Weekly market recap

Your weekly global financial market newsletter

  • The US Nasdaq index reached a record high, helped by positive CPI results. This only reinforced expectations of further interest rate cuts.
  • The President of the European Central Bank (ECB), Christine Lagarde, announced a 25 basis point cut in interest rates for the fourth time in a row. The ECB has subsequently updated its economic forecasts and expects the Eurozone to grow at a slower pace than previously expected.
  • Concerns about a possible tightening of sanctions against Iran and Russia have raised fears about the stability of supply, leading to a rise in oil prices.

Indices

The market was affected by concerns sparked by hot inflation data, with most US indices ending in losses. This included the S&P 500, which ended its three-week streak of gains. In contrast, the technology-focused Nasdaq Composite index reached a new milestone, surpassing the 20,000-point threshold for the first time. This rise was mainly attributable to the unexpected earnings of Broadcom, a major player in the software development sector.

The STOXX Europe 600 index fell by 0.77% after investors considered whether the ECB is implementing an appropriate monetary policy to support the weakening economy. However, developments in major stock markets were mixed. The German stock market index, DAX, reached a new high this week with a 0.10% gain. The increase was primarily driven by a strong operating performance at Munich Re, where estimated revenues in 2025 are expected to reach 64 billion €, reflecting a positive outlook for the company. France’s CAC 40 fell by 0.23%, while the UK’s FTSE 100 declined by 0.10%. Market sentiment is mixed, particularly concerning the potential impact of Trump’s expected trade tariff policy and its effect on European indices.

US30
-1.82%
US100
+0.73%
US500
-0.64%
GER30
+0.10%

Commodities

The price of gold increased by 0.53% compared to the previous week. This indicates that traders were more cautious ahead of the Federal Reserve meeting. Despite reaching several record highs this year, partly due to rate cuts, the rise in gold has slowed in recent months.

Oil prices remain between USD 72.90 and USD 66.60 per barrel, consistent with the levels observed since October 15th. However, it has seen a rise of 4.76% over the past week. The oil price has been supported by interest rate cuts by central banks in Canada, Europe and Switzerland. Additionally, positive sentiment surrounding the anticipated Fed rate cuts may increase oil demand. On the other hand, the continued decline in oil demand in China, the world’s second-largest consumer, negatively impacts the global oil market.

Gold
+0.53%
Silver
-1.56%
BRENT
+4.74%
NATGAS
+6.63%

Forex

The appointment of a new prime minister has boosted hopes for political stability in France, with the euro (EUR) benefiting as a result. However, the EUR’s prospects remain weak, with European Central Bank (ECB) officials indicating further interest rate cuts. The EUR/USD exchange rate has fluctuated around 1.0500 for the fifth consecutive day, reaching a weekly low of 1.0452 on Thursday following the ECB’s rate cut decision. Investors are awaiting Monday’s PMI reports, which could potentially create increased volatility in the market.

The pound ended the week at a loss of 0.96% against the dollar. This decline was driven by weaker-than-expected monthly GDP data, which fell 0.1% against expectations of 0.1% growth. Manufacturing, construction, and services all performed below forecast levels. The pound continues to trend downward, but this week’s PMI and CPI reports may provide short-term upward momentum for the currency.

Despite recent declines and mixed market sentiment, the US Dollar Index (DXY) remained above 107.00 throughout the week. Speculation about the Fed’s next moves did not affect the DXY index, which held key levels on Friday.

EUR/USD
-0.63%
USD/JPY
+2.52%
GBP/USD
-0.96%
USD/CAD
+0.58%

Macro

This week saw the release of key economic data for the US, with the CPI data for November, published by the Labor Department on Wednesday, representing a particularly significant development. The year-on-year inflation rate slightly increased from 2.6% to 2.7% in October. Concurrently, producer price inflation accelerated, reaching 0.4% from 0.3%. Headline inflation increased by 0.3%, in line with expectations. Core inflation, which excludes food and energy, increased by 3.3% year-on-year and remained at the same level as in the previous month.

On Thursday, the number of weekly jobless claims saw a surprising increase, reaching a two-month high of 242,000. However, analysts have suggested that some of these increases may be attributed to the Thanksgiving holiday. The number of continuing claims rose and remained at a three-year high, indicating that some individuals are taking longer to secure employment.

The European Central Bank (ECB) has reduced its key rates by 0.25 percentage points to 3.0%, marking the fourth rate cut this year. The ECB has additionally stated its intention to maintain the current restrictive policy for as long as necessary. In light of these decisions, the ECB has also revised its growth and inflation forecasts for the euro area. The current growth expectations are 0.7% for 2024, 1.1% for 2025, 1.4% for 2026 and 1.3% for 2027.

What to watch out for this week

  • We are scheduled to receive data from the Canadian consumer price index on Tuesday.
  • The most significant news is expected to be released on Wednesday. The UK Consumer Price Index and the most important news from the US on rate cuts are expected. A 25-basis-point reduction to 4.5% is anticipated. New Zealand is scheduled to release its latest GDP data.
  • The Bank of England will announce its decision on the official bank rate and bank rate vote on Thursday.

Disclaimer

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