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Markets

Global Markets Report - 4 December

ASX set to open higher, after the Dow, S&P 500 finished at highest levels since early 2022, US treasuries continued lower.


Australia

Australian shares are set to open higher, after the Dow Jones Industrial Average and S&P 500 finished at their highest levels since early 2022, and US treasuries continued lower.

ASX futures were up 0.9% or 65 point as of 8:30am on Monday, suggesting a higher open.

U.S. stocks powered higher on Friday, shrugging off tough talk from Federal Reserve Chairman Jerome Powell about it being too early to talk about rate cuts.

The Dow Jones Industrial Average gained about 294 points, or 0.8%, ending near 36,245, according to preliminary FactSet data. The S&P 500 index rose 0.6%, while the Nasdaq Composite Index gained 0.6%.

In commodity markets, Brent crude oil fell 2.5% to US$78.88 a barrel while gold was up 1.8% to US$2,072.22.

In local bond markets, the yield on Australian 2 Year government bonds was up at 4.15% while the 10 Year yield was also up at 4.49%. US Treasury notes were down, with the 2 Year yield at 4.54% and the 10 Year yield at 4.20%.

The Australian dollar hit 66.73 US cents up from the previous close of 66.06. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was down at 97.53.

Asia

Chinese shares reversed early declines to close slightly higher as investors digested data showing a mixed economic picture. "The divergence of the Caixin and official PMI are normal when the economy is not that well," Dan Wang, chief economist at Hang Seng Bank China says. "Foreign investment outflows create hesitant market sentiment," Wang adds. Among large-cap gainers, iFlytek rose 5.4% and Beijing Kingsoft Office Software climbed 3.4%. Muyuan Foodstuff fell 1.3% and Great Wall Motor declined 1.45%. The benchmark Shanghai Composite Index edged 0.1% higher to 3031.64 and the Shenzhen Composite Index rose 0.25% to 1887.98. The ChiNext Price Index gained 0.2%.

Hong Kong shares closed lower after a brief rebound in the previous session, dragged by semiconductor and tech hardware stocks. The benchmark Hang Seng Index fell 1.25% to 16830.30, while the Hang Seng Tech Index ended 1.8% lower. Investor sentiment was likely weighed by China's slowing manufacturing activity, though a private gauge tracking smaller enterprises showed activity expansion in November. SMIC lost 4.1% and Hua Hong Semiconductor was 3.9% lower. Xiaomi Corp. declined 2.9% and Lenovo was off 0.6%. Haidilao International shed 4.25%. Geely Automobile declined 3.4%.

Nikkei Stock Average edged 0.2% lower to close at 33431.51 in possible position adjustment ahead of Fed Chair Powell's speech later today. Fed officials' comments overnight seem to be balanced and market reactions to softer U.S. PCE data have been muted, Saxo Markets' APAC Strategy Team says in a commentary, adding investors await Powell's speech. The worst performers on the Japanese benchmark index included Rakuten Group, which dropped 4.4%, M3 Inc., which lost 3.6%, and Rohm, which was down 2.9%. USD/JPY was at 148.04, up from 147.03 as of Thursday's Tokyo stock-market close. The 10-year JGB yield was up 3.5 bps at 0.705%.

Indian shares closed higher, as investor sentiment was buoyed by the country's higher-than-expected September quarter GDP growth. The benchmark Sensex rose 0.7% to 67481.19. Industrial and utilities stocks led gains. NTPC added 3.0% and Tata Power was 2.9% higher. Inox Wind Energy put up 6.4% and Finolex Cables advanced 5.8%. Auto stocks fell broadly, with Mahindra & Mahindra down 1.3% and Bajaj Auto shedding 0.8%.

Europe

European stocks rose on the back of gains for miners and property stocks, as hopes of interest-rate cuts next year boosted sentiment. "Weaker-than-expected eurozone inflation has led to re-pricing, with European yields dropping to multi-month lows as traders price in around 125 basis-point European Central Bank rate cuts in 2024," IG analyst Axel Rudolph wrote. The Stoxx Europe 600 and DAX advanced 1% and the CAC 40 gained 0.5%. Brent crude rose 0.2% to $81.03 a barrel. Anglo American and Antofagasta headed higher following upgrades from UBS, which predicted a boost from rising metal prices, while other miners also gained.

The FTSE 100 rose 1.0% to 7,529.35, starting December on a strong footing amid optimism about possible interest-rate cuts next year. Heavyweight miners led gainers after China's Caixin manufacturing PMI data beat expectations and house builders rose on encouraging signs for the U.K. housing market. "The FTSE 100 has regained some confidence from investors, helping to erase losses of recent days," writes Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown. Anglo American jumped 6.4%, Antofagasta rose 4.3% and Glencore gained 3.2%, with miners also helped by output disruptions in copper-producing South American countries. Nationwide reporting a third successive increase in house prices in November lifted property stocks, with Berkeley up 1.8% and Taylor Wimpey gaining 1.2%.

North America

U.S. stocks powered higher on Friday, shrugging off tough talk from Federal Reserve Chairman Jerome Powell about it being too early to talk about rate cuts.

The Dow Jones Industrial Average gained about 294 points, or 0.8%, ending near 36,245, according to preliminary FactSet data. The S&P 500 index rose 0.6%, while the Nasdaq Composite Index gained 0.6%.

All three indexes also ended the week higher for five straight weeks. The gains allowed the Dow to clinch its highest close since since January 2022, while the S&P 500 finished at its highest level since March 2022, according to Dow Jones Market Data.

The powerful rally in equities since early November has been attributed to easing inflation, falling long-term Treasury yields and expectations for rate cuts next year The 10-year Treasury yield fell to 4.225% on Friday, after hitting 5% in October, ending the week at its lowest yield since early September, according to DJMD.



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