The PULSE: Global Economic and Market Summary: December 24, 2024

Asian Markets: China's Fiscal Stimulus and Growth Strategies

Asian markets closed on a positive note today, driven by China's latest fiscal policy announcements and indications of economic stabilization. The CSI300 Index gained 0.9%, the Shanghai Composite rose by a similar margin, and Hong Kong's Hang Seng Index advanced 1.08%. According to Reuters, China's government revealed plans for a record 3 trillion yuan ($411 billion) issuance of special treasury bonds for 2025, aiming to bolster economic growth through infrastructure investment and support for technological innovation.

The People's Bank of China has also signaled its intention to maintain loose monetary policies to stimulate lending and consumer spending. However, challenges such as declining export demand and vulnerabilities in the property sector remain critical concerns.

Elsewhere in Asia, Japan's Nikkei 225 saw a 0.5% increase, buoyed by gains in technology and automotive stocks. In South Korea, the KOSPI rose by 0.7%, driven by semiconductor giants like Samsung Electronics, which benefitted from a resurgence in global chip demand.

U.S. Markets: The Santa Rally Gains Momentum

On Wall Street, markets extended their year-end rally with strong performances across all major indices. The S&P 500 rose 1.1%, the Dow Jones Industrial Average added 0.9%, and the Nasdaq climbed 1.3%. The "Santa Rally," a term used for the typical rise in stock prices during the final trading days of December, reflects investor optimism fueled by better-than-expected consumer spending data and positive corporate earnings forecasts (AP News).

Tech giants like Apple, Amazon, and Nvidia led the gains, supported by robust cloud computing demand and a strong holiday season. The energy sector also contributed as crude oil prices ticked higher amid colder weather and sustained OPEC+ production cuts.

Economic indicators presented mixed results:

• The Consumer Confidence Index reached 112.5 in December, its highest in six months, signaling recovery optimism.
• Durable Goods Orders, however, fell by 0.6%, reflecting weaker industrial demand.

European Markets: Caution Amid Energy Concerns

European markets were more subdued as colder-than-expected winter weather stoked concerns about energy supply shortages. The STOXX 600 Index edged up 0.2%, while Germany's DAX Index closed flat. In contrast, the UK's FTSE 100 gained 0.4%, supported by strong retail sales figures during the holiday season.

Eurozone inflation continued its downward trend, with year-on-year inflation recorded at 3.5%. Although this marks progress, it remains above the European Central Bank's target of 2%, fueling speculation about the ECB's monetary policy in 2025 (Atradius).

Currency and Bond Markets: The Dollar Remains Firm

The U.S. dollar maintained its strength, trading near a two-year high against major currencies, bolstered by higher Treasury yields and expectations of fewer Federal Reserve rate cuts in 2025 (Reuters).

• EUR/USD traded at $1.0403, while the yen weakened to 156.99 per dollar, nearing its five-month low.
• U.S. Treasury yields remained elevated, with the two-year yield at 4.34% and the ten-year yield at 4.59%.

Investors are closely monitoring central bank policies, with the Bank of Japan expected to announce updates to its yield curve control framework early next year.

Commodities: Oil Prices Edge Higher

Oil prices showed modest gains in thin holiday trading.

• Brent crude rose 0.5% to settle at $72.99 per barrel, while WTI crude ended at $69.56 per barrel (Reuters).
• Analysts attribute this rise to increased heating demand during colder weather and reaffirmed OPEC+ production cuts into Q1 2025.

Gold prices also edged higher, rising 0.2% to trade at $1,935 per ounce, as ongoing geopolitical uncertainties drove safe-haven demand.

Outlook for 2025

Economists project global economic growth of 2.8% for 2025, driven by innovation in technology, renewable energy, and healthcare (Atradius). Inflation rates are expected to continue declining, aligning closer to central bank targets. However, geopolitical tensions in Eastern Europe, Asia-Pacific, and the Middle East, coupled with global trade policy uncertainties, remain significant risks.

Conclusion

As of December 24, 2024, global markets are poised to end the year cautiously optimistic. While challenges persist, proactive fiscal policies, resilient corporate earnings, and improving economic indicators provide a solid foundation for growth heading into 2025. Investors are advised to remain vigilant but optimistic about the new year's opportunities.

Disclosure

This material is for informational purposes only and should not be construed as an offer to sell or a solicitation of an offer to buy any securities or investment products. The information contained herein is derived from publicly available sources believed to be reliable, but its accuracy and completeness cannot be guaranteed. The content reflects current market conditions as of December 24, 2024, and is subject to change without notice.

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Sources

Reuters - China plans record $411 billion special treasury bond issuance next year
https://www.reuters.com/world/china/china-plans-411-bln-special-treasury-bond-issuance-next-year-sources-say-2024-12-24

Associated Press - Stock market today: Wall Street rallies ahead of Christmas
https://apnews.com/article/db0d53cf8ad8ac565e899bed284f4280

Reuters - Dollar firms as US rates outlook dominates
https://www.reuters.com/markets/currencies/dollar-firms-us-rates-outlook-dominates-2024-12-24

Reuters - Oil prices up in thin pre-Christmas trade
https://www.reuters.com/business/energy/oil-prices-up-thin-pre-christmas-trade-2024-12-24

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

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