The PULSE: Global Economic and Market Summary – November 18, 2024

U.S. Stock Markets Show Mixed Results

U.S. stock markets closed with mixed performances on November 18 as investors cautiously awaited upcoming earnings reports and critical economic data. The S&P 500 posted a modest gain of 0.4%, led by advances in technology and healthcare sectors. The Nasdaq Composite rose by 0.6%, driven by solid performances in large-cap tech stocks, including Microsoft and Nvidia, which gained 1.2% and 2.4%, respectively. However, the Dow Jones Industrial Average edged down by 0.1%, weighed by declines in energy and industrial stocks.

Investors are showing cautious optimism as the Federal Reserve prepares for upcoming speeches, and retail earnings data could provide further insight into the strength of consumer spending. Volatility remains subdued, with the VIX ("fear gauge") index holding steady at 14.9.

Gold Prices Rebound Amid Renewed Economic Uncertainty

Gold prices saw a strong rebound, with spot gold climbing 1.8% to trade at $1,970 per ounce, while the SPDR Gold Shares ETF (GLD) rose to $241.09, up 1.89%. The increase reflects heightened interest in safe-haven assets amid ongoing concerns over geopolitical tensions and slowing growth in major economies. A stronger U.S. dollar, however, capped further gains, keeping the metal's ascent in check.

Eurozone: The Euro Nears Parity

The euro extended its decline against the U.S. dollar, trading near $1.05, raising fears that parity could be reached within weeks. The ongoing weakness is tied to multiple factors:

•               Persistent economic challenges in key Eurozone economies, including slowing growth in Germany and France.

•               Concerns over potential U.S. tariffs targeting European goods, adding pressure to export-driven economies.

•               Rising U.S. bond yields have made the dollar a more attractive investment, further undermining the euro.

European Central Bank policymakers have cautioned about further rate hikes, signaling that economic stagnation could take precedence over inflationary pressures.

Oil Prices Under Pressure

Oil prices remained under pressure, reflecting mixed signals from global demand and supply dynamics. Brent crude traded at $73.10 per barrel, down 0.4%, while West Texas Intermediate (WTI) settled at $69.50 per barrel, marking a slight 0.3% decline. Factors influencing the market include:

•               Expectations of a supply surplus in 2025, with the International Energy Agency (IEA) forecasting an oversupply of approximately 1 million barrels per day.

•               Sluggish demand growth from China, the world's largest oil importer, as recent data highlighted weaker-than-expected industrial production.

•               A stronger U.S. dollar raises the relative oil cost for foreign buyers.

Energy stocks in the S&P 500 mirrored these trends, with ExxonMobil and Chevron declining 0.8% and 1.1%, respectively.

Investor Sentiment and Broader Global Market Trends

Global investors remain cautious, with portfolios reflecting defensive positioning amid uncertainty surrounding President-elect Donald Trump's economic policies. His proposed tax reforms and tariffs have stirred concerns about global trade dynamics, particularly between the U.S., China, and the European Union.

Emerging markets faced headwinds, with the MSCI Emerging Markets Index falling 0.6% as capital outflows continued to pressure equities in Asia and Latin America. The Chinese yuan weakened further, trading at 7.35 to the dollar, while the Mexican peso saw gains as investors sought undervalued opportunities in Latin America.

Technology Sector Strengthens

Technology stocks in the U.S. outperformed broader markets, with Nvidia leading the rally ahead of its quarterly earnings report, which is expected later this week. Nvidia's 2.4% gain underscores the optimism surrounding AI-driven growth, which has bolstered the sector throughout 2024. Tesla also rose 1.8%, fueled by positive European and Asian sales data.

Geopolitical and Environmental Updates

The COP29 summit in Azerbaijan concluded with significant progress on global carbon market agreements. Participating nations committed to stricter emissions standards and expanded renewable energy investments. The new framework could channel billions of dollars toward carbon-reducing projects, though implementation details remain unclear.

Conclusion

Global markets on November 18 reflected a complex mix of optimism and caution. Gains in U.S. tech stocks contrasted with ongoing challenges in energy and Eurozone currencies. Gold's recovery and the euro's decline highlighted persistent uncertainties in the global economic landscape. As the world awaits the full impact of new political leadership and shifting economic policies, investors are bracing for further volatility in the weeks ahead.

Sources:

•               Reuters: https://www.reuters.com/markets/global-markets-wrapup-1-2024-11-18/

•               AP News: https://apnews.com/article/b80ab78cee5382e0d17ea058f123ace7

•               Cinco Días: https://cincodias.elpais.com/economia/2024-11-18/china-europa-y-trump-avanza-el-mundo-hacia-una-economia-global-mas-fragmentada.html

•               MarketWatch: https://www.marketwatch.com/story/oil-prices-head-for-weekly-fall-on-surging-u-s-dollar-soft-china-demand-ef457b87

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