The PULSE: Global Economic and Market News for December 26, 2024

U.S. Stock Market Performance

The U.S. stock market exhibited a mixed yet generally optimistic performance on December 26, 2024, as investors engaged in low-volume trading due to the holiday season.

• S&P 500: The index closed with a small uptick of 0.1%, reflecting a slight rebound after consolidation in the days leading up to the holidays. A strong 2024 performance continues, with the S&P up about 26% year-to-date, making it one of the best-performing years for U.S. equities in recent memory.
• Tech Sector: While chip companies like Broadcom and Micron Technology gained traction, reflecting robust demand for semiconductor products, large tech giants like Nvidia, Meta Platforms, and Amazon suffered losses. This might suggest some investor caution surrounding growth in high-growth sectors as interest rates remain elevated.
• Retail Stocks: Target and Dollar Tree saw strong performances due to resilient consumer spending. Despite economic uncertainties, the holiday season has been favorable for these companies, which have dampened spending in other areas.
• Volatility and Economic Sentiment: Analysts attribute the mild volatility to the ongoing holiday period, historically characterized by lower trading volumes and more muted price movements. Despite this, investor sentiment appears optimistic, bolstered by positive year-end economic forecasts and a general recovery in corporate earnings. (AP News)

Global Economic Outlook

As we head into 2025, the global economy faces a combination of steady growth and caution, with differing regional performances:

• U.S. Growth: The U.S. economy has shown remarkable resilience, with growth projections for 2025 at 2.8%. Analysts expect the economy to continue benefiting from the robust labor market, high consumer spending, and solid corporate profits. The Federal Reserve's efforts to bring inflation down to the 2% target are bearing fruit, with inflation levels declining without triggering a recession.
• Eurozone: In stark contrast, the Eurozone's growth is projected to remain tepid at 0.8%. This year, the region has faced multiple headwinds, including energy price volatility, geopolitical tensions, and inflationary pressures. Central banks in Europe are continuing their tightening cycles, which may dampen growth further in the near term.
• Global Inflation Trends: Global inflation is expected to ease further as central banks' policy adjustments take effect. Inflation in major advanced economies, including the U.S. and the Eurozone, is forecast to approach the target 2% mark by 2025. However, inflation remains a concern in emerging markets, where price increases are more volatile. (Atradius)

China's Economic Revisions and Outlook

China has revised its 2023 GDP growth estimate upward, reporting a 5.2% growth for the year. Based on a national economic census, the revised figures reflect a slight improvement over the previous estimate. However, the outlook for 2024 remains cautious due to several persistent challenges:

• Economic Growth Rate: China's economy grew by 5.2% in 2023, a recovery from the 3% growth in 2022, which was heavily impacted by the COVID-19 lockdowns. Despite these gains, the forecast for 2024 remains around 4.9%, and the World Bank has reduced its long-term growth forecast for the country to 4% by 2026.
• Property Market Woes: The real estate sector continues to weigh on China's economic performance. The government is struggling to manage the fallout from its real estate market downturn, where high debt levels and a slowdown in housing sales are putting pressure on developers and homebuyers.
• Government Support: In response, the government has promised increased fiscal stimulus, including bond issuance, to support infrastructure development, but there are concerns that these measures may not be enough to lift consumer confidence or reverse the slowdown in key sectors.
• Geopolitical Risks: The ongoing trade tensions with the U.S. and high tariffs on Chinese goods continue to add uncertainty to the outlook, especially for export-oriented businesses. (AP News)

India's Economic Performance

India's economy has shown resilience in the face of global uncertainty, with a projected growth rate of 6.5% for the fiscal year 2024/25. However, this growth is lower than expected due to softer manufacturing and consumption in the July-September quarter.

