Key points
- Equities: US stocks hit record highs, Europe and Asia slipped on renewed tariff concerns
- Volatility: VIX near July lows, with subdued expected moves ahead of key economic data
- Currencies: RBNZ cuts, but provisional guidance for more cuts boosts NZD. JPY powers higher on soft bond yields.
- Commodities: Gold rebounds; crude awaits OPEC+ meeting; cocoa and coffee rally continues
- Fixed Income: French bonds lag as yield premium versus Germany hits 12-year high, Fed signals cautious rate cuts
- Macro events: US Weekly Initial Jobless Claims, US Q3 GDP figures revision, US Oct PCE Index and Core PCE Price Index
The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.
Macro data and headlines
- Israel has entered into a 60-day ceasefire agreement with Lebanon's Hezbollah, following negotiations facilitated by the United States.
- Trump’s nominates Jamieson Greer as the US Trade Representative. Greer sees China as a “generational challenge” to the US and has advocated for a strategic decoupling from the country. He will now manage the implementation of Trump's tariff plans.
- A measure of French bond risk rose to levels last seen during the euro-area debt crisis as a standoff over the country’s budget threatens to bring down the government. Michel Barnier said the country faces a “storm” in financial markets should that happen.
Macro events (times in GMT): US Oct Durable Goods Orders (1330), US Weekly Initial Jobless Claims (1330), US Q3 GDP revision (1330), US Personal Income and Spending (1500), US Oct PCE Index and Core PCE Price Index (1500), EIA’s Weekly Crude and Fuel Stock Report (1530), EIA’s Natural Gas Storage Change (1700)
Earnings events
- Today: Siemens
- Next week: Salesforce, Prosus, Marvell, Kroger, Lululemon, Zscaler
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
- US: The S&P 500 rose 0.57% to a new record, with the Dow Jones adding 0.28% and the Nasdaq Composite climbing 0.63%. Gains were driven by megacaps like Microsoft (+2%) and Apple (+1.5%) amid optimism around stable rate expectations following the FOMC minutes. Meanwhile, small caps underperformed as the Russell 2000 dropped 0.7%. Dell Technologies tumbled 11% in after-hours trading after reporting a weaker-than-expected revenue forecast, dampening investor sentiment. GM shares plunged nearly 9% following Trump’s proposed tariff hikes, which target US trading partners.
- Asia: Most Asian markets retreated on Wednesday after US President-elect Donald Trump reignited trade war fears with threats of additional tariffs on imports from China, Mexico, and Canada. Japan's Nikkei 225 declined 0.6%, while the TOPIX slid 1%, reflecting concerns over export-focused economies. In contrast, Chinese markets were resilient, with the CSI 300 and Shanghai Composite rising 0.3% and 0.4%, respectively, supported by positive sentiment from domestic investors. Hong Kong’s Hang Seng Index gained 0.6%, led by property and financials, balancing losses in technology stocks.
- Europe: European equities slipped under pressure from global concerns about renewed tariff policies, with the Stoxx 50 declining 0.8% and the Stoxx 600 down 0.5%. Automaker Stellantis plunged 5% on fears that its Mexico-based manufacturing supply chain could face significant disruptions. Banking stocks BBVA and UniCredit also lagged, falling more than 2% each. The session marked a reversal after three consecutive gains earlier in the week, which had been fueled by optimism surrounding Scott Bessent’s nomination as US Treasury Secretary.
Volatility
The VIX dipped to 14.10, nearing lows last seen in early July, reflecting muted market uncertainty. Short-term measures such as the VIX9D declined further, indicating little immediate concern ahead of the holiday-shortened trading week. Options markets showed notable activity in cryptocurrency-related ETFs, particularly IBIT, which climbed into the top five most active ETF options after only one week of trading. Expected moves for the S&P 500 and Nasdaq 100 are subdued at 0.38% and 0.59%, respectively, as investors await key PCE inflation data and GDP updates later today.
Fixed Income
European sovereign bonds diverged as France’s 10-year yield premium over Germany hit a 12-year high amid budget concerns, with French bonds underperforming. Bund yields fell to 2.2% as traders reduced ECB rate-cut expectations. Meanwhile, U.S. Treasuries saw yields rise 1-3bps, led by the belly of the yield curve, following a solid 5-year auction and cautious FOMC minutes signaling gradual rate cuts.
Commodities
- Gold traded higher for a second day after finding support ahead of USD 2,600. The recent choppy price action points to a near-term peak as traders book profits. However, given the challenging macroeconomic and geopolitical climate, the prospect for further gains next year remains, with Trump’s radical plans on tariffs, tax cuts, and deportation all pointing to increased inflation and rising debt—two factors gold investors seek protection from.
- Crude prices remain stuck near key support levels as traders assess the outlook for growth and demand into 2025. Focus is on the EIA’s weekly report after the API indicated that crude stocks shrank by 5.9 million barrels, as well as the upcoming OPEC+ meeting and whether the group will once again delay restoring some production.
- Industrial metals traded higher on the week, led by zinc, as orders for LME stock surged the most since 2015, while copper continues to find support ahead of USD 4 despite headwinds from dollar strength and the US tariffs’ threat to demand.
- Coffee and cocoa continue to find support from deteriorating production outlooks in key growers Brazil and West Africa.
Currencies
- The US dollar was mixed ahead of today’s PCE inflation figures, with most attention on JPY overnight as softer global bond yields offered a further boost to the JPY, with USDJPY challenging the 200-day moving average near 152.00 this morning, while EURJPY dropped below 160.00 for the first time since early October.
- The RBNZ cut the policy rate 50 basis points as a strong majority expected and guided for another large cut early next year if the economy continues to develop as expected, but this seemed priced into the market and RBNZ Governor said a further cut is “provisional”. NZ short rates rebounded, and the NZD surged on the announcement. AUDNZD dropped sharply to confirm the failure of the pair to break above the 1.1100-1.1150 area.
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