Stock Markets

The week began with the inauguration of the 47^th U.S. President, Donald Trump. On his first day in office, Trump signed a record 26executive orders that, from a macroeconomic perspective, focused on four key areas, namely energy, immigration reform, tariffs, and technology. The new policy proposals were in general more measured and less severe than initially expected, which the market welcomed, although it does not dispel the likelihood of market volatility ahead as policy updates are released.

Major stock indexes were up for the week. The 30-stock Dow Jones Industrial Average (DJIA) advanced by 2.15% while the Total Stock Market Index added 1.72%. The broad S&P 500 Index gained by 1.74% and notched a new record high intraweek. The technology-heavy Nasdaq Stock Market Composite gained 1.65%, and the NYSE Composite also added 1.99%. For the first time this year, growth stocks outperformed value shares as measured by the Russell indexes. The CBOE Volatility Index, which measures investor risk perception, fell by 7.01%.

On Tuesday, President Trump announced a new joint venture between Softbank, Open AI, Oracle, and Stargate, which will inject $500 billion towards the development of an AI-supportive infrastructure. This spurred a rally among AI-related stocks in anticipation of a potential jump in spending. As the first 100 days of this new administration play out, strong fundamentals underlie the investing environment supported by a healthy consumer and positive economic and earnings growth. This should prevail and even improve as new policies are rolled out since most of the uncertainty is already resolved.

U.S. Economy

On Friday morning, S&P Global released its first estimate of January economic activity. The report states that growth in business activity slowed month-on-month in January but remained expansionary. For the first time in six months, the report indicated that business activity was supported by a return to growth in the manufacturing sector. Services activity continued to grow during the month, although the pace of growth was slower.

On Friday, the National Association of Realtors also reported existing home sales for the month of December. According to the report, sales rose by 2.2% during the month to a seasonally adjusted annual rate of 4.24 million, the highest reading in ten months. The report also noted, however, that despite the upside surprise at the year’s end, amid elevated mortgage rates and record-high home prices existing home sales for the full year dropped to the lowest level in almost 30 years.

In January, the University of Michigan’s Index of Consumer Sentiment declined for the first time in six months from, 74.0 in December to 71.1. The drop is largely attributed to rising inflation expectations and concerns regarding unemployment.

Metals and Mining

For gold investors, the inauguration of Donald Trump as the 47^th President of the United States marked an auspicious start. Gold prices have closed the week near $2,800 per ounce, close to their record highs from late October. Global uncertainties and mounting concerns about inflation are the factors that have caused gold to thrive presently. Before Trump’s inauguration, several market experts and economists warned that his policies, particularly regarding tariffs, tend to push inflation higher and may compromise global economic growth. For now, gold’s outlook appears robust although some volatility may develop along the way. The uptrend of gold prices may be sustained although further volatility may be driven by geopolitical and economic uncertainty.  

The spot market for precious metals gained ground this week. Gold closed last week at $2,703.25 and gained 2.49% to end this week at $2,770.58 per troy ounce. Silver ended last week at $30.37 and increased by 0.72% to settle this week at $30.59 per troy ounce. Platinum, with a closing price last week at $944.40, rose by 0.75% to close at $951.45 per troy ounce. Palladium, formerly at $951.50, ascended by 3.83% to settle this week at $987.93 per troy ounce. The three-month LME prices of industrial metals were mixed. Copper closed the week at $9,276.00 per metric ton, 0.94% higher than last week’s close at $9,190.00. Aluminum ended this week at $2,641.00 per metric ton, lower by 1.62% from the last weekly close of $2,684.50. Zinc closed this week at $2,827.50, lower by 3.89% from last week’s close at $2,942.00. Tin ended this week at $30,156.00 per metric ton for a gain of 1.28% over last week’s close at $29,775.00        

Energy and Oil

The key theme throughout the week revolved around uncertainty regarding Trump’s tariff threats on Canada and Mexico. Oil markets continued to await February 1 to discern whether the talk about tariffs is part of a negotiation tactic or something more. As ICE Brent ticked lower to $79 per barrel, US President Donald Trump also called on OPEC to immediately increase oil production in order to lower oil prices, raising another contentious issue between the cartel and the White House. President Trump further announced that his administration would cease buying crude oil from Venezuela. If this pushes through it will potentially rescind the 2022 Chevron waiver that allowed the U.S. major to ramp up production to 200,000 barrels per day across the country.

Natural Gas

For the report week beginning Wednesday, January 15, and ending Wednesday, January 22, 2025, the Henry Hub spot price fell by $0.54 from $4.43 per million British thermal units (MMBtu) to $3.89/MMBtu. The Henry Hub reached an intraweek high on Friday, January 17 of $10.07/MMBtu, its highest price since January 2024. Regarding Henry Hub futures, the price of the February 2025 NYMEX contract decreased by $0.12, from $4.083/MMBtu at the start of the report week to $3.960/MMBtu at the week’s end. The price of the 12-month strip averaging February 2025 through January 2026 futures contracts rose by $0.04 to $4.011/MMBtu. Natural gas spot prices fell at most locations this report week. Price changes ranged from a decrease of $0.97 at PG&E Citygate to an increase of $11.04 at Transco Zone 6 NY.

International natural gas futures price changes were mixed this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia decreased by $0.14 to a weekly average of $14.01/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, increased by $0.57 to a weekly average of $14.57/MMBtu. In the week last year corresponding to this report week (beginning January 17 and ending January 24, 2024), the prices were $9.49/MMBtu in East Asia and $8.92/MMBtu at the TTF.  

World Markets

European stocks climbed this week after U.S. President Trump did not announce new tariffs in his first week in office. The pan-European STOXX Europe 600 Index ended 1.23% higher in local currency terms. Also driving stocks higher is the growing expectation that the European Central Bank (ECB) could consider further cutting interest rates. Germany’s DAX rose by 2.35% and France’s CAC 40 Index ascended by 2.83%. Falling by 0.18%, however, was Italy’s FTSE MIB. The UK’s FTSE 100 Index was hardly changed. In the Eurozone, business activity increased slightly in January, according to purchasing managers’ surveys compiled by S&P Global. Demand, however, continued to be weak. The composite output index registered 50.2, up from 49.6 – an optimistic reading, since levels above 50 denote expansion. For the second consecutive month, activity in the services sector increased modestly. Manufacturing remains contractionary but companies expect that output will increase one year forward. In France, business activity also remains contractionary; in Germany, however, the condition has stabilized after six straight months of declines. In the rest of the European bloc, activity expanded modestly for the 13^th consecutive month. In the UK, wage growth, excluding bonuses, climbed to a six-month high of 6.0% in the three months through November. This is in line with expectations. The unemployment rate, however, unexpectedly rose to 4.4% at the same time the payroll numbers experienced its sharpest drop since November 2020. There was also a further fall in job openings.

Japan’s stock markets gained over the week over the hopes that Japanese exporters would further be boosted by the decision of U.S. President Trump to refrain from imposing new tariffs on his first day in office. The Nikkei 225 Index rose by 3.85% and the broader TOPIX Index climbed by 2.67% for the week. A stronger currency has posed a modest headwind. The yen appreciated from the low JPY 156 range at the end of the previous week to the high end of the JPY 155 range versus the US dollar. Comments by Japan’s finance minister suggesting that the government may be prepared to take appropriate action to support the yen underpinned the gains of the yen. In a hawkish move, the Bank of Japan (BoJ) raised its policy rate for the third time in a year. The 0.25 percentage point increase brought the policy rate to about 0.5%. This is its highest level since the 2008 global financial crisis. From the prior week’s 1.20%, the yield on the 10-year Japanese government bond rose to 1.23%. Provided that the BoJ’s outlook for economic activity and prices is realized, the central bank will accordingly continue to raise the policy interest rate and adjust the degree of monetary accommodation. Further monetary policy normalization by the BoJ is supported by the latest consumer inflation data. Recent reports showed that price growth was well above the central bank’s 2% target. In December 2024, Japan’s core consumer price index rose by 3.0% year-on-year, up from November’s 2.7% year-on-year and matching expectations.

The Shanghai Composite Index added 0.33% this week while the blue-chip CSI 300 gained 0.54%. The Hong Kong benchmark Hang Seng Index added 2.46%.  Chinese stocks rose amid news that President Trump may be taking a softer stance on China tariffs. Banks’ one- and five-year loan prime rates were left unchanged at 3.1% and 3.6%, respectively. In October, Chinese lenders cut the benchmark lending rates by 25 basis points, a higher-than-expected level, to revive the economy. Analysts foresee that the central bank will continue to ease monetary policy in 2025, and even potentially cut the reserve requirement ratio and interest rates. In the meantime, Beijing intensified efforts to ease market uncertainty caused by the new U.S. administration. On the economic front, China’s youth unemployment rate fell for the fourth straight month since reaching its recent highest level in August 2024. Excluding students, the December jobless rate for 16- to 24-year-olds declined to 15.7% from November’s 16.1%. In the prior week, data released showed the nationwide jobless rate edged up to 5.1% in December from 5% in November.    

The Week Ahead

The FOMC meeting, durable goods orders for December, and the first preliminary estimate for the fourth quarter GDP are among the important economic releases scheduled for the coming week.

Key Topics to Watch

• New home sales for Dec.
• Durable-goods orders for Dec.
• Durable-goods minus transportation for Dec.
• S&P Case-Shiller home price index (20 cities) for Nov.
• Consumer confidence for Jan.
• Advanced U.S. trade balance in goods for Dec.
• Advanced retail inventories for Dec.
• Advanced wholesale inventories for Dec.
• FOMC interest-rate decision 
• Fed Chair Powell press conference (Jan. 29)
• GDP for Q1
• Initial jobless claims for Jan. 25
• Pending home sales for Dec.
• Fed Gov. Michelle Bowman speaks (Jan. 31)
• Employment cost index for Q4
• Personal income (nominal) for Dec.
• Personal spending (nominal) for Dec.
• PCE index for Dec.
• PCE (year-over-year) 
• Core PCE index for Dec.
• Core PCE (year-over-year)    
• Chicago Business Barometer (PMI) for Jan.

Markets Index Wrap-Up

Stock Markets

All major stock indexes ended in positive territory this week, rebounding from the sharp sell-off last week and erasing the losses of the prior week. The 30-stock Dow Jones Industrial Average (DJIA) surged by 3.69%, slightly better than the Total Stock Market weekly gain of 3.12%. The broad S&P 500 climbed by 2.91% while the technology-heavy Nasdaq Stock Market Composite went up by 2.45%. The NYSE Composite gained 3.40%. The investor risk perception indicator, the CBOE Volatility Index (VIX) dropped by 18.27%.

The Russell 1000 shares indicate that value stocks outperformed growth shares by the widest weekly margin since September. This was partly driven by outperformance in the energy sector amid higher oil prices. There was also some profit-taking in large-cap technology stocks. The financial sector also posted strong weekly gains after the banking giants reported strong rises in profits during the fourth quarter. 

U.S. Economy

The week’s economic high point came on Wednesday with the release of the Labor Department’s December inflation report. The headline inflation signaled an acceleration from November. However, core inflation – which excludes food and energy – rose by 0.2% in December, a tick lower than the prior month and the smallest increase since July. The year-over-year core inflation figure likewise slowed from 3.3% in November to 3.2% in December.

On Thursday, the jobless claims data for the week ending January 11 was released. New applications for unemployment rose from 203,000 in the prior week to 217,000 during the current week, exceeding consensus estimates. The four-week average of claims, however, dropped modestly. Continuing claims also dropped from 1.88 million in the previous week to 1.86 million in the current week.

