Market update: 17 December 2024
Global markets mostly fell this week as investors took profits ahead of a likely interest rate cut by the U.S. Federal Reserve next week. While inflation data met expectations and central banks made rate changes, disappointment over China’s lack of fresh economic stimulus left many markets cautious.
In Australia, the ASX 200 dropped 1.5%, its biggest weekly loss since August. A stronger-than-expected jobs report showed unemployment falling below 4%, making it less likely the RBA will cut rates early next year. Markets now see only a 55% chance of a February rate cut, down from 70%.
In the U.S., markets were mixed. The Dow Jones and S&P 500 fell 1.8% and 0.6%, while the Nasdaq gained 0.3%. November inflation data came in as expected, with both headline and core CPI rising 0.3% month on month. This solidified expectations for a 25bps Fed rate cut next week, with markets now pricing in a 93% chance. Consumer sentiment improved, hitting its highest level since April, helped by easing election-related uncertainty.
European markets ended lower, snapping a winning streak. The ECB cut interest rates for the third time in a row, while the UK pound hit a two-and-a-half-year high against the Euro as markets speculated that the Bank of England may cut rates more cautiously than the ECB. France saw political shifts, with President Macron naming a new Prime Minister, but broader economic concerns held markets back.
In Asia, Chinese markets had a mixed week, with the Hang Seng up 0.5% and the Shanghai Composite down 0.4%. Investors were disappointed by vague promises at China’s economic planning meeting, despite hints of increased public spending. Japan’s Nikkei rose 1.0% for the week, but profit-taking on Friday erased some earlier gains.
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