic data and Fed meeting minutes next week. Despite the dip, gold has gained nearly
27% this year, reaching a record $2,790.15 in October, supported by central bank purchases and U.S. rate cuts. Analysts are cautious ahead of potential economic shifts in 2025 under President-elect Trump, with markets anticipating policy changes that could
impact the Federal Reserve’s outlook and broader economic conditions. Gold -0.2%, Silver -0.6%.
ENERGY:
Oil prices rose modestly with Brent crude reaching $74.08 per barrel and WTI at $70.47, buoyed by a sharper-than-expected U.S. inventory drop of 4.2 million barrels,
far exceeding the forecasted 700,000-barrel reduction. Expectations of fiscal stimulus in China also provided support, offsetting concerns over OPEC’s continued supply cuts of 2.2 million barrels per day and weaker demand from China, the world’s largest importer.
Natural gas futures rose 15% on reports that Ukraine has declined to renew its gas transit deal with Russia, as the year-end expiration looms. This could trigger retaliation from European Union territories that get gas supplies from Russia via pipeline. WTI
+0.4%, Brent +0.3%, Nat Gas +15%.
CURRENCIES:
In currency markets, the US dollar edged lower, while the Japanese yen traded near five-month lows, as global currencies headed toward the end of a year marked by
diverging central bank policies. The yen weakened, losing 10.6% this year, as traders reacted to the Fed’s cautious stance on rate cuts. Japanese policymakers have shown some confidence in a potential rate increase, but doubts remain due to low yields. The
pound held steady on Monday and looked set to end the year as the best-performing major currency against the dollar, and the euro strengthened following Spanish inflation data. US$ Index -0.2%, GBPUSD +0.1%, EURUSD +0.18%, USDJPY -0.2%, AUDUSD +0.35%, NZDUSD
+0.44%, USDCHF +0.14%.
Bitcoin +0.1%, Ethereum +0.6%
Colors within the report:
Green is always the 200 period (day, week).
Red is always 21,
Blue = 50,
Brown =
100 *Stars have added importance
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Upgrades
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American Air (AAL) Raised to Outperform at Raymond James; PT $24
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Initiations
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Arcutis Biotherapeutics (ARQT) Rated New Buy at HC Wainwright; PT $19
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Artiva Biotherapeutics (ARTV) Rated New Buy at HC Wainwright; PT $20
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Emergent Bio (EBS) Rated New Buy at HC Wainwright; PT $15
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MetaVia Inc (MTVA) Rated New Buy at HC Wainwright; PT $12
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Newamsterdam Pharma (NAMS) Rated New Buy at HC Wainwright; PT $48
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Nuvalent (NUVL) Rated New Buy at HC Wainwright; PT $110
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ResMed (RMD) Rated New Outperform at CICC; PT $295
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Rocket Pharma (RCKT) Rated New Outperform at Wedbush; PT $32
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SunCar (SDA) Rated New Buy at BTIG; PT $12
Data sources: Bloomberg, Reuters, CQG
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