Metals and Mining

The spot market for precious metals remains in breakout mode. Gold holds above the former critical resistance, now support, level of $2,700 and ended this week at $2,703.25 per troy ounce, 0.50% above last week’s close at $2,689.76. Silver settled this week at $30.37 per troy ounce, 0.13% lower than last week’s close at $30.41. Platinum corrected to end the week at $944.40 per troy ounce, 2.22% lower than last week’s closing price of $965.80. Palladium ended the week at $951.50 per troy ounce, higher by 0.03% from last week’s close at $951.17. The three-month LME prices of industrial metals were mostly up. Copper came from its previous weekly close at $9,091.50 and ended the week at $9,190.00 per metric ton for a rise of 1.08%. Aluminum, which ended last week at $2,571.50, closed this week at $2,684.50 per metric ton for a 4.39% gain.  Zinc ended at $2,942.00 per metric ton this week, 2.58% higher than last week’s close at $2,868.00. Tin closed at $29,775.00 per metric ton, 0.37% lower than last week’s close at $29,886.00.

The gold market previously struggled since the November 5 election under President-elect Donald Trump’s push toward a world trade war. It appears, however, that this conjecture is likely to dissipate as the effects of the America First policies become clearer. Gold has broken out of the $2,700 resistance level and continues to remain above it, despite the solid momentum of the US dollar. The currency is trading at or near its highest level in more than two years. Analysts warned that a global trade war may keep consumer prices high and arrest global growth. Geopolitical worries also were expected to weigh on the economic environment even as the government debt levels weighed on bond markets. The anticipated challenges, however, have failed to hold back investor sentiment. Gold remains the singular global asset that has a low correlation to risk assets, no third-party or geopolitical risks, relatively low volatility, and a deep and liquid market. Gold may continue to test higher critical resistance levels.

Energy and Oil

Backwardation continues to expand in both Brent and Dubai futures despite the relentless oil price rally that pushed Brent to break the $82-per-barrel resistance level. Lower prices from next week onwards could be brought about by a potential de-escalation of hostilities between Israel and Hamas, leading to the Houthis ending their maritime warfare in the Red Sea. This week, however, remains firmly in bullish territory. In other stories, the head of Libya’s National Oil Corporation Farhat Bengdara has resigned his post after three years at the helm of the state oil firm. His stewardship was marred by repeated shutdowns, militia interference, and haggling over revenue allocation.

Natural Gas

For the week beginning Wednesday, January 8, and ending Wednesday, January 15, 2025, the Henry Hub spot price rose by $0.67 from $3.76 per million British thermal units (MMBtu) to $4.083/MMBtu. Regarding the Henry Hub futures, the price of the February 2025 NYMEX contract increased by $0.43, from $3.651/MMBtu to $4.083/MMBtu throughout the report week. The last time the front-month contract settled above $4.00/MMBtu was on January 4, 2023, when it settled at $4.172/MMBtu. The price of the 12-month strip averaging February 2025 through January 2026 futures contracts climbed by $0.29 to $3.967/MMBtu. Natural gas spot prices rose at most locations this report week. Price changes ranged from a decrease of $5.00 at Transco Zone 6 NY to an increase of $1.14 at PG&E Citygate.

International natural gas futures prices decreased this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia decreased by $0.15 to a weekly average of $14.15/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, decreased by $0.55 to a weekly average of $14.00/MMBtu. In the week last year corresponding to this report week (the week beginning January 10 and ending January 17, 2024), the prices were $10.51/MMBtu in East Asia and $9.62/MMBtu at the TTF.

World Markets

European equity trended higher this week. The pan-European STOXX Europe 600 Index settled 2.37% higher than last week as investor sentiments rose on slower-than-expected inflation on both sides of the Atlantic. Market participants’ hopes climbed that central banks could continue to cut interest rates this year. Major stock indexes jumped sharply. Italy’s FTSE MIB climbed by 3.36%, Germany’s DAX added 3.41%, and France’s CAC 40 Index gained 3.75%. The UK’s FTSE 100 Index surged by 3.11%. The European Central Bank (ECB) released the minutes of its December meeting. The ECB acknowledged that they need to lower interest rates cautiously and gradually as they reduced interest rates for the third time in a row. By the end of January, the market seems to expect another quarter-point reduction in the deposit rate to 2.75%.  Various ECG officials emphasized the outlook’s exceptional uncertainty due to geopolitical tensions, potential global trade frictions, and fiscal policy concerns in the region.

Japan’s stock markets declined during the week. The Nikkei 225 Index fell by 1.9% and the broader TOPIX Index gave up 1.3%. There were heightened expectations that the Bank of Japan (BoJ) could raise interest rates at its January 23-24 monetary policy meeting, based on hawkish comments from the central bank officials. This speculation provided support to the yen, which strengthened to around JPY 155.6 against the U.S. dollar, from around JPY 157.6 at the end of the week before. The profit outlook of Japan’s export-heavy industries was weighed down by the strength of the yen. The yield on the 10-year Japanese government bond climbed near its highest level during the week to as high as 1.25%, although it eventually settled at the 1.20% level. While the BoJ stressed that rates will be raised if economic and price conditions keep improving, recent concerns emerged around U.S. economic policies regarding tariffs and fiscal policy. Some investors believe that an increase in the policy rate will be delayed until March or April.

Despite persistent deflationary pressures, Chinese equities rose as the economy improved. The Shanghai Composite Index added 2.31% while the blue-chip CSI 300 gained by 2.14%. The Hong Kong benchmark Hang Seng Index rose by 2.73%. China’s GDP expanded by a better-than-expected 5.4% year-on-year in the fourth quarter. The economy grew by a quarterly 1.6%, up from a revised 1.3% gain in the preceding quarter. The GDP for the year reached 5%, attaining Beijing’s target for the year. Other data supported China’s recovery. Industrial production rose by 6.2% exceeding forecasts, up from the 5.4% increase in November. This is attributed partly to higher auto, computer, and solar cell sales. In December, retail sales grew by 3.7% from a year earlier, up from November’s 3% increase. In the January to December period, fixed asset investment was 3.2% from a year ago, slightly down from a 3.3% rise in the month preceding. Property investment declines deepened to 10.6% year-on-year. The unemployment rate moved up to 5.1%.  

The Week Ahead

The Conference Board’s leading economic index and S&P Global PMI data are among the important economic releases scheduled for the coming week.

Key Topics to Watch

• U.S. leading economic indicators for Dec.
• Initial jobless claims for Jan. 18
• Existing home sales for Dec.
• Consumer sentiment (final) for Jan.
• S&P flash U.S. services PMI for Jan.
• S&P flash U.S. manufacturing PMI for Jan.

Markets Index Wrap-Up

Stock Markets

Major U.S. indexes are down for the shortened trading week due to market closure on Thursday in honor of the recently deceased former US President Jimmy Carter. The 30-stock Dow Jones Industrial Average (DJIA) dropped by 1.07% although the Total Stock Market Index dipped by only 0.72%. The broad S&P 500 Index fared a bit worse than the total stock market, declining by 0.71%. The technology-tracking Nasdaq Stock Market Composite lost by 0.62%, and the NYSE Composite Index gave up 0.69%. Investor risk perception, as indicated by the CBOE Volatility Index (VIX), rose by 8.98% over last week.

The week began on a positive note, as most indexes were up on Monday on reports that the incoming Trump administration will pursue a softer stance on tariffs than previously indicated. The initial optimism faded during the week after the president-elect refuted those reports and some economic data were released that resurrected concerns about stubborn inflation. The markets could remain choppy over the coming weeks as investors receive upcoming corporate earnings releases, Federal Reserve outlook updates, and the policy proposals of the incoming administration.  

U.S. Economy

In the first US jobs report in 2025, the nonfarm payrolls for December amounted to 256,000 which is well above the 165,000 expected level. The unemployment rate dropped from 4.2% to 4.1%. Signaling some modest potential easing in services inflation as well, the average hourly wage growth rose 3.9% year-over-year which is slightly below the forecasted 4.0% wage growth. Other economic data releases on Tuesday noted that the Institute for Supply Management (ISM) Services Purchasing Managers’ Index (PMI) came in at 54.1 for December, two percentage points higher than its November level. The ISM-PMI is a measure of economic activity in the services sector, and readings above 50 indicate expansion while those lower than 50 denote contraction.

Fears that progress on reducing inflation has stalled and that interest rates could remain “higher for longer” were stoked when the component of the index that measures prices paid by service organizations for materials and services increased by 6.2 percentage points to 64.4. Further fueling these fears was Fed Governor Michelle Bowman’s observation that inflation has held “uncomfortably above” the Fed’s 2% long-term target and that there remained upside risks to inflation even though the Fed made significant progress since 2023 to control inflation. While the data capped off a resilient year for the economy, the labor market in particular still faces several headwinds and appears to provide the Fed with another data point that favors moderating the pace of rate cuts.

Metals and Mining

For 2024, gold closed the year with a 26% gain, however, it ended December disappointing investors as a Santa Claus rally failed to materialize in the gold market for the first time in seven years. The new year brings fresh hope, nevertheless, as new opportunities push gold to test its critical resistance level near $2,700, and likewise defy critical headwinds from rising bond yields and the surging bullishness of the U.S. dollar. Analysts note that the delinking of gold from its traditional relationship with currency and bond yields may be due to investors paying less attention to the higher opportunity costs of holding gold while they hedge against growing inflation risks, geopolitical turmoil, and economic uncertainty.

The spot prices of precious metals registered gains for the week. Gold climbed from $2,640.22 last week to $2,689.76 per troy ounce this week for a gain of 1.88%. Silver came from last week’s close of $29.62 to this week’s close of $30.41 per troy ounce for an appreciation of 2.67%. Platinum closed last week at $939.51 and this week at $965.80 per troy ounce for a gain of 2.80%. Palladium ended last week at $925.64 and this week at $951.17 per troy ounce to register a gain of 2.76%. The three-month LME prices of industrial minerals, on the other hand, ended mixed. Copper closed this week at $9,091.50 per metric ton, 3.28% higher than last week’s close at $8,802.50. Aluminum closed this week at 1.68% higher than last week’s closing price of $2,529.00, ending this week at $2,571.50 per metric ton. Zinc lost 2.02% from the last weekly close of $2,927.00 to settle this week at $2,868.00 per metric ton. Tin gained 4.65% above last week’s closing price of $28,557.00 to end this week at $29,886.00 per metric ton.

Energy and Oil

Oil prices began the year noticeably bullish, as Brent broke $80 per barrel for the first time since October 7, 2024. The rally’s momentum may be traced to several reasons, including the eleventh-hour sanctions the Biden Administration imposed on Russia, continued concerns that inflation may once more rise, cold temperatures across the Atlantic Basin, and widening backwardation in all crude futures. The bullishness in the oil market has once more been felt for the first time in months. In other news, Chinese consumers have nominated 43.5 million barrels of Saudi crude next month shortly after Saudi Aramco hiked formula prices for Asian term buyers by $0.50 to $0.60 for February. This is down by 2.5 million barrels from January.

Natural Gas

For the report week beginning Wednesday, January 1, and ending Wednesday, January 8, 2025, the Henry Hub spot price rose by $0.37 from $3.39 per million British thermal units (MMBtu) to $3.76/MMBtu. Regarding Henry Hub futures, the January 2025 contract expired on Friday, December 27, at $3.514/MMBtu. The price of the February 2025 NYMEX contract decreased by $0.009 for the report week, from $3.660/MMBtu to $3.651/MMBtu. The price of the 12-month strip averaging February 2025 through January 2026 futures contracts increased by $0.03 to $3.678/MMBtu. Natural gas spot prices increased at all major pricing locations this report week. Price increases ranged from $0.29 at Eastern Gas South to $11.69 at Algonquin Citygate.

International natural gas futures prices increased this report week. Weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased by $0.14 to a weekly average of $14.30/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands increased by $0.06 to a weekly average of $14.55/MMBtu. In the week last year corresponding to this report week (from January 3 to January 10, 2024), the prices were $11.44/MMBtu in East Asia and $10.35/MMBtu at the TTF.