• Domestic Demand: Strong demand from rural areas and gradually recovering urban consumption is expected to offset weaker global growth in the second half of 2024.
• Inflation and Monetary Policy: Inflation remains a concern for the Indian government, with the Reserve Bank of India holding interest rates steady to combat price pressures. However, high rates and global risks like a strong U.S. dollar could limit India's ability to manage inflation without impacting growth.
• Long-term Outlook: Despite near-term uncertainties, India's long-term growth prospects remain solid, driven by infrastructure development, demographic trends, and an expanding digital economy. (Reuters)

Global IPO Activity

India has emerged as the top IPO market in Asia, surpassing China in the number of listings for 2024. A surge in domestic investments, along with robust stock prices, has helped India attract significant equity fundraising:

• Indian IPO Market: Companies like Swiggy and Hyundai Motor's Indian subsidiaries have led the charge, with the Indian stock exchange drawing international attention. India's IPO market is expected to continue its strong performance into 2025, supported by investor optimism and favorable economic conditions.
• China's Decline: In contrast, China's IPO market has sharply declined, with both primary and secondary listings plummeting by 86% from 2023 to 2024. Tightened regulations and a struggling economy have dampened investor sentiment.
• Hong Kong's Resilience: While mainland China has slowed, Hong Kong has gained traction as an alternative listing hub, particularly for Chinese firms seeking international capital. (FT.com)

Oil Prices and Commodities

Commodity markets continue to exhibit mixed performance as of December 26:

• Oil Prices: Brent crude oil prices are trading around $73.78 per barrel, a slight increase driven by global demand recovery and geopolitical tensions. However, the oil market remains volatile as OPEC+ policies and geopolitical instability exert pressure.
• Gold Prices: Spot gold trades around $2,625 per ounce, reflecting its status as a safe-haven asset amidst global economic uncertainties. Concerns over inflation and potential economic slowdowns in major markets have buoyed gold prices. (NDTV Profit)

Conclusion

The global economic and market landscape on December 26, 2024, reflects a delicate balance of optimism and caution. U.S. markets continue to show strength, fueled by solid earnings and resilient consumer demand. At the same time, global economies like the Eurozone and China face headwinds from inflationary pressures, geopolitical tensions, and structural challenges in key sectors. India's growth remains steady, though slightly lower than anticipated, and the global IPO market continues to be a mixed bag, with India outperforming China. The outlook for commodities is similarly balanced, with gold continuing to serve as a safe-haven asset amidst economic uncertainty.

As we look ahead to 2025, the interplay of these factors will be critical in shaping the trajectory of the global economy and market performance.

Disclosure:

This article is for informational purposes only and should not be construed as financial, investment, or legal advice. The content presented in this article is based on publicly available information as of the date of publication and is not intended to be a recommendation or endorsement of any securities, investment strategies, or financial products.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of any affiliated organizations or entities. Investors should seek the advice of a qualified financial advisor or professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry inherent risks, including the potential loss of principal.

Please note that the author or affiliated parties may hold positions in the securities mentioned in this article. Any links to third-party websites or sources are provided for convenience, and the author does not endorse or control the content of these external sites.

Sources:

U.S. Stock Markets Post-Modest Gains After Christmas - AP News
https://apnews.com/article/stock-market-2024-december-26-christmas-3bc4f6704b9fa5f4ad63517456c7d9a1

Economic Outlook – December 2024 - Atradius
https://group.atradius.com/knowledge-and-research/reports/economic-research-economic-outlook-december-2024

China Revises GDP Estimate, Sees Slower Growth Ahead - AP News
https://apnews.com/article/china-economy-gdp-revision-2024-1206

Indian Economy to Grow Around 6.5% in FY25 - Reuters
https://www.reuters.com/article/india-economy-forecast-2024-12-26

India Overtakes China as Asia’s Leading IPO Market - FT.com
https://www.ft.com/content/11c4f63d-fcdd-495b-b4fa-12f50dbe1108

All You Need to Know Going into Trade on Dec 26 - NDTV Profit
https://www.ndtvprofit.com/markets/stock-market-today-all-you-need-to-know-going-into-trade-on-dec-26-2024

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