TODAY’S GAME PLAN: from the trading
desk, this is not research
TODAY’S ECONOMIC DATA: 8:30 a.m.: US November Wholesale Inventories, US November Advance Goods Trade Balance
Highlights and News:
- OpenAI says it needs ‘more capital than we’d imagined’ as it lays out for-profit plan
- Netflix scored 24 million viewers during its Christmas Day NFL games, a streaming record for pro football.
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Investigators are continuing to search for answers after a body was found in the wheel well of a United Airlines plane on Christmas Eve, following a flight from Chicago to Maui.
The plane had earlier flown from São Paulo, Brazil, to Chicago.
Global stocks were mixed on Friday, with U.S. equity futures inching lower as European and Asian stocks rose in subdued holiday trading. The three major U.S. indexes
are in the green for the week, following strong back-to-back gains at the start of the shortened holiday week. The S&P 500 is up 1.8% so far. The broad market index posted its best Christmas Eve performance since 1974 on Tuesday, according to Bespoke. Meanwhile,
the dollar held steady in low liquidity, with concerns rising over France’s budget deficit. Bitcoin retraced from recent highs ahead of the expiry of major cryptocurrency options contracts. Oil prices gained on optimism over China’s economic recovery, although
geopolitical tensions in the Middle East provided a risk premium. Gold prices weakened but remained flat for the week, while the Bank of Japan signaled a potential rate hike..
EQUITIES:
US equity futures signaled a weaker opening following a muted session after the Christmas holiday. The S&P 500 ended Thursday flat, while the Nasdaq 100 fell 0.1% in a quiet post-holiday
session, with mixed jobless claims data not altering expectations of Federal Reserve policy. Among the biggest US movers, Raymond James (RJF US) rose 2.0%, ASML (ASML US) increased 1.2%, and Emcor (EME US) and Cencora (COR US) both gained 1.1%. On the downside,
Philips (PHG US) fell 1.3%, Datadog (DDOG US) dropped 1.4%, and Tesla (TSLA US) also lost 1.4%, dragging down consumer stocks. In volume action, ReAlpha Tech (AIRE US) saw the highest increase at 653.0%, followed by SES AI (SES US) at 232.0%.
Futures ahead of the bell: E-Mini S&P -0.3%, Nasdaq -0.2%, Russell 2000 -0.3%, DJI -0.3%
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European stocks edged higher, with the Stoxx Europe 600 Index up 0.3% by midday in Paris, poised for its first weekly gain in three weeks. Financial services, banking,
and tech sectors led the gains, while insurance lagged. Delivery Hero shares plunged up to 9% after Taiwan’s antitrust regulator blocked Uber’s $950 million acquisition of its Foodpanda unit. Despite a strong start to the year, the Stoxx 600 has halved its
earlier 10% gains amid regional political uncertainties and concerns about U.S. tariffs under President-elect Trump. France’s CAC 40 underperformed, down 3% this year, while Germany’s DAX rose over 15%. Analysts noted that year-end moves are likely driven
by technical adjustments rather than fundamentals. Stoxx 600 +0.4%,CAC +0.6%, FTSE 100 +0.08%.
Asian stocks rose for a fifth consecutive day, with Japan leading gains as the MSCI Asia Pacific Index climbed 0.4%, marking its longest winning streak since July.
Japanese exporters like Toyota surged after the yen hit a five-month low, while Hong Kong equities steadied post-holiday. Despite the year-end rally, Asian stocks lag behind global peers, with the MSCI Asia gauge up 8% in 2024 compared to an 18% rise globally,
as concerns over U.S.-China trade tensions and China’s economy persist. Investors remain cautious heading into 2025, anticipating a volatile first quarter and potential intervention from the Bank of Japan as the yen fluctuates. Gains were seen across Malaysia,
Thailand, India, and Australia, while South Korea’s Kospi fell due to political uncertainties. Sector highlights included Xiaomi’s AI advancements boosting related stocks, while China’s aviation firms gained on test flight rumors, and South Korean stocks dipped
after a lukewarm reception to Netflix’s “Squid Game” sequel.
Topix +1.2%, Nikkei +1.8%, China’s CSI 300 -0.16%; Kospi -1.02%.
FIXED INCOME:
U.S. Treasuries faced pressure as trading resumed, following steeper declines in European bonds post-holiday. Yields rose 1-4 basis points, with the 30-year nearing
its year-to-date high of 4.81%, and the 2s10s spread hitting a 2024 high of 27.9 basis points. Since Dec. 17, when the Fed cut rates for the third time but signaled slower future moves, 5- to 30-year yields have climbed over 15 basis points. Economic data
releases include November’s advance goods trade balance and wholesale inventories, while Federal Reserve commentary is paused until Jan. 3.
METALS:
Gold prices inched lower in post-holiday trading as mixed U.S. jobless claims data provided little clarity on the Federal Reserve’s 2025 interest rate path. Spot
gold hovered around $2,633 an ounce after a 0.6% rise on Thursday, driven by a surge in recurring unemployment claims to a three-year high. However, initial claims edged lower, suggesting mixed labor market signals. Gold -0.1%, Silver -0.4%.
ENERGY:
Oil prices rose in subdued year-end trading as investors assessed 2025 risks, including potential oversupply and geopolitical tensions. Brent climbed toward $74 a
barrel, gaining over 1% for the week, with volatility at its lowest since July, while WTI reached $70.17. Concerns of an oversupplied market loom as China’s demand slows and global production expands, though tighter U.S. sanctions on Iranian exports under
Donald Trump could remove significant supply. In the Middle East, Israel targeted Houthi-controlled sites in Yemen after threats to shipping, forcing tankers to reroute around southern Africa. Analysts expect OPEC+ to maintain output limits through 2025 to
sustain prices, with Brent likely trading between $68 and $78 and ending the year near $75. Near-term supply tightness is indicated by a premium on WTI futures, while U.S. crude stockpiles reportedly declined, adding to bullish sentiment. WTI +0.7%, Brent
+0.7%, Nat Gas +2.8%.
CURRENCIES:
In currency markets, the U.S. dollar was steady higher and set to gain nearly 7% for 2024. The yen strengthened against the dollar, breaking a four-day losing streak,
after Japanese Finance Minister Katsunobu Kato signaled potential intervention to curb excessive currency moves. USDJPY slid 0.3% to 157.51 before stabilizing around 157.78 in thin holiday trading. Minutes from the Bank of Japan’s recent meeting revealed divided
opinions on the timing of rate hikes, reflecting ongoing challenges in normalizing policy. Meanwhile, traders expected the Bank of Japan to maintain loose monetary policies and the European Central Bank to deliver further cuts as the eurozone economy slowed.
Despite global trade concerns, weaker Asian and European currencies continued to benefit exporters, sustaining global equity markets.US$ Index -0.2%, GBPUSD +0.2%, EURUSD +0.1%, USDJPY -0.2%, AUDUSD +0.03%, NZDUSD +0.28%, USDCHF +0.1%.
Bitcoin +0.9%, Ethereum +2.1%
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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Tencent Music (TME) ADRs Raised to Buy at 86Research; PT $14
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Downgrades
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Viracta Therapeutics Inc (VIRX) Cut to Neutral at Rodman & Renshaw
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Initiations
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Estee Lauder (EL) Rated New Market Perform at CICC; PT $82
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ServiceTitan (TTAN) Rated New Outperform at Baird; PT $117
Data sources: Bloomberg, Reuters, CQG
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