World Markets

European stock markets rose this week as the pan-European 600 Index closed 0.65% higher in local currency terms. Despite an uptick in the inflation rate, investors continue to expect the European Central Bank to cut interest rates in January. Germany’s DAX climbed by 1.55%, France’s CAC 40 Index ascended by 2.04%, and Italy’s FTSE MIB added 2.82%. The UK’s FTSE 100 Index gained by 0.30%. Various data painted a varying picture of the eurozone economy. Driven by higher energy prices and service costs, December’s year-over-year inflation speeded up to 2.4% from November’s 2.2%. The core rate (excluding energy, food, alcohol, and tobacco prices) remained unchanged at 2.7%. After falling in October, retail sales barely grew in November. In the meantime, the jobless rate stayed at a record low of 6.3% in November. In its latest Economic Bulletin, the European Central Bank (ECB) said that the disinflation process was well on track and that most indicators underlying inflation suggested that inflation will sustainably settle at the bank’s 2% medium-term target. The Italian newspaper, Corriere della Sera, quoted policymaker Piero Cipollone as saying that the ECB “shouldn’t try to guard excessively against possible future inflation shocks” and that “running the economy below potential weakens it and reduces the scope to react to shocks when they occur.” This and other individual comments by other policymakers encourage investors to believe that future monetary policy would contribute to a stronger economic outlook.

Over the week, Japanese equities lost ground, as the Nikkei 225 Index slid by 1.8% and the broader TOPIX Index dropped by 2.5%. The timing of Bank of Japan’s (BoJ’s) next interest rate hike remained the most speculated topic among market observers. Japan’s currency weakened over the week from around JPY 157.3 per USD at the end of last week, to about JPY 158.1 at the end of this week. The yen’s weakness was due to the uncertainty of the pace of further monetary policy normalization by the BoJ, as well as the pressure from a recent widening of the U.S.-Japan interest rate differential. The authorities have expressed their readiness to take appropriate action against excessively speculative, one-sided moves in the currency market. In the past, Japan’s monetary authorities have intervened in the foreign exchange markets to prop up the yen, most recently in July 2024. The central bank maintained its tightening bias, and its Governor Kazuo Ueda reiterated that if economic and price conditions keep improving, rates will be raised. Investors believe that it is unlikely that the BoJ will raise rates soon, and instead expect the policy rate hike will be delayed until March or April. Japan’s real (inflation-adjusted) wage growth, a closely watched indicator of consumers’ purchasing power, fell by 0.3% year-on-year in November. This is the fourth consecutive month of negative real wage growth. The BoJ’s case is that if the economy, prices, and wage growth develop in line with its projections, interest rates will rise.

Chinese stock markets receded after data released showed that the economy remained in deflation territory. The Shanghai Composite Index lost 1.34%, and the blue-chip CSI 300 slid by 1.13%. The Hong Kong benchmark Hang Seng Index plunged by 3.52%. On Thursday, inflation data released indicated that China is still struggling with deflationary pressures. The consumer price index (CPI) rose by 0.1% in December from one year ago. This is in line with estimates and down by 0,2% in November due to lower food and fuel prices. Excluding volatile food and energy costs, core inflation ticked up to 0.4% from November’s 0.3% growth. The producer price index (PPI) fell by 2.3% year-on-year, slowing from the 2.5% decline of the previous month and extending the deflation in factory gate prices for the 27th straight month. In other developments, the private Caixin S&P Global survey of services activity climbed to 52.2 in December, a better-than-expected result and the highest level since May. This matches the official data released in the previous week indicating that nonmanufacturing activity rose to 52.2 in December, the highest level in six months after Beijing introduced a broad stimulus package in late September. Furthermore, the People’s Bank of China (PBOC) announced after its quarterly policy meeting that to support economic growth, it will implement a moderately loose monetary policy this year. The PBOC vowed to increase financial support directed at the technology, emissions, pensions, and digital sectors. It likewise declared that, when appropriate, it would reduce the reserve requirement ratio and interest rates in order to boost consumption. 

The Week Ahead

The CPI and PPI inflation for December, retail sales data, and industrial production data are among the macroeconomic reports scheduled for release in the coming week.

Key Topics to Watch

• Monthly U.S. federal budget for Dec.           
• NFIB optimism index for Dec.
• Producer price index for Dec.
• Core PPI for Dec.
• PPI year over year      
• Core PPI year over year         
• Kansas City Fed President Jeffrey Schmid speaks (Jan. 14)
• Fed Beige Book         
• New York Fed President Williams delivers opening remarks (Jan. 14)       
• Consumer price index for Dec.
• CPI year over year     
• Core CPI for Dec.
• Core CPI year over year        
• Empire State manufacturing survey for Jan.
• Richmond Fed President Barkin speaks (Jan. 15)     
• New York Fed President Williams speaks (Jan. 15)
• Chicago Fed President Goolsbee speaks (Jan. 15)
• Initial jobless claims for Jan. 11
• U.S. retail sales for Dec.
• Retail sales minus autos for Dec.
• Import price index for Dec.
• Import price index minus fuel for Dec.
• Philadelphia Fed manufacturing survey for Jan.
• Business inventories for Nov.
• Home builder confidence index for Jan.
• Housing starts for Dec.
• Building permits for Dec.
• Industrial production for Dec.
• Capacity utilization for Dec.

Markets Index Wrap-Up

Stock Markets                                                    

The shortened New Year’s trading week provided little incentive for market activity, and most indexes were slightly down. The Dow Jones Industrial Average (DJIA) dropped 0.60% while the Total Stock Market came down by 0.30%. The S&P 500 Index gave up 0.48% and the Nasdaq Stock Market Composite lost by 0.51%. The NYSE Composite bucked the trend and ended up by 0.08%. Investor risk perception, as measured by the CBOE Volatility Index (VIX), rose slightly by 1.13% this week.

Although stocks ended the week mixed, they nevertheless closed the year strong. Broad gains on Friday helped the indexes to finish above their worst levels. The underperformance at the beginning of the week was partially due to some profit-taking that is only to be expected as the year’s end draws near. Tuesday was the fourth consecutive day of declines for the S&P Index. However, despite the year-end slump, 2024 still marked the second straight annual gain of over 20% for the S&P 500 Index. It also capped off the best two-year stretch in 25 years. Furthermore, the Nasdaq Composite also finished the year up by 20% for the sixth time in the past eight years.

Other stock headlines weighed on the broader sentiment on Thursday. These include Tesla’s fourth-quarter deliveries report, which failed to meet consensus expectations. Declining iPhone shipments to China likewise led to Apple shares plunging by 2.62% for the day.   

U.S. Economy                             

Macroeconomic releases were light during this New Year’s week. The Atlanta Fed revised its fourth-quarter gross domestic product (GDP) forecast downward, from 3.1% to 2.6%. The revision was based on recent data releases from the US Census Bureau that resulted in a reduction in expectations, from 1.3% to 0.7%, for real gross private domestic investment growth. But there was also positive news. For the week ended December 28, the Labor Department reported initial jobless claims of 211,000. This was a reduction from the previous week’s reading of 220,000 and was the lowest level in eight months. There was also a decline in continuing claims for the prior week to a three-month low of 1.84 million.

Metals and Mining

The spot market for precious metals was up for the first week of the new year. Gold gained 0.72% from its last weekly close at $2,621.40 to end this week at $2,640.22 per troy ounce. Silver settled 0.78% above last week’s close of $29.39 to reach $29.62 per troy ounce. Platinum gained 1.51% from last week’s closing price of $925.54 to end at this week’s closing price of $939.51 per troy ounce. Palladium inched up by 1.01% from its close last week at $916.38 to this week’s close at $925.64 per troy ounce. The three-month LME prices of industrial metals were down for this week. Copper came from $8,982.00 last week to $8,802.50 per metric ton this week for a loss of 2.00%. Aluminum closed last week at $2,558.00 and this week at $2,529.00 per metric ton for an attrition of 1.13%. Zinc, which ended last week at $3,031.50, settled this week at $2,927.00 per metric ton, down by 3.45%. Tin ended this week at $28,557.00 per metric ton, 0.88% lower than its close last week at $28,810.00.

Energy and Oil

Tacit optimism marked the gradual return of oil market participants from the New Year’s Eve holidays as US stock draws tightened product availability. Cold snaps are threatening both the US and Europe. As forecasts indicated a series of Arctic cold snaps across the United States, the NYMEX ULSD futures contract climbed to $2.36 per gallon this week and hit a three-month high. The anticipated cold weather is bound to lift diesel and heating oil demand beyond seasonal patterns over January. Further, it is reported that outgoing US President Joe Biden is preparing to issue a decree to permanently ban offshore drilling in US coastal waters. These waters are to be considered biodiversity-sensitive under the 1953 Outer Continental Shelf Lands Act. Meanwhile, the spirits of those who gave up on the more robust policy coming from Beijing have been lifted, even if temporarily, by China’s promises to be more proactive with stimulus measures. These developments pushed the ICE Brent futures closer to $76 per barrel.  

World Markets

The pan-European STOXX Europe 600 Index closed 0.20% higher in local currency terms on thin trading volume and light news flow. Most major stock indexes ended modestly lower. Italy’s FTSE MIB was slightly down, Germany’s DAX slid by 0.39%, and France’s CAC 40 Index eased by 0.99%. On the other hand, the UK’s FTSE 100 Index gained by 0.91%. Lending support to the index was a weaker British pound versus the US dollar, providing leverage to many multinational British companies that generate revenue overseas. The year started with a light macroeconomic data calendar, with Spain releasing its first estimate of consumer price inflation for December, at a rate stronger than initially forecasted. Non-seasonally adjusted annual inflation rose to 2.8% from 2.4% in November due to higher fuel prices. Core inflation, however, which excludes energy and food prices, exceeded the forecasted 2.4% to 2.6%. The uptick in Spain’s inflation rate appeared to bolster arguments from more restrictive policies in the European Central Bank (ECB) for a more gradual reduction in borrowing costs. Governing Council member Robert Holzmann suggested that rate-setters could take more time before once more cutting interest rates, in light of the rising energy prices and possible devaluation of the euro if the US introduces trade tariffs. In any case, President Christine Lagarde stated in a video that inflation was on track to achieve the 2% target in 2025, implying that rates remained on a downward trajectory.  

In a holiday-shortened weekend, Japan’s stock market ended lower amid signs of profit-taking. On Monday, the last trading day of 2024, the Nikkei 225 Index gave up almost 1% to close at 39,894.54, its record-high year-end closing level. The benchmark index posted a 20% gain over last year due to share buybacks, corporate governance reforms, and a weaker yen that helped boost export-oriented companies and industries that generate their income from foreign markets. The broader TOPIX, on the other hand, dipped by 0.6% from last week, but posted an annual increase of 17.6%. The yen maintained its level at near JPY 157 on Friday in thin trading volumes, hardly changed from last week’s close. Over the year, it depreciated close to 11%, keeping traders on the lookout for signals that the Bank of Japan (BoJ) is intervening to support the currency. Investors continue to monitor the BoJ’s rate outlook after Tokyo’s consumer price inflation accelerated in December. The yield on the bank’s 10-year government bond moved lower to 1.09% on Monday, keeping close to its highest level in 13 and a half years. According to the minutes of the BoJ’s policy meeting, policymakers continue to debate the likelihood of a near-term rate hike. On the economic front, the final release of the au Jibun Bank Manufacturing PMI indicates that factory activity contracted for the sixth consecutive month in December, but the decline in new orders appeared to be stabilizing and backlogs of work were diminishing.   

China’s equities markets retreated due to a weaker-than-expected manufacturing data release that impacted investor sentiment negatively. The Shanghai Composite Index dropped by 5.5%, while the blue-chip CSI declined by 5.17%. The Hong Kong benchmark Hang Seng Index dipped by 1.64%. For the third consecutive month, China’s factory activity expanded. According to the statistics bureau, the official manufacturing PMI slowed to 50.1 in December from 50.3 in November. This reading, while still in expansion territory, missed economists’ forecasts. The non-manufacturing PMI, a measure of construction and services activity, advanced to 52.2 in December from November’s 50, registering a better-than-forecasted level. The value of new home sales by the top 100 developers remained unchanged in December from one year ago according to the China Real Estate Information Corporation, compared to November’s 6.9% fall. New home sales increased by 24.2% month-on-month. Sales from the top 100 developers sank for the full year by 28.1% compared to a 16.5% drop in 2023. The data showed further evidence of a possible turnaround in China’s housing market after a rescue package was unveiled by Beijing in September to revive the troubled housing sector.

