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After a late night, Johnson is up early.

Plan A and Plan B didn’t work, let’s see how Plan C looks. But seriously, if this gets done we could see stock markets turn around. The market just doesn’t want to see the fiscal hawks in charge and Republican disarray.

I think what makes this deal a bit easier to make is that everyone in Congress wants to go home for Christmas.

This headline here is from The Hill but Fox also writes that a temporary fix to the shutdown could come at 10 am ET.

This article was written by Adam Button at www.forexlive.com.

Headlines:

• US futures sink lower on the session
• Trump: EU must make large scale purchase of US oil and gas or face tariffs
• What is the distribution of forecasts for the US PCE?
• ECB’s Lane: We only have to be restrictive if inflation momentum is above 2%
• Germany November PPI +0.5% vs +0.3% m/m expected
• UK November retail sales +0.2% vs +0.5% m/m expected
• UK December CBI retailing reported sales -15 vs -18 prior

Markets:

• CHF leads, AUD lags on the day
• European equities lower; S&P 500 futures down 1.1%
• US 10-year yields down 3.2 bps to 4.538%
• Gold up 0.4% to $2,604.93
• WTI Crude down 0.9% to $68.72
• Bitcoin down 4.3% to $93,076

There’s no festive cheer in markets as we look to the final real trading day of the year. Instead, there is an overhang with dark clouds circling over the US Congress amid an imminent government shutdown.

Trump’s spending bill failed to pass the House vote and now the clock is ticking until midnight before it all goes up in flames. And markets are certainly not taking too kindly to that.

Risk trades are on the ropes as equities are being punished hard following the late selling in Wall Street yesterday. European indices are down well over 1% while S&P 500 futures are now down 1.1% as well, after having held down by around 0.2% at the start of the session.

USD/JPY is also falling to 156.65 with Treasuries also catching some bids, with the pair falling from around 157.10 earlier in the day.

Besides that, EUR/USD continues to hug near the 1.0400 mark amid large option expiries but the Swiss franc is also bid amid the risk retreat in European assets. USD/CHF is down 0.6% to 0.8930 on the day.

Elsewhere, gold is up amid a more sluggish dollar with the precious metal climbing back just above $2,600. And Bitcoin is hammered down to $93,000 levels after its fall from grace down from six figures.

It’s the home stretch now before we get to the Christmas and New Year’s holidays. I wish everyone a wonderful festive period and thanks for all the support and teachings in 2024. Have a wonderful year-end!

This article was written by Justin Low at www.forexlive.com.

These two things are clear:

1) Republicans control Congress, or at least they will shortly

2) We don’t know exactly what Republicans want

The market is finding out the hard truth that the Republican party is a group of loosely-connected lawmakers that are seemingly only united by their hatred of Democrats. There are fiscal hawks and those that don’t care about the deficit. There are MAGA Republicans and classic free-market conservatives. There are war hawks and isolationists.

All of this is with a very narrow House majority and little breathing room in the Senate. I wrote yesterday that most market watchers were over-estimating how much impact the Fed had on the market selloff and underestimating how much was because of Congress.

I think we’re seeing more of that today with futures down 1% following the failure of yesterday’s efforts to prevent a government shutdown.

The bill never had a chance to get a needed two-thirds majority but what was surprising was that 38 House Republicans voted against it.

That puts long odds on avoiding a government shutdown at midnight on Friday.

But that’s not the real problem.

The market was pricing in a Republican-controlled Congress that would be market-friendly. Instead, we’re starting off with a fiscal battle and Republican dis-unity. Elon Musk is dictating policy via Twitter and the House leader had his bi-partisan efforts torpedoed.

Politics is hard to predict so maybe this gets back on the rails — I truly believe that passing a corporate tax cut gets done — but as of right now the entire post-election rally has been wiped out.

This article was written by Adam Button at www.forexlive.com.

The monthly retail sales balance only saw a marginal improvement in December but continues to keep in negative territory. Similarly, the measure of expected retail sales for January remains negative at -11 but at least is an improvement to -29 in the month before. CBI notes that:

“Retailers have endured a gloomy festive period. Looking ahead, retailers expect sales to fall again in January while wholesalers and motor traders are braced for sharper sales declines.”

This article was written by Justin Low at www.forexlive.com.

This lines up with what Morgan Stanley is saying after the FOMC meeting here. Expect more calls similar to this to follow as we look to the turn of the year.

This article was written by Justin Low at www.forexlive.com.

There’s no festive cheer in stocks as of yet, as the downside shove this week continues to run its course. S&P 500 futures are now down 0.8% as we observe one-way traffic ever since European traders got to their desks today.

Dow futures are down 0.6% and Nasdaq futures down 1.2% as well currently. In Europe itself, it’s still a sea of red too. The DAX is down 1.4% and CAC 40 down 1.2% on the day. The UK FTSE is also down but less striking, lower by 0.6% at the moment.

A more hawkish Fed was a key trigger but don’t discount the impact of rising long-term Treasury yields in all of this.

