Global Market Quick Take: Asia – December 6, 2024

Key points: 

• Macro: Non-farm payrolls expected to rebound but keep Fed Dec cut on track 
• Equities: DAX up 0.5%, reaching another record high 
• FX: USD weakens after higher-than-expected initial jobless claims 
• Commodities: Silver holding above $31 per ounce  
• Fixed income: France and Italy outperform Germany as haven bids decrease 

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Disclaimer: Past performance does not indicate future performance. 

 Macro:  

• For the week ending November 30, seasonally adjusted US initial claims rose by 9,000 to 224,000. The prior week's claims were revised up from 213,000 to 215,000. The 4-week moving average increased by 750 to 218,250, with the previous average revised up by 500 to 217,500. Continued claims fell to the lowest level since mid-October, but data had little impact on the expectation of Fed rate cut in December. 
• Eight OPEC+ members decided to delay a 2.2Mbpd output cut rollback to Apr 2025 due to weak demand, sources say. Originally set for December, this cut is part of broader reductions, with OPEC+ capping production at 39.725M bpd. 
• NFP preview: The non-farm-payroll data is due today and consensus expectations are as below: 
• Headline NFP: 220k expected vs. 12k in October (distorted due to the impacts of Hurricanes and strikes at Boeing)
• Unemployment Rate: Expected to remain unchanged at 4.1%, and beneath the September Fed median dot plot view of 4.4%
• Wages: Expected to rise by 0.3% MoM (vs. 0.4% prior) and 3.9% YoY (vs. 4.0%) 

The data will be used to help shape expectations for the December FOMC meeting, where the vast majority of analysts expect a 25bps rate cut, while money market pricing is assigning 70% probability of a rate cut. Governor Waller has said that he favours a 25bps rate cut in December, and while some other members have hinted at caution at the pace of easing – that is more a 2025 story. Mary Daly speaks after the NFP release and her comments could be key to shape up December Fed expectations, but a 300k+ headline print may be needed to dissuade the Fed from cutting rates this month. For a trader’s preview of the NFP, read this article.  

Equities:  

• US- The S&P 500 and Nasdaq 100 fell 0.2% and 0.3%, and the Dow Jones lost 248 points, with weekly jobless claims rising to 224,000, hinting at a cooling labor market.
• American Airlines surged 16.7% after naming Citigroup as its exclusive credit card partner while Crypto stocks like Coinbase (-3.1%) and MicroStrategy (-4.5%) lost earlier gains, despite Bitcoin surpassing $100,000 for the first time.
• China - Hang Seng dropped 182 points (0.9%) to 19,560 on Thursday, amid sector losses and investor concerns over China's policy direction and new US-China tech restrictions.
• Germany - DAX climbed 0.5% to exceed 20,300, reaching a new record high. European markets stayed positive despite political unrest in France due to the government's collapse. Puma surged nearly 5%, leading the gains, with Commerzbank rising 3%.
• France - CAC 40 rose 0.4% to 7,331 marking its sixth consecutive gain despite France's political instability. A successful no-confidence vote against Prime Minister Barnier requires President Macron to appoint a new prime minister.
• Earnings – N/A 

FX: 

• The USD weakened as Initial Jobless Claims exceeded expectations at 224k (forecast 215k, previous 215k), although Continued Claims dropped to 1.781 million (forecast 1.905 million, previous 1.896 million). Focus now shifts to Friday's NFP jobs report and speeches from several Fed officials, including Bowman, Goolsbee, Hammack, and Daly.
• EURUSD rallied towards 1.06 as Emmanuel Macron plans to name a new prime minister in the coming days, which might remove some political uncertainty in France.
• GBPUSD breaks above the recent trading range, hitting month highs of 1.277after after BoE's Greene noted that services inflation has remained stubbornly high. 

Commodities: WTI crude stayed near $68 per barrel as OPEC+ maintained Q1 2025 production levels, planning gradual increases until September 2026. U.S. data showed a large stockpile drop but record production. Gold fell below $2,630 per ounce due to rising Treasury yields. Silver held above $31 per ounce on Fed rate cut bets. Copper traded around $4.14 per pound, amid speculation of Beijing stimulus measures. 

Fixed income:  

• Treasuries ended mixed, with the long end outperforming after reversing earlier losses post-London close. U.S. Treasuries faced pressure from falling bunds due to Marine Le Pen's comments on a 2025 budget. The short end lagged as the 2s10s spread narrowed flattening the curve. 
• The OAT-bund spread and the BTP-bund gap are anticipated to narrow the most since July 1, with Italy's yield premium reaching its tightest level since 2021. 

For a global look at markets – go to Inspiration.