The Week Ahead

In the coming week, some of the important economic news scheduled for release are the ISM services PMI and the nonfarm payrolls report for December.

Key Topics to Watch

• S&P final U.S. services PMI for Dec.
• Factory orders for Nov.
• Richmond Fed President Tom Barkin speaks (Jan. 7)
• U.S. trade deficit for Nov.
• ISM services for Dec.
• Job openings for Nov.
• ADP employment for Dec.
• Minutes of Fed’s December FOMC meeting
• Consumer credit for Dec.
• Initial jobless claims for Jan. 4
• Wholesale inventories for Nov.
• Consumer sentiment (prelim) for Jan.
• U.S. employment report for Dec.
• U.S. unemployment rate for Dec.
• U.S. hourly wages for Dec.
• Hourly wages year over year 

Markets Index Wrap-Up

Stock Markets

Markets recovered some ground by the end of the week and chalked up some modest gains. The 30-stock Dow Jones Industrial Average (DJIA) added 0.35% while the Total Stock Market charted a 0.57% gain. The broad S&P 500 Index rose by 0.67% although the SmallCap 600 fell by 0.02%. The technology-heavy Nasdaq Stock Market Composite gained by 0.76%, and the NYSE Composite ticked up by 0.62%.  The investor risk perception indicator, the CBOE Volatility Index (VIX) fell by 13.13% for the week.

The week was relatively quiet as the country celebrated the Christmas holiday. It began with a continuation of the preceding Friday’s move in a rally largely driven by large-cap growth stocks. The technology-heavy Nasdaq Composite led the way and the Russell 1000 Growth Index outpaced its value counterpart through Tuesday. However, the trend reversed midweek with the market’s closure on Wednesday, Christmas day, as most indexes declined in the days following where most of the early gains were returned.

U.S. Economy

The Conference Board reported on Monday that its index of U.S. consumer confidence fell to 104.7 in December from 112,8 in November. According to Dana M. Peterson, chief economist at the Conference Board, “The recent rebound in consumer confidence was not sustained in December as the Index dropped back to the middle of the range that has prevailed over the past two years.” The report stated that while the consumer assessments of both the present situation and expectations contributed to the overall decline, the expectations component of the index sustained the sharpest drop, falling by 12.6 points to 81.1. The expectations component measures consumers’ short-term outlook for income, business, and labor market conditions. A reading below 80 could signify an upcoming recession.

Also on Monday, a reading for durable goods orders for the month of November came in below consensus. In the past six months, this is the fourth time that new orders for durable goods declined, falling by 1.1% compared to consensus expectations for a rise of 0.2%. The November decline resulted from fewer orders for commercial aircraft and lower-than-expected defense spending. Also coming in slightly below consensus expectations are new home sales in November. The Census Bureau reported a seasonally adjusted annual pace of 664,000, as against expectations for 670,000. The November figure, however, was a notable improvement over the previous month which was negatively impacted by hurricanes in southeast US.

On Thursday, the Labor Department reported that applications for unemployment benefits fell slightly to 219,000 for the week ended December 21, its lowest level since mid-November, although continuing claims rose to 1.91 million for the prior week, the highest since late 2021. This is a signal that out-of-work individuals are taking longer to find new jobs.

Metals and Mining

The spot prices of precious metals hardly moved during the Christmas holiday week. Gold slid a hairline 0.06% down from its close last week at $2,622.91 to end this week at $2,621.40 per troy ounce. Silver ticked down by 0.44% from last week’s close at $29.52 to settle this week at $29.39 per troy ounce. Platinum edged 0.24% down from its closing price last week of $927.80 to close this week at $925.54 per troy ounce. Palladium slipped by 0.34% from its previous weekly close of $919.54 to its new weekly close of $916.38 per troy ounce. The three-month LME prices of base metals took modest steps up for the week. Copper came from its close last week of $8,883.00 and rose by 1.11% to settle this week at $8,982.00 per metric ton. Aluminum climbed by 2.03% from its previous weekly close of $2,507.00 to end this week at $2,558.00 per metric ton. Zinc added 2.17% to its previous closing price of $2,967.00 to end this week at $3,031.50 per metric ton. Tin settled 1.45% higher than last week’s closing price of $28,399.00 to end this week at $28,810.00 per metric ton.

Energy and Oil

Oil prices climbed this week on falling U.S. inventories and China’s stimulus outlook. Toward the end of the week, oil prices were gaining ground with WTI bouncing back above $70 and Brent trading at $73.72. After Beijing agreed to issue special treasury bonds worth roughly $411 billion, optimism surrounding China’s economic growth helped to spark bullish sentiment in markets this week. Expectations of a crude draw in the U.S. prompted prices to rise even further, with the EIA set to report at 13:00 EST due to a Christmas holiday delay.

Natural Gas

For the report week beginning Wednesday, December 11, and ending Wednesday, December 18, 2024, the Henry Hub spot price fell by $0.09 from $3.11 per million British thermal units (MMBtu) to $3.02/MMBtu. Concerning Henry Hub futures, the price of the January 2025 NYMEX contract was largely unchanged from $3.378/MMBtu to $3.374/MMBtu. The price of the 12-month strip averaging January 2025 through December 2025 futures contracts declined by $0.05 to $3.232/MMBtu. Natural gas spot prices fell at most locations this report week. Price changes ranged from a decrease of $6.88 at the Algonquin Citygate to an increase of $0.07 at the Waha Hub.

International natural gas futures prices decreased this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia decreased by $1.26/MMBtu to a weekly average of $13.78/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands decreased by $1.38/MMBtu to a weekly average of $12.73/MMBtu. In the week last year corresponding to this report week (beginning December 13 to December 20, 2023), the prices were $13.30/MMBtu in East Asia and $10.89/MMBtu at the TTF.

World Markets

Over the truncated holiday trading week, stocks in Europe moved higher with the STOXX 600 Index annexing 0.99% in local currency terms. Major regional indexes also realized gains, with France’s CAC 40 Index adding 1.11% and Germany’s DAX climbing by 0.50%. The only noteworthy economic news released this week was that of the UK’s Office for National Statistics. On Monday, the ONS announced that it was lowering its final estimate for third-quarter economic growth to 0.0% from 0.1%. Its revised estimate of second-quarter growth from 0.5% to 0.4%. The unexpected downward revisions added to investor concerns that the economy may have stalled even prior to the planned tax increases by the Labor government to meet budgetary requirements. On the same day as the ONS release, US President-elect Donald Trump announced on social media that the European Union (EU) should “make up their tremendous deficit with the US by the large-scale purchase of our oil and gas.” Failure to do so would result in tariffs imposed by the US on EU exports entering the country. Analysts believe that as the EU proceeds to wean itself off Russian supplies, it is likely to increase its purchases of U.S. energy exports.

Japan’s stock markets climbed this week with the Nikkei 225 Index ascending by 4.08% and the broader TOPIX Index gaining by 3.69%. The yen’s weakness lent support to the profit outlooks for Japan’s export-oriented industries, which remain near five-month lows due to cautions by the Bank of Japan (BoJ). From about JPY 156 to the USD at the end of the week prior, the yen lost some ground to about JPY 157 against the US dollar. The yield on the 10-year Japanese government bond increased to its highest level in five weeks 1.1%.  If economic conditions continue to improve as expected, the central bank will need to hike interest rates again as stated by BoJ Governor Kazuo Ueda. In December, the Tokyo-are consumer price index (CPI) rose to an above-expected 3% year-on-year up from 2% in November. The core CPI (excluding volatile food and energy prices) increased by 2.4% from one year ago in December. This is slightly higher than the 2.2% increase of the prior month. Tokyo prices, which have been hovering around the BoJ’s 2% inflation target, are viewed as a leading indicator of trends nationwide. Japan’s November activity data painted a mixed picture of the economy. Industrial production dipped by 2.3%, lower than October’s 2.8% but higher than estimates of a 3.5% decline. However, retail sales were optimistic, rising by a better-than-expected 1.8% in November and speeding up from October’s 0.1% increase. The 2.5% unemployment rate remained unchanged, as forecasted.

Amid hopes that the government will announce further stimulus measures to support economic growth, the Chinese stock markets climbed this week. The Shanghai Composite Index gained by 0.95% and the blue-chip CSI 300 added 1.36%. The Hong Kong benchmark Hang Seng Index ascended by 1.87% this holiday-shortened week. Markets were closed for Christmas and Boxing Day, which fell on Wednesday and Thursday respectively. The lending rate was unchanged at 2% as the People’s Bank of China injected RMB 300 billion into the banking system via its medium-term lending facility. RMB 1.45 trillion in loans are due to expire in December. Thus, the operation will result in a net withdrawal of RMB 1.15 trillion from the banking system. This will be the largest liquidity drain via the one-year lending facility since 2014. With respect to manufacturing, profits at industrial firms fell by 7.3% in November according to reports by the National Bureau of Statistics. The November decrease is the fourth consecutive monthly decline, although it is slower than the 10% year-on-year October drop. Although the slower decline follows Beijing’s extensive stimulus measures, it shows that the policies have yet to stop the decline in corporate earnings, which are under pressure from deflation in China over the last year.

The Week Ahead

The ISM manufacturing PMI and housing price data are among the important economic releases in the coming week.

Key Topics to Watch

• Chicago Business Barometer (PMI) for Dec.
• Pending home sales for Nov.
• S&P Case-Shiller home price index (20 cities) for Nov.
• Initial jobless claims for Dec. 28
• Construction spending for Nov.
• ISM manufacturing for Dec.

Markets Index Wrap-Up

Stock Markets

All major indexes moved sharply lower when it was determined that only two rate cuts would be taking place in 2025 instead of the expected four rate cuts. The 30-stock Dow Jones Industrial Average (DJIA) fell by 2.25% for the week while the Total Stock Market Index was not far behind, having lost 2.26%. The broad S&P 500 Index finished the week 1.99% lower and the technology-heavy Nasdaq Stock Market Composite ended 1.78% lower than its close last week. The NYSE Composite dropped by 3.09% for the week. The CBOE Volatility Index (VIX), a measure of investor risk perception, shot up by 32.95%.

U.S. stocks plummeted during the week but a rally on Friday helped major indexes recover some of their lost ground. While smaller-cap indexes generally fared worse, losses were broad-based. Traders observed that Thursday marked the 14^th consecutive trading session wherein decliners outnumbered gainers in the S&P 500 Index, the longest record since 1978. The dominant event during the week seems to be the Fed’s rate announcement after its highly-awaited policy meeting on Wednesday. The policymakers announced a quarter basis point cut to the Fed’s policy rate as expected, bringing the total rate reduction to 100 basis points (1.00 percentage point) since the start of the rate-cutting cycle in September. Investor sentiment turned sour when Fed Chair Jerome Powell noted that core inflation in 2025 rose to 2.5% from 2.2% in September, prompting greater caution before adopting future rate cuts.  

U.S. Economy

The U.S. economy grew at an annualized rate of 3.1% in the third quarter, the Commerce Department reported on Thursday. The reading outpaces a previous estimate of 2.8%, partly due to increases in consumer spending. Also possibly related is the increase in retail sales in November by 0.7%, up from 0.5% in October. Also ringing a positive tone is the jobs data for the week. Initial jobless claims of 220,000 were reported by the Labor Department, as well as continuing claims of 1.87 million. Both indicators were down from the week before. Finally, on Friday morning the personal consumption expenditure (PCE) inflation report was released. The core PCE index, which is the Fed’s preferred inflation metric, rose by 2.8% year-over-year in November. This is in line with October’s reading and slightly lower than consensus expectations. The better-than-expected report appeared to have helped push stocks higher on Friday to end the week above their lowest levels.   