Here’s a look at how the week is playing out so far for the major indices:

• DAX -3.4%
• CAC 40 -2.7%
• UK FTSE -2.9%
• IBEX -3.7%
• FTSE MIB -4.3%
• S&P 500 -3.0% (Futures down 0.8%)
• Nasdaq -2.8% (Futures down 1.2%)
• Dow -3.4% (Futures down 0.6%)
• Russell 2000 -5.3% (Futures down 1.1%)

This article was written by Justin Low at www.forexlive.com.

The post Ex-Dividend 23/12/2024 first appeared on IC Markets | Official Blog.

• Eurostoxx -0.8%
• Germany DAX -0.8%
• France CAC 40 -0.8%
• UK FTSE -0.3%
• Spain IBEX -0.7%
• Italy FTSE MIB -0.8%

The late selling in US trading yesterday has knocked down dip buyers and that is leaving a more defensive mood as we look towards the final stages of the week. US futures are also lower, with S&P 500 futures down 0.2% and Nasdaq futures down 0.4%. It’s still early in the day and we do have the US PCE price index to watch out for later before Wall Street enters the fray.

This article was written by Justin Low at www.forexlive.com.

• Prior -0.7%
• Retail sales +0.5% vs +0.8% y/y expected
• Prior +2.4%; revised to +2.0%
• Retail sales ex autos, fuel +0.3% vs 0.0% m/m expected
• Prior -0.9%
• Retail sales ex autos, fuel +0.1% vs +0.7% y/y expected
• Prior +2.0%; revised to +1.6%

This is a slight bounce in retail sales with ONS noting that the official Black Friday sales date will only be calculated in their December release. But some retailers were already reporting that Black Friday sales started well in advance of the official day. So, we’ll probably need to look at both months to get a better idea on how much that influenced retail sales.

In any case, the rebound here is just a modest one and not really indicative of a major turnaround in consumer sentiment/demand. We’ll have to see how things carry over to next year to have a better sense of that.

This article was written by Justin Low at www.forexlive.com.

• German DAX futures -0.7%
• UK FTSE futures -0.1%

It’s been a rough week for equities and it might not change to end the week. US stocks were poised for a slight bounce back yesterday only to be dashed in the final hour of trading. The late selling is weighing on the optimism today with US futures also sitting lower. S&P 500 futures are down 0.1% with Nasdaq futures down 0.4% on the day.

This article was written by Justin Low at www.forexlive.com.

• Prior +0.2%

The main rise on the month actually came from energy prices, which were up 1.8%. If you strip that out, producer prices actually fell by 0.1% on the month in November. But compared to the same month a year ago, they are 0.1% higher.

This article was written by Justin Low at www.forexlive.com.

Global Markets:

•  Asian Stock Markets : Nikkei down 0.09%, Shanghai Composite up 0.31%, Hang Seng up 0.18% ASX down 1.24%
• Commodities : Gold at $2612.35 (-0.14%), Silver at $29.04 (-0.38%), Brent Oil at $72.39 (-0.56%), WTI Oil at $69.04 (-0.39%)
• Rates : US 10-year yield at 4.560, UK 10-year yield at 4.5785, Germany 10-year yield at 2.304

News & Data:

• (USD) Final GDP q/q  3.1% vs 2.8% expected
• (USD) Unemployment Claims 220K vs 229K expected

Markets Update:

Asia-Pacific markets mostly declined on Friday as investors weighed inflation data from Japan and China’s interest rate decision. The People’s Bank of China maintained its loan prime rates, keeping the one-year rate at 3.1% and the five-year rate at 3.6%. The one-year LPR impacts corporate and household loans, while the five-year LPR influences mortgage rates.

Following the announcement, Hong Kong’s Hang Seng index edged up 0.11%, and mainland China’s CSI 300 rose 0.27%, reversing earlier losses. These were the only major Asian indexes in positive territory.

Japan released November inflation data, with core inflation (excluding fresh food prices) at 2.7%, slightly above the 2.6% forecast, and headline inflation reaching 2.9%, up from 2.3% in October. Despite this, Japan’s Nikkei 225 dipped slightly, and the Topix fell 0.11%.

South Korea’s Kospi dropped 1.87%, and the Kosdaq fell 2.33%, leading regional losses. Australia’s S&P/ASX 200 declined 1.36%, hitting its lowest intraday level since September at 8,051 before recovering slightly.

In the U.S., the Dow Jones Industrial Average narrowly broke its longest losing streak since 1974, gaining 0.04% on Thursday. However, the S&P 500 fell 0.09%, and the Nasdaq Composite dropped 0.10%. Meanwhile, the 10-year Treasury yield climbed for a second consecutive day, exceeding 4.5% and pressuring stocks, following a 13-point surge in the prior session.

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The post Friday 20th December 2024: Asia-Pacific Markets Slip Amid Inflation Data and China’s Rate Decision first appeared on IC Markets | Official Blog.