Metals and Mining

The spot price of precious metals generally fell for this week. Gold closed at $2,622.91 per troy ounce, 0.96% lower than last week’s closing price of $2,648.23. Silver settled this week at $29.52 per troy ounce for a loss of 3.37% from its final price last week of $30.55. Platinum bucked the trend and closed this week at $927.80 per troy ounce, 0.10% higher than last week’s closing price of $926.91. Palladium ended this week at $919.54 per troy ounce for a loss of 3.86% from last week’s close of $956.42. The three-month LME prices of industrial metals also lost ground over the week. Copper settled this week at $8,883.00 per metric ton, 1.87% lower than last week’s closing price of $9,052.50. Aluminum ended this week at $2,507.00 per metric ton which is lower by 3.76% from last week’s close at $2,605.00. Zinc, which ended last week at $3,095.50 and this week at $2,967.00 per metric ton for a loss of 4.15%. Tin closed one week ago at $29,097.00 and this week at $28,399.00 per metric ton for a drop of 2.40%.

Energy and Oil

The 2025 rate policy outlook of the Federal Reserve produced two key takeaways. The foreseen policy will be slower and shallower, with a suggested prolonged break in rate-cutting next year. This adds insult to the injury suffered by the oil market. China remains bearish on its oil market for 2025, with the country’s state refining giant Sinoper expecting the country’s oil consumption to peak by 2027 at 16 million barrels per day. As both gasoline and diesel are expected to fall next year by 2.4% and 5.5% respectively, growth is seen to come only from the petrochemicals sector. Almost all 2025 outlooks are trying to outcompete one another in terms of bearishness. As a result, Brent prices dipped to $72 per barrel again.

Natural Gas

For the report week beginning Wednesday, December 11, and ending Wednesday, December 18, 2024, the Henry Hub spot price fell by $0.09 from $3.11 per million British thermal units (MMBtu) to $3.02/MMBtu. Regarding the Henry Hub futures, the price of the January 2025 NYMEX contract was generally unchanged from $3.378/MMBtu to $3.374/MMBtu for the report week. The price of the 12-month strip averaging January 2025 through December 2025 futures contracts declined by $0.05 to $3.232/MMBtu. At most locations this report week, natural gas spot prices fell. Price changes ranged from a decline of $6.99 at the Algonquin Citygate to an advance of $0.07 at the Waha Hub.

International natural gas futures prices decreased this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia fell by $1.26/MMBtu to a weekly average of $13.78/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands declined by $1.38/MMBtu to a weekly average of $12.73/MMBtu. In the week last year corresponding to this report week (beginning December 13 and ending December 20, 2023), the prices were $13.30/MMBtu in East Asia and $10.89/MMBtu at the TTF.  

World Markets

European stocks lost ground this week on concerns regarding the uncertainty of interest rate reductions and potential U.S. trade tariffs to be imposed on the European Union. The pan-European STOXX Europe 600 Index ended 2.76% lower this week in local currency terms. The region’s major stock indexes also fell for the week. France’s CAC 40 Index lost by 1.82%, Germany’s DAX declined by 2.55%, and Italy’s FTSE MIB dropped by 3.22%. The UK’s FTSE 100 Index gave up 2.60%. The Bank of England (BoE) maintained its key interest rate at 4.75%, which was in line with expectations. Also as expected, headline annual inflation accelerated in November to 2.6% from 2.3% in October as gasoline and clothing costs went higher. Sweden’s central bank reduced its key interest rate by a quarter-point to 2.50% as expected, with the potential of one more cut in the first half of 2025 if conditions remain unchanged. Norway’s central bank left its policy rate unchanged at 4.50%, a 16-year-high, as it attempts to stabilize inflation around its target. Activity in the Eurozone’s private sector closed the year in contraction. A rebound in the services sector, however, kept the overall decline marginal, according to the S&P Global purchasing managers’ surveys. The slowdown in business activity in Germany and France, the bloc’s largest economies, eased only modestly.

Japan’s stock markets fell this week, with the Nikkei 225 Index losing by 2.0% and the broader TOPIX Index falling by 1.6%. Banks faced tougher challenges due to a slight increase in expectations that the pace of monetary policy normalization by the Bank of Japan (BoJ) could be slower than anticipated. Broadly unchanged during the week at 1.05% was the yield on the 10-year Japanese government bond. The profit outlook for Japan’s exporters, especially automakers, was supported by the sell-off in the yen, reducing the currency’s value and making Japanese exports more attractive to foreign markets. The yen softened to within the high-JPY 156 range against the US dollar, from about JPY 153.7 at the end of the previous week. The situation prompted fresh verbal intervention by Japanese authorities to prop up the yen. At its December 18-19 meeting, the BoJ maintained its policy rate steady at approximately 0.25%. BoJ Governor Kazuo Ueda’s post-meeting comments were read as dovish by investors. Market expectations are strengthening around the possibility of a rate hike in January. It is more likely that a rate hike may be delayed beyond January, according to analysts, as Ueda mentioned that wage trends will be clearer in March or April and that the economic policy of the new U.S. administrations will continue to pose a risk. In the meantime, consumer inflation rose to a three-month high, pressure remains on the BoJ to raise interest rates.  

Disappointing data raised concerns about the economy and sent Chinese stocks retreating. The Shanghai Composite Index declined by 0.7% while the blue-chip CSI 300 gave up 0.14%. The Hong Kong benchmark Hang Seng Index fell by 1.25%. Amid a looming trade war with the U.S., November activity data pointed to the uneven nature of China’s recovery. From a year ago, retail sales expanded a below-consensus 3%, down from 4.8% in October and highlighting the unwillingness of Chinese consumers to spend. In the January to November period, fixed asset investment grew by 3.3%, lagging forecasts and less than the 3.4% increase in the calendar year to October. In the same period, property investment fell by 10.4%. On the contrary, a bright spot was industrial production rising by a better-than-expected 5.4% year-on-year attributed to an increased demand for robots, passenger cars, and solar panels. For the third straight month, China’s youth unemployment rate eased after hitting its highest level this year in August. According to official data, the jobless rate for 16- to 24-year-olds (excluding students) was 16.1% in November, down from, 17.1% in October. As expected, urban unemployment remained steady at 5%. After Beijing unveiled a sweeping package in late September aimed at revising the crisis-hit sector, China’s property market has shown signs of stabilizing.

The Week Ahead

New home sales and consumer confidence reports are among the important economic releases scheduled for this coming week.

Key Topics to Watch

• Consumer confidence for Dec.
• Durable-goods orders for Nov.
• Durable-goods minus transportation for Nov.
• New home sales for Nov.      
• Initial jobless claims for Dec. 21
• Advanced U.S. trade balance in goods for Nov.
• Advanced retail inventories for Nov.
• Advanced wholesale inventories for Nov.

Markets Index Wrap-Up

Stock Markets

Last week, the Nasdaq reached a new milestone when it briefly surpassed the 20,000 level. Growth stocks underperformed against value stocks for the third consecutive week, partly due gains by Tesla (12.08%) and Google parent Alphabet (9.44%) shares. Between Tuesday and Wednesday, Alphabet recorded its largest two-day gain since 2015. Thus far, the stock market’s winning formula has been rising corporate profits, solid economic growth, and the start of easing by central banks. While the outlook remains positive, inflation is proving tenacious in the fourth quarter, raising uncertainty concerning the next moves central banks will take. 

Except for the Nasdaq, all major indexes were down for the week. The 30-stock Dow Jones Industrial Average lost 1.82% and the Total Stock Market fell by 0.90%. The broad S&P 500 Index slid by 0.64% and the NYSE Composite gave up 1.88%. The technology-heavy Nasdaq Stock Market Composite bucked the trend and rose by 0.34%. The CBOE Volatility Index (VIX), the accepted indicator of investor risk perception, climbed by 8.14% this week.

U.S. Economy

Wednesday provided the highlight of this week’s economic calendar with the Labor Department releasing the headline and core (excluding food and energy) consumer price inflation (CPI). Both indicators rose by 0.3% in November, in line with consensus expectations. Core prices increased 3.3% year-over-year in November and remained unchanged since the prior month, Overall inflation modestly grew to 2.7% up from October’s 2.6%. Almost 40% of the total price increase in November is attributable to higher shelter costs, while few of the index components decreased during the month. Producer price inflation likewise accelerated slightly in November, from 0.3% to 0.4%.

The following day, the Labor Department reported a surprise increase in weekly initial jobless claims to a two-month high of 242,000. Seasonal factors around the Thanksgiving holiday accounted for some of the increase. However, continuing claims also rose and persisted near three-year highs, indicating that some unemployed individuals are taking longer to find a job. The jobs data signaled a softening labor market following the preceding week’s report of an increase in November’s unemployment rate.

As a result of the week’s economic data, investors’ expectations for a rate cut at the upcoming Federal Reserve meeting appeared to have solidified. The CME FedWatch Tool showed that futures markets on Friday priced in a 97.1% chance of the Fed cutting rates at its upcoming meeting, higher than the 86.0% registered at the end of the preceding week. The Fed’s two-day meeting will begin on Tuesday, December 17. The new rate decision is expected to be made on the following day. 

Metals and Mining

News that the People’s Bank of China (PBOC) increased its official gold reserve by 6 tons triggered investor buying that raised gold to a five-week high. The purchase, though smaller than previous orders, demonstrates that the Chinese central bank maintains an active presence in the market. Demand from central banks has been a major factor in the recent surge of gold prices to record highs. Analysts forecast that central bank gold buying will drive the price of this metal to $3,000 per ounce in 2025. The official sector demand will be the most significant factor that will influence prices in the coming year, according to Wells Fargo’s 2025 outlook. Furthermore, geopolitical uncertainties remain high and the threat of global war continues to impact the markets, causing investors to flee to gold, which carries no third-party political risks. 

The spot prices of precious metals ended mixed for the week. Gold closed at $2,648.23 per troy ounce,       0.56% higher than last week’s closing price of $2,633.37. Silver settled at $30.55 per troy ounce, 1.36% lower than its close last week at $30.97. Platinum ended the week at $926.91 per troy ounce, 0.50% lower than last week’s closing price of $931.55. Palladium ended at $956.42 per troy ounce this week, 0.40% than last week’s close at $960.29. The three-month LME prices of industrial metals mostly fell. Copper came from $9,074.50 last week to close at $9,052.50 per metric ton this week for a loss of 0.24%. Aluminum, which ended at $2,639.00 last week, settled this week at $2,605.00 per metric ton for a decline of 1.29%. Zinc, which closed last week at $3,118.50, ended this week at $3,095.50 per metric ton, down by 0.74%. Tin, whose last weekly close was at $29,165.00, settled this week at $29,097.00 per metric ton for a decline of 0.23%.

Energy and Oil

OPEC has revised its global oil demand forecast for 2024 and 2025 for the fifth time. Next year’s growth outlook is seen at 1.45 million barrels per day with changes almost wholly driven by a downgrade of consumption growth across the Middle East. However, with the potential threat of sanctions front and center this week, it appears that gold has become immune from the pains of the OPEC+ meeting. Some geopolitical risks have been added by other concerns such as the new G7 sanctions on Russia’s shadow fleet, Chinese concerns about buying Iranian crude with Trump ascending into office, and looming nuclear sanctions in Tehran. The Brent has risen back to $74 per barrel, posting its first weekly gain since November.

Natural Gas

For the report week from Wednesday, December 4 to Wednesday, December 11, 2024, the Henry Hub spot price rofsse by $0.28 from $2.83 per million British thermal units (MMBtu) to $3.11/MMBtu. Regarding Henry Hub futures, the price of the January 2025 NYMEX contract rose by $0.34, from $3.043/MMBtu at the start of the report week to $3.378/MMBtu by the week’s end. The price of the 12-month strip averaging January 2025 through December 2025 futures contracts rose by $0.12 to $3.282/MMBtu. Natural gas spot prices rose at most major pricing locations along with the Henry Hub this report week. Price changes ranged from a decrease of $0.38 at Northwest Sumas to an increase of $1.86 at Algonquin Citygate.

International natural gas futures prices decreased this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia decreased by $0.02 to a weekly average of $15.04/MMBtu.  Natural gas futures for delivery at the Title Trade Facility (TTF) in the Netherlands decreased by $0.71 to a weekly average of $14.11/MMBtu. In the week last year corresponding to this report week (from December 6 to December 13, 2023), the prices were $15.77/MMBtu in East Asia and $11.73/MMBtu at the TTF.

World Markets

European stock lost ground this week. The pan-European STOXX Europe 600 ended 0.77% lower in local currency terms as investors were uncertain whether the European Central Bank (ECB) has been easing monetary policy fast enough to support the struggling economy. The major stock indexes were mixed. France’s CAC 40 Index dipped by 0.23%, Germany’s DAX squeezed out a modest gain of 0.10%, and Italy’s FTSE MIB climbed by 0.40%. The UK’s FTSE 100 Index declined by 0.10%. The European Central Bank (ECB) lowered its key deposit rate by a quarter of a percental point to 3.0%. This is the ECB’s fourth rate reduction this year. The central bank also revised its outlooks for growth and inflation. ECB officials announced that it will keep the door open to further ease monetary policy and will maintain a meeting-by-meeting approach to policy decisions. Meanwhile, the UK economy has significantly slowed after its strong start in the year. Real gross domestic product (GDP) shrank unexpectedly by 0.1% sequentially in October due to the weakening of production output. The economy underwent a contraction of the same magnitude in September. Output in the services sector was flat in both months. The Bank of England (BoE) is widely expected to hold interest rates steady at its upcoming policy meeting, and cautiously proceed next year due to stubbornly high services inflation.

Japan’s equities registered modest gains this week. The Nikkei 225 Index rose by 0.97% and the broader TOPIX Index gained by 0.71%. China’s announcement of more proactive rascal measures and moderately looser monetary policy boosted regional market sentiment. Speculation grew on the domestic monetary front that the Bank of Japan (BoJ) may suspend an interest rate hike at its meeting scheduled for December 18-19. This led the yen to soften to about the middle of the JPY 153 range against the US dollar, from the prior week’s JPY 150 level. The yield on the 10-year Japanese government bond fell to about 1.04%, from 1.06% at the end of the previous week. On the economic front, the final GDP data showed that Japan’s economy grew by 0.3% quarter-on-quarter in the three months to September. This exceeds the 0.2% consensus expectation as indicated by preliminary data. The BoJ’s tankan survey (a gauge of sentiment among big manufacturers) showed support for the country’s economic outlook as it edged higher in the fourth quarter.  Indications are that there were more companies that said they were optimistic about business conditions than companies that said they were pessimistic.

Chinese stocks lost ground last week as investors were underwhelmed by recent policy announcements. The Shanghai Composite Index dipped by 0.36% and the blue-chip CSI 300 fell by 1.01%. The Hong Kong benchmark Hang Seng Index gained 0.53%. At the annual Central Economic Work Conference, a high-level meeting wherein top officials plan the economic agenda for the next year, China pledged to implement a more proactive fiscal policy and increase the budget deficit in 2025. Officials said that the central government will continue issuing ultra-long special Treasury bonds to fund major projects. However, the report after the two-day conference provided no details which further dampened investor sentiment. China’s economy remained stuck in deflation, according to inflation data released earlier in the week. The consumer price index rose by a lower-than-consensus 0.2% in November from a year earlier. Core inflation (excluding volatile food and energy costs) inched up to 0.3%, from 0.2% in October. The producer price index dipped by 2.5% year-on-year, easing from the previous month’s 2.9% slide and marking the 26^th straight monthly decline despite the government’s efforts to boost domestic demand in recent months.

The Week Ahead

In the coming week, the important economic reports scheduled for release include the PCE inflation data, GDP second revision for the third quarter, and the results of the FOMC meeting.

Key Topics to Watch

• Empire State manufacturing survey for Dec.
• S&P flash U.S. services PMI for Dec.          
• S&P flash U.S. manufacturing PMI for Dec.
• U.S. retail sales for Nov.       
• Retail sales minus autos for Nov.      
• Industrial production for Nov.           
• Capacity utilization for Nov. 
• Home builder confidence index for Dec.      
• Housing starts for Nov.          
• Building permits for Nov.     
• FOMC interest-rate decision             
• Fed Chair Powell press conference               
• Initial jobless claims for Dec. 14       
• GDP (second revision) for Q3           
• Philadelphia Fed manufacturing survey for Dec.      
• Existing home sales for Nov.
• U.S. leading economic indicators for Nov.   
• Personal income (nominal) for Nov. 
• Personal spending (nominal) for Nov.          
• PCE index for Nov.   
• PCE (year-over-year)            
• Core PCE index for Nov.      
• Core PCE (year-over-year)               
• Consumer sentiment (final) for Dec. 

Markets Index Wrap-Up

Stock Markets

Major stock indexes closed mixed this week. The 30-stock Dow Jones Industrial Average (DJIA) dipped by 0.60%, while the Total Stock Market Index rose by 0.91%. The broad S&P 500 Index climbed by 0.96%, and the technology-heavy Nasdaq Stock Market Composite gained by 3.34%. The NYSE Composite descended by 0.81%. The indicator for investor risk perception, the CBOE Volatility Index (VIX), fell by 5.48%. Sector performance was widely dispersed. Consumer discretionary, communication services, and information technology shares all gained 3% over the week. Energy, utilities, and materials stocks which form the more value-oriented segments of the market all fell over 3%. The geopolitical headlines for the week were dominated by French and South Korean politics, but their impact on U.S. markets was limited.

Other headlines during the week focused on comments from the officials from the Federal Reserve that provided investors with possible clues regarding the pace of interest rate cuts. Federal Reserve Governor Christopher Waller stated that some recent data indicate that progress on inflation may be stalling. Nevertheless, he is inclined to support a cut to the policy rate at the Fed’s upcoming meeting in December if no surprising incoming economic data develops. Fed Chair Powell was more neutral in his comments that “The U.S. economy is in very good shape, and there’s no reason for that not to continue.” Waller’s comments and positive economic news boosted expectations for a 25-basis-point rate cut in December, priced into futures markets.

U.S. Economy

Data released in the past week continued to support a resilient economy and labor market. Both in expansion territory for November were the new orders components of the Institute for Supply Management (ISM) manufacturing and services Purchasing Managers’ Index (PMI). Regarded as the leading indicators of economic growth, both manufacturing and services PMI indicate the likelihood of upward expansion.

Earlier in the week, the release of the November data from the U.S. labor market indicated that it is poised for a rebound. The number of job openings in October climbed to 7.74 million, up from September’s revised 7.37 million reading. While layoffs during the month hardly changed, the number of Americans quitting jobs voluntarily (regarded by some as a better measure of labor market conditions) increased to 3.3 million. New jobs added, expected to be 220,000, overshot consensus and registered 227,000, and the weaker data reported for last month was revised higher. The unemployment rate broadly ticked higher to 4.2%. However, this remains well below the long-term averages of around a 5.7% unemployment rate in the U.S.   

Metals and Mining

Gold and silver remain confined in a consolidation pattern as investors anticipate a new catalyst for a breakout. Investors traverse a balancing act between rising inflation risks, geopolitical uncertainties, and a shallower easing cycle that tends to strengthen the U.S. dollar and higher bond yields. Although the current price fluctuations of these precious metals tend to disappoint ahead of the coming new year, analysts nevertheless remain bullish. While it may take time for the markets to adjust to the new administration that formally takes over on January 20, 2025, financial institutions such as Goldman Sachs, Bank of America, the CIBC, and other Canadian banks see gold prices likely to push to $3,000 per ounce next year. Towards the second half of 2025, gold prices may rally as the threat of a global trade war drives inflation higher and dampens economic growth.  

The spot prices of precious metals ended mixed for the week. Gold ended at $2,633.37 per troy ounce, lower by 0.37% from last week’s close at $2,643.15. Silver came from $30.63 last week to close this week at $30.97 per ounce for a 1.11% gain. Platinum fell by 1.93% from its close last week at $949.90 to settle this week at $931.55 per troy ounce. Palladium closed this week at $960.29 per troy ounce, 2.32% lower than its close last week at $983.09. The three-month LME prices of industrial metals were mostly up for the week. Copper closed this week higher by 0.71% from its previous weekly close at $9,010.50 to end the week at $9,074.50 per metric ton. Aluminum climbed by 1.73% from its previous close at $2,594.00 to end the week at $2,639.00 per metric ton. Zinc ascended by 0.50% from its previous weekly close at $3,103.00 to close this week at $3,118.50 per metric ton. Tin gained 0.87% from last week’s close at $28,913.00 to end this week at $29,165.00 per metric ton.  

Energy and Oil

OPEC+ postponed its scheduled supply increases by another quarter, as widely anticipated. It is now promising to start unwinding output cuts beginning April 2025 and beyond. This reset simultaneously extends the full unwinding of output cuts by a year until the end of 2026 as the oil group addresses rising non-OPEC production.  This pronouncement failed to convince the oil markets that the bulls would take over in the foreseeable future. Even the postponement of the UAE’s baseline quota increase could not stop ICE Brent from slipping back below $72 per barrel.

Natural Gas

For the report week beginning Wednesday, November 27, to Wednesday, December 4, 2025, the Henry Hub spot price fell by $0.52 from $3.35 per million British thermal units (MMBtu) to $2.83/MMBtu. Regarding Henry Hub futures prices, the December 2024 contract expired on Tuesday, November 26, at $3.431/MMBtu. The price of the January 2025 NYMEX contract decreased by $0.16, from $3.204/MMBtu at the start of the report week to $3.043/MMBtu by the week’s end. The price of the 12-month strip averaging January 2025 through December 2025 futures contracts declined by $0,08 to $3.161/MMBtu. At most locations this report week, natural gas spot prices fell. Price changes ranged from a decrease of $0.52 at the Henry Hub to an increase of $0.68 at Northwest Sumas.

International natural gas futures prices increased during the report week. The weekly average front-line futures prices for liquefied natural gas (LNG) cargoes in East Asia increased by $0.09 to a weekly average of $15.06/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands increased by $0.24 to a weekly average of $14.82/MMBtu. In the week last year corresponding to this report week (beginning November 29 and ending December 6, 2023), the prices were $16.10/MMBtu in East Asia and $12.91/MMBtu at the TTF.

World Markets

As jitters about political instability in France abated, the pan-European STOXX Europe 600 Index closed 2.00% higher in local currency terms. Faster policy easing by the European Central Bank (ECB) appeared to be anticipated by the markets. The major European stock indexes likewise climbed. France’s CAC 40 Index added 2.65%, Germany’s DAX rose by 3.86%, and Italy’s FTSE MIB ascended by 4.00%. The UK’s FTSE 100 Index gained by 0.26%. The political concerns in France arose when Prime Minister Michel Barnier’s minority government collapsed after a no-confidence motion was backed by Parliament. The motion was tabled by the National Rally (NR) and left-wing New Popular Front to block the proposed deficit-reducing budget for 2025.

The Week Ahead

In the coming week, watch out for important economic releases such as the CPI and PPI inflation data, wholesale inventories for October, and revised U.S. productivity data for the third quarter. The effect was for the yield spread between German 10-year bunds and French 10-year OATS – a metric for political and financial risk in the Eurozone – to widen at one point to 90 basis points, the most since 2012. Subsequently, the gap narrowed to below 80 basis points after President Emmanuel Macron said he would appoint a new prime minister in “coming days.” He also promised to meet with political leaders from both sides of the aisle to form a new “government of general interest.” On the economic front, the key macroeconomic data in Europe continued to signal a slowing economy in the fourth quarter of 2024. Mainly due to drops in sales of non-food products and auto fuel, Eurozone retail trade volumes decline in October by 0.5% sequentially, after increasing by 0.5% in September. Manufacturing continued to struggle in Germany. Industrial output fell by 1.0% month-over-month, which falls short of expectations for a 1.2% rebound. A decline in the demand for machinery and equipment led to a slump in factory orders by 1.5% for the month.

Japan’s equities rose during the week. The Nikkei 225 Index gained 2.3% while the broader TOPIX Index added 1.7%. The rosy profit outlooks for Japan’s export-heavy industries are supported by the weakness of the nation’s currency. The yen depreciated to approximately the middle of the JPY 150 range against the greenback, from the high JPY 149 range at the end of the previous week. Regarding fixed income, due to the persistent uncertainty about the Bank of Japan’s (BoJ’s) rate hike plans, the yield on the 10-year Japanese government bond closed the week broadly flat at 1.06% after trading in a narrow range. According to Toyoaki Nakamura, a member of the BoJ’s board, a judgment on the merits of incoming data will determine any forthcoming interest rate hike, particularly regarding wage and economic growth. The timing of the next 25-basis-point rate hike is deemed by investors to be split between December and January. The likelihood of a January rate hike is suggested by a recent commentary by BoJ Governor Kazuo Ueda on the need to observe 2025 wage trends and whether wage hikes are being reflected in service prices. Uncertainty around U.S. economic policy remains to be clarified, particularly on the future imposition of tariffs. Average nominal wages grew by 2.6% year-on-year in October, up from a revised 2.5% in September and matching consensus expectations. Real wage growth (adjusted for inflation) remained unchanged following a 0.4% contraction. Household spending fell by 1.3% year-on-year, a reduction for the third consecutive month.

China stocks saw gains in the past week as investors anticipate fresh stimulus measures. Resilient manufacturing data released during the week also supported equities performance. The Shanghai Composite Index climbed by 2.33%. Likewise, the blue-chip CSI 300 was up by 1.44%. The Hong Kong benchmark Hang Seng Index added 2.28%. During the Central Economic Work Conference, an annual meeting where top officials map out the economic agenda for the next year, analysts expect China’s leadership to announce further action to support the economy. Among the topics investors look forward to are economic growth targets and plans for more stimulus. The meeting will last for two days, beginning December 11. There are high expectations that Beijing will roll out additional measures to address growth risks that may be posed by the trade policies of the incoming Trump administration. Economic news released showed that China’s factory activity expanded for the second consecutive month. According to the statistics bureau, the official manufacturing Purchasing Managers’ Index (PMI) increased to a higher-than-expected 50.3 in November from 50.1 in October. The measure of construction and services activity, the nonmanufacturing PMI, fell to a below-consensus 50 in November from 50.2 in October. The 50-mark delineates expansion and contraction.

Key Topics to Watch

• Wholesale inventories for Oct.
• NFIB optimism index for Nov.
• U.S. productivity (revision) for Q3
• Consumer price index for Nov.
• CPI year over year
• Core CPI for Nov.
• Core CPI year over year
• Monthly U.S. federal budget
• Initial jobless claims for Dec. 7
• Producer price index for Nov.
• Core PPI for Nov.
• PPI year over year
• Core PPI year over year
• Import price index for Nov.
• Import price index minus fuel for Nov.

Markets Index Wrap-Up

Stock Markets

All major indexes are up for the week. The 30-stock Dow Jones Industrial Average (DJIA) inched up by 0.42% while the Total Stock Market gained by 0.52%. The broad S&P 500 Index gained 0.56% and the technology-heavy Nasdaq Stock Market Composite climbed by 0.83%. The NYSE Composite added 0.31% while all the Russell indexes posted gains. The CBOE Volatility Index (VIX), the indicator for investor risk perception, fell by 4.18%.

Stocks recorded another week of solid gains that resulted in record intraday highs for the DJIA, S&P 500 Index, and the S&P 400 MidCap Index. The small-cap Russell 2000 Index hit an intraday high of 2,466.49 on Monday, exceeding the record high it established s little over three years ago. Trading was relatively robust in the runup to the Thanksgiving holiday when the markets were closed in its observance. Markets were also closed on the Friday after the holiday.

During the week, domestic policy and geopolitical factors seem to be the major drivers of sentiment. Monday saw investors welcoming the nomination of Scott Bessent, a veteran hedge fund manager, as President-elect Donald Trump’s Treasury secretary. Bessent is expected to bring a Wall Street mindset to his position, prioritizing economic stability and inflation control with a measured approach to tariffs, easing fears of an out-of-consensus selection.

U.S. Economy

Wednesday saw the release of a host of closely watched economic reports. Most of the data came in line with expectations, but there were some exceptions. In October, personal income rose by 0.6% which is about double consensus estimates. Personal spending climbed by 0.4% which is slightly above expectations. Pending home sales also went against expectations for a decline, and instead rose by 2.0%. In the meantime, September’s increase was revised up to its strongest gain in nearly two years at 7.5%. On the other hand, the manufacturing sector appeared to remain in a slump. Durable goods orders in October missed the expected consensus expectation of 0.5% and rose by only 0.2%. Orders, with the exclusion of defense and transportation goods (a generally accepted proxy for capital investment), fell by 0.2%.

Metals and Mining

The past weeks proved volatile for the gold market, a trend that does not appear to be diminished anytime soon. The yellow metal has been relatively resilient as it holds fast to its critical support level at $2,600 per ounce, but the past week revealed that it is balancing at a major decision point as traders and investors await news that will favor one direction or the other. Presently, the U.S. economy is not running too hot nor too cold – a “Goldilocks” scenario. The current scenario does not decisively attract investors to gold as a hedge against inflation and safe-have asset. Inflation pressures remain stubbornly elevated as seen from the core Personal Consumption Expenditure (PCE) Index reading of 2.8% over the last 12 months. This is much higher than the Federal Reserve’s target of 2%. The PCE is the Fed’s preferred gauge for inflation.

Spot prices for precious metals generally ended lower for the week. Gold, formerly at $2,716.19, closed this week at $2,643.15 per troy ounce, down by 2.69%. Silver, which last week closed at $31.35, settled this week at $30.63 per troy ounce for a loss of 2.30%.  Platinum ended last week at $966.30 and this week at $949.90 per troy ounce for a decline of 1.70%. Palladium, which a week ago was priced at $1,011.87, closed this week at $983.09 per troy ounce for a drop of 2.84%.  The three-month LME prices for industrial metals were mixed. Copper closed this week at $9,010.50 per metric ton, slightly up by 0.02% from its week-ago close of $9,008.50. Aluminum ended this week at $2,594.00 per metric ton, down by 1.43% from last week’s closing price of $2,631.50. Zinc settled at $3,103.00 this week for a gain of 3.78% over last week’s close of $2,990.00. Tin closed this week at $28,913.00 per metric ton, modestly higher than last week’s close of $28,750.00 by 0.57%.

Energy and Oil

The Thanksgiving holidays disrupted the highly eventual week in the global markets that prompted OPEC+ to postpone its December 1 meeting as it ramped up its shuttle diplomacy. The decision to delay its policy meeting to December 5 was due to members reportedly discussing postponing the anticipated output hike due to start in January 2025, to simultaneously coordinate the future of compensation buts with Iraq and Kazakhstan. ICE Brent traversed a very narrow bandwidth of less than $1 per barrel all week, between $72 and $73 per barrel despite the postponement. Meanwhile, in what proved to be the war’s second-largest attack of the past month, Russia attacked Ukraine’s energy assets with 91 missiles and 97 drones this week. Over 1 million people lost power in the immediate aftermath of the strikes and damages were reported in 9 regions.  Geopolitics could make a surprise comeback in December as the Russian-Ukraine war intensifies and Iran comes to the forefront of Trump’s policy move. These developments would complement OPEC+’s decisions and push oil prices higher. 

Natural Gas

For this report week from Wednesday, November 13, to Wednesday, November 20, 2024, the Henry Hub spot price rose by $0.24 from $2.10 per million British thermal units (MMBtu) to $2.34/MMBtu. Regarding Henry Hub futures, the price of the December NYMEX contract increased by $0.21 from $2.983/MMBtu at the start of the report week to $3.193/MMBtu at the end of the week. The price of the 12-month strip averaging December 2024 through November 2025 futures contracts rose by $0.13 to $3.227/MMBtu.  Natural gas spot prices rose at all major regional pricing locations this report week. Price changes ranged from an increase of $0.03 at the Houston Ship Channel to an increase of $2.45 at the Waha Hub.

International natural gas futures prices rose this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased by $0.63 to a weekly average of $14.17/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, increased by $0.90 to a weekly average of $14.38/MMBtu. In the week last year corresponding to this report week (beginning November 15 and ending November 22, 2023), the prices were $16.83/MMBtu in East Asia and $14.41/MMBtu at the TTF.

World Markets

European stocks rose despite the looming uncertainty about U.S. trade tariffs and the future direction of interest rates. The pan-European STOXX Europe 600 Index rose by 0.32% in local currency terms. The major stock indexes were mixed, with Germany’s DAX climbing by 1.57%, Italy’s FTSE MIB falling by 0.70%, and France’s CAC 40 losing by 0.29%. The UK’s FTSE 100 added 0.24%. For a second month in November, the annual inflation in the eurozone accelerated to 2.3% from 2.0% in October, based on a preliminary estimate. The increase in inflation was expected because last year’s declines in energy prices are no longer incorporated in the annual rates. The underlying inflation, however, unexpectedly eased. Core inflation (excluding volatile components such as food, energy, alcohol, and tobacco prices) remained at 2.7% while services’ prices inched down from 4.0% to 3.9%. The European Central Bank is still expected by the financial markets to lower borrowing costs next month, but just by how much remains uncertain. Meanwhile, the German economy continued to struggle in the last quarter of this year based on mixed economic data. Seasonally adjusted retail sales in October decreased by 1.5% sequentially, worse than the forecasted 0.5% drop, and still, the seasonally adjusted number of unemployed rose by 7,000, much less than the forecasted 20,000.

Japan’s stock markets sustained modest losses for this week. The Nikkei 225 Index fell by 0.2% while the broader TOPIX Index lost by 0.6%. The slump in the market was due to global investor risk appetite reacting to geopolitical risk pressures driving demand for assets perceived to be safer. The subsequent strength in the national currency lent support to Japan’s export-heavy industries. The yen strengthened to about JPY 150 against the USD, from the prior week’s JPY 154 range since it is perceived to have the characteristics of a safe-haven asset. Further interest in the yen is bolstered by speculation about the potential timing of the Bank of Japan’s (BoJ’s) next interest rate hike, forecasted to be either in December or January. The core consumer price index (CPI) in the Tokyo area, widely regarded as a leading indicator of nationwide trends, ascended by 2.2% year-on-year in November. This is up from 1.8% year-on-year in October and higher than consensus expectations. BoJ Governor Kazuo Ueda has stressed that interest rates will be increased if the economy and prices perform in line with the central bank’s forecasts. Japan’s Prime Minister Shigeru Ishiba outlined his latest policy vision which he intends to pursue with a new stimulus package aimed at boosting the economy, particularly in rural areas. The package is intended to counter the negative effects of inflation on businesses and households by curbing rising energy costs, providing cash handouts to low-income households, and increasing the tax-free salary threshold to boost disposable incomes.  

Chinese stocks rose as the market’s hopes for greater government support offset worries about the potential tariff hike in the U.S. The Shanghai Composite added 1.81% while the blue-chip CSI 300 climbed by 1.32%. The Hong Kong benchmark Hang Seng Index ascended by 1.01%. The People’s Bank of China injected RMB 900 billion into the banking system while leaving the lending rate unchanged at 2%, according to expectations. With RMB 1.45 trillion set to expire in December, the operation resulted in a net withdrawal of RMB 550 billion from the banking system for November. A sharp increase in local government bond issuance will increase liquidity pressures in the banking system toward the end of the year as Beijing increases efforts to stimulate the economy. With tighter liquidity conditions and threats of additional U.S. tariffs, analysts expect that the government will implement further economic consolidation policies by 2025.  Regarding China’s economy, profits at industrial firms dipped by 10% in October from last year, narrowing from a 27.1% decline in September. This is the third straight monthly decline, according to the National Bureau of Statistics. The slower drop is partly attributable to the government’s support measures and profit growth in the equipment and high-technology manufacturing industries.

The Week Ahead

Nonfarm payrolls data, the Fed Beige Book, and the ISM PMIs are among the important economic releases scheduled for the coming week.

Key Topics to Watch

• S&P final U.S. manufacturing PMI for Nov.
• ISM manufacturing for Nov.
• Construction spending for Oct.
• Job openings for Oct.
• Auto sales for Nov.
• ADP employment for Nov.
• Louis Fed President Musalem speaks (Dec, 4)
• S&P final U.S. services PMI for Nov.
• ISM services for Nov.
• Factory orders for Oct.
• Fed Beige Book
• Initial jobless claims for Nov. 30
• U.S. trade deficit for Oct.
• U.S. employment report for Nov.
• U.S. unemployment rate for Nov.
• U.S. hourly wages for Nov.
• Hourly wages year over year
• Consumer sentiment (prelim) for Dec.
• Chicago Fed President Goolsbee speaks (Dec. 6)
• Consumer credit for Oct.

Markets Index Wrap-Up

Stock Markets

All major stock indexes advanced during the week. The 30-stock Dow Jones Industrial Average (DJIA) gained 1.96% while the Total Stock Market Index climbed by 2.17%. The broad S&P 500 Index went up by 1.68% and the technology-tracking Nasdaq Stock Market Composite added 1.73%. The NYSE Composite Index climbed by 2.43%. The CBOE Volatility Index (VIX), the gauge for investor risk perception, fell by 5.58%.  

Stocks are on track to finish the year on a strong note. Solid fundamentals will continue to support equities all the way to the start of 2025. However, even with the current optimism, prudence is enjoined to anticipate potential curveballs and for investors to plan the positions to best take advantage of the growing potential. Tariffs and how the incoming administration may choose to use them are a source of uncertainty. The technology sector also appears to be proceeding through a period of consolidation to digest its disproportionate gains over the last two years.

In order to strengthen portfolios against potential risks, investors may seek to attain an appropriate allocation to value-style investments and balance small- and mid-cap companies that tend to generate a greater share of their revenue in the U.S. They will tend to relatively benefit from stronger domestic growth and lower tax rates which the incoming administration promised to implement.

U.S. Economy

The Department of Labor reported on Wednesday that initial jobless claims unexpectedly dropped for the week ended November 16, 2024. This appeared to have driven positive market sentiment toward the end of the week. Applications for unemployment benefits fell to 213,000. This is the lowest reading since April 2024 and constituted a decline of 6,000 from the prior week. The number of continuing claims reached a three-year high of 1.91 trillion, however, some of this increase was due to secondary effects of the aircraft machinist strike at Boeing, a matter which has since been resolved.

Investors also appear to have been encouraged by the National Association of Realtors’ report of existing home sales in October. For the first time since July 2021, existing home sales rose year-over-year for the first time. Factors leading to the growth in housing demand are continued economic growth, additional job gains, and stabilizing mortgage rates, as cited by the upbeat report.

As investors look for clues around the pace of interest rate cuts, much of the macroeconomic focus remained on the Federal Reserve’s final meeting of the year in December. Federal Reserve Governor Lisa Cook stated in a speech on Wednesday that “the disinflationary process is continuing” and that she perceives the path of short-term interest rates would appropriately be downward although the magnitude and timing of rate cuts should be driven by inflation and labor market data.

Metals and Mining

Over the past year, the gold market has been on a rally with shallow dips that caused many cautious investors to await a correction to the support at $2,100 per ounce. However, the U.S. election and its decisive results created the opportunity for many on the sidelines to jump back in. Markets experienced fresh momentum in the U.S. dollar and rising bond yields. A significant headwind for gold was created by investors who zeroed in on Trump’s America-first policies. Gold prices fell by more than 9% from its peak at $2,800 per ounce three weeks ago. With its nearly 6% surge this week, it appears that the correction is over, as gold once again demonstrated that it is much bigger than the U.S. market. Its role as a necessary global financial asset continues to grow. Gold’s attractiveness to a significant safe-haven bid as the war in Ukraine escalates. In the Middle East and Asia, meanwhile, geopolitical tensions remain high with China striving to assert its dominance.

Spot prices of precious metals surged for the week. Gold shot up 5.97% from its previous weekly close at $2,563.25 to end this week at $2,716.19 per troy ounce. Silver closed at $31.35 per troy ounce, which is 3.57% higher than its last weekly close at $30.27. Platinum, which closed last week at $941.80 and ended this week at $966.30 per troy ounce for a 2.60% gain. Palladium, priced last week at $953.58, rose by 6.11% to close this week at $1,011.87 per troy ounce. The three-month LME prices of industrial metals ended mixed for the week. Copper closed this week at $9,008.50 per metric ton appreciated by 0.07% from its close last week at $9,002.50. Aluminum came from its last weekly close at $2,649.50 to settle at $2,631.50 per metric ton for a modest decline of -0.68%. Zinc ended this week at $2,990.00 per metric ton, 1.44% higher than last week’s close of $2,947.50. Tin, which settled last week at $28,742.00, ended this week at $28,750.00 per metric ton for a modest gain of 0.03%.

Energy and Oil

Brent futures have been trading within a narrow range of $73-74 per barrel. However, the return of geopolitical risk has caused oil prices to climb and in effect recover most of November’s losses to date. Russia’s launch of hypersonic missiles into Ukraine keeps the markets distracted for now. Meanwhile, the possible outcome of an OPEC+ meeting taking place next week looms large for oil. In the coming week, expect plenty of OPEC+ policy speculation. Responding to geopolitical worries, the International Atomic Energy Agency passed a resolution urging Iran to enhance cooperation with the global nuclear community. The IAEA further requests for a comprehensive assessment of Iran’s arsenal. Tehran defies compliance, however, and instead suggests capping its stock of uranium.

Natural Gas

For the report week from Wednesday, November 13 to Wednesday, November 20, 2024, the Henry Hub spot price rose by $0.24 from $2.10 per million British thermal units (MMBtu) to $2.34/MMBtu. Regarding Henry Hub futures, the price of the December 2024 NYMEX contract increased by $0.21, from $2.983/MMBtu at the start of the report week to $3.193/MMBtu at the week’s end. The price of the 12-month strip averaging December 2024 to November 2025 futures contracts rose by $0.13 to $3.227/MMBtu. Natural spot prices rose at all major pricing locations for the report week. Price changes ranged from an increase of $0.03 at a Houston Ship Channer to an increase of $2.45 at the Waha Hub.

International natural gas futures prices increased this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased $0.63 to a weekly average of $14.17/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, increased by $0.90 to a weekly average of $14.38/MMBtu. In the week last year corresponding to this report week (beginning November 15 to November 22, 2023), the prices were $16.83/MMBtu in East Asia and $14.41/MMBtu at the TTF.

World Markets

the pan-European STOXX Europe 600 Index closed the week 1.06% higher in local currency terms. Investors were hopeful that the European Central Bank (ECB) could lower borrowing costs in December after a deterioration in the economic outlook was signaled by the purchasing managers’ surveys. Notwithstanding the pan-European index performance, most major stock indexes fell, but they were overall mixed. Italy’s FTSE MIB dipped by 2.04%, France’s CAC 40 Index declined slightly by 0.20%, and Germany’s DAX rose by 0.58%. The UK’s FTSE 100 Index surged by 2.46%. In the euro area, business activity unexpectedly contracted in November, which, according to purchasing managers’ surveys, underscore the uncertain economic outlook. The HCOB Flash Eurozone Composite PMI Output Index fell unexpectedly to a 10-month low. The manufacturing sector plunged deeper into recession and the services sector began to struggle after two months of marginal growth. The PMIs for France and Germany, the bloc’s largest economies, also shrank, while the UK’s business activity ended a 12-month period of sustained expansion and moved into contractionary territory. Expectations that the ECB could further ease monetary policy in December appeared to be bolstered by the Weak PMI data. This may be offset, however, by a pickup in negotiated wage growth which may reinforce the case for continued policy caution. Negotiated wage growth is a measure monitored by the ECB for signals of underlying inflationary pressures.

Japan’s equities markets pulled back during the week, albeit modestly, with the Nikkei 225 Index dropping by 0.93% and the broader TOPIX Index sliding by 0.56%. Impacting investors were heightened geopolitical tensions that dented risk appetite and drove demand for assets perceived to be safer. These safer assets include the Japanese yen which traded mostly within the JPY 154 range against the U.S. dollar. Consumer inflation remained above the Bank of Japan’s (BoJ’s) 2% target in October. The headline consumer price index fell to 2.3% year-on-year, this however remained aligned with expectations given the return of electricity and gas subsidies. BoJ Governor Kazuo Ueda said that if the economy and prices move as expected, the bank will keep raising rates. On the economic front, service providers recorded a slight expansion in activity within Japan’s private sector, according to the November Flash Purchasing Managers’ Index (PMI) data. On the other hand, manufacturers saw a sustained reduction in output. Across the private sector, price pressures remained elevated and firms increasingly sought to pass on higher cost burdens to consumers. On Friday, Japan’s government approved an economic package to ease the pain of inflation on households and businesses. The package is also designed to revitalize the struggling regional economies. It is estimated to add JPY 39 trillion (US$250 billion) to the economy, combined with expected spending from the private sector. Measures adopted include subsidies to curb rising energy costs and cash handouts to low-income households. Another measure in the package involves an increase in the tax-free salary threshold to boost disposal incomes.    

A light economic calendar and concerns about the incoming Trump administration curbed risk appetites and caused equities to decline. The Shanghai Composite Index dropped by 1.91% and the blue-chip CSI 300 declined by 2.6%. The Hong Kong benchmark Hang Seng Index gave up 1.01%. The country’s banks left their one- and five-year loan prime rates unchanged at 3.1% and 3.6% respectively, a move largely anticipated after banks slashed the benchmark lending rates by 25 basis points in October, which was greater than expected. This makes it cheaper for consumers to take out mortgages and other loans. A slew of stimulus measures was unveiled by the government in late September to revive consumer demand and boost the ailing housing sector. Officials have signaled further easing measures in the near term. Potentially cutting the reserve requirement ratio for domestic banks is among these measures. Some analysts point out, however, that policymakers will wait until the new U.S. administration takes over in January and U.S. policies are clarified. In other developments, China’s youth unemployment rate eased for the second straight month since August when it hit its highest level this year. Excluding students, the jobless rate for 16- to 24-year-olds came in at 17.1% in October, down from 17.6% in September.

The Week Ahead

The PCE inflation data, consumer confidence, and the minutes of the Fed’s November FOMC meeting are among the important economic releases scheduled for this week.

Key Topics to Watch

• S&P Case-Shiller home price index (20 cities) for Sept.
• Consumer confidence for Nov.
• New home sales for Oct.
• Minutes of Fed’s November FOMC meeting
• Initial jobless claims for Nov. 23
• Durable-goods orders for Oct.
• Durable-goods minus transportation for Oct.
• Advanced U.S. trade balance in goods for Oct.
• Advanced retail inventories for Oct.
• Advanced wholesale inventories for Oct.
• GDP (first revision) for Q3
• Chicago Business Barometer (PMI) for Nov.
• Personal income (nominal) for Oct.
• Personal spending (nominal) for Oct.
• PCE index for Oct.
• PCE (year-over-year)
• Core PCE index for Oct.
• Core PCE (year-over-year)
• Pending home sales for Oct.

Markets Index Wrap-Up