MARKET WRAPS
Watch For:
PMI for eurozone, Germany, France, UK; EU foreign trade, labor cost index; UK consumer confidence survey; trading updates from H&M
Opening Call:
Shares could continue rising in Europe, as investors price in global rate cuts for the new year. In Asia, stock benchmarks were in the green; Treasury yields are clawing their way back from previous losses; the dollar weakened on the rate outlook; while oil and gold advanced.
Equities:
European stocks are poised to extend gains on Friday after the ECB and the BOE held interest rates steady, as rich countries' central banks begin to reposition for a world in which inflation is under control.
TD Wealth said optimism about rate cuts should be tempered, with the Fed indicating the first rate cut is likely to occur in the fall, while traders are expecting a pivot to cuts this spring.
Investors are also likely to parse the raft of economic data released by China and the decision of the country's central bank to keep policy rates unchanged.
China's economy showed some renewed signs of weaknesses as key gauges for consumption and investment missed expectations, while Beijing continues to grapple with challenges including a drawn-out property market slump and waning business confidence.
Forex:
The dollar eased in Asia, as investors continued to price in the Fed's unexpectedly dovish policy pivot.
The Fed's actions are likely to remain far more influential for the euro than those of the European Central Bank, said State Street Global Markets.
"With dovish pricing for the Fed now embedded into markets, the euro has scope to weaken should U.S. data remain strong and push out the timing of the start of an easing cycle for the Fed," it said.
Bonds:
Treasury yields advanced slightly in Asia after finishing at their lowest levels since the summer on Thursday, as investors and traders continued to absorb the Fed's interest-rate projections and policy update.
Markets priced in an 81.4% probability that the Fed will leave interest rates unchanged again in January, according to the CME FedWatch Tool.
The chance of at least a 25-basis-point rate cut by its subsequent meeting in March was seen at 77.2%, up from 64.5% just a week ago. And traders were mostly expecting the central bank to take its fed-funds rate target down to around 3.875% or lower by next December.
Goldman Sachs expects the Federal Open Market Committee "to cut earlier and faster" and forecasts three consecutive quarter-point cuts to take place in March, May and June.
Energy:
Oil futures rose amid the dollar's softness.
A weaker dollar has made commodities priced in the U.S. currency, including oil, more attractive, ANZ said.
Crude oil prices have risen after the Fed's shift in tone around interest rates. With the the ECB and BOE both keeping rates unchanged, markets are seeing an end to interest-rate hikes, ANZ said.
The weaker dollar is offsetting demand concerns stemming from an International Energy Agency report saying oil demand growth is slowing sharply due to weakening economic activity in key countries, it added.
Metals:
Gold was higher, following its over 2% rise overnight, the biggest one-day gain since October, after the U.S. Fed signaled rates cut next year.
Gold is back above the $2,000/oz level and not too far from previous record highs, said Oanda.
A weaker dollar and lower yields, if sustained, could support gold prices further, it said.
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Iron-ore prices were higher amid signs of rising demand and low inventories, Huatai Futures said.
Demand for the steelmaking material may increase as factories could opt to increase their inventories of iron ore during the winter period, it added.
However, it flags potential headwinds from declining profits at Chinese steel mills and extreme weather hindering supply logistics.
TODAY'S TOP HEADLINES
China Economic Data Shows Some Renewed Signs of Weakness
China's economy showed some renewed signs of weaknesses as key gauges for consumption and investment missed expectations, while Beijing continues to grapple with challenges including a drawn-out property market slump and waning business confidence.
Retail sales, a key metric for domestic consumption, rose 10.1% from a year earlier in November, topping the 7.6% growth marked in October but missing the 12.9% expansion expected by surveyed economists.
Beware the Most Crowded Trade on Wall Street: Next Year's Soft Landing
At the end of last year, investors thought recession was a done deal. The year before, they thought big tech would be immune to rate increases. And a year before that, they were convinced that paying high prices for stocks popular with the wider public would make them rich.
This December, they believe, again with absolute conviction, that the economy is heading for a soft landing and lower interest rates. Maybe this time they will be right.
China's Central Bank Keeps Key Policy Rates Unchanged
China's central bank kept its key policy rates unchanged Friday, while injecting a record amount of liquidity into the market via one-year policy loans as Beijing seeks to revive an economy mired in a protracted housing slump and tepid demand.
The People's Bank of China injected 1.45 trillion yuan ($203.97 billion) worth of funds via the one-year medium-term lending facility, keeping the interest rate at 2.5%-the same as with the previous operation. There were CNY650 billion worth of medium-term loans due Friday, according to Wind, a local data provider.
China's New Home Prices Fell in November Amid Continued Weakness
New home prices in 70 major Chinese cities fell at a faster clip in November from a year earlier, reflecting continued weakness in the country's property sector despite Beijing's efforts to reverse the downturn.
Compared with a year earlier, average home prices fell 0.70% in November, compared with a 0.58% decline in October, according to calculations by The Wall Street Journal based on data released by the National Statistics Bureau on Friday.
Campari in Talks to Buy Courvoisier Cognac From Beam Suntory for Up to $1.32 Billion
Davide Campari-Milano has entered into exclusive negotiations with Beam Suntory to acquire the owner of Courvoisier cognac for up to $1.32 billion, paving the way for a significant step up in the U.S. market in what the group said would be the largest deal in its history.
The Italian distiller said Thursday that the talks with Beam Suntory were aimed at acquiring Beam Holding France, which owns Courvoisier, for a fixed purchase price of $1.20 billion on a cash- and debt-free basis, with an additional payment of up to $120 million expected in 2029 upon the achievement of a 2028 net sales target.
Germany Uncovers Alleged Hamas Terror Plot in Europe
BERLIN-German authorities on Thursday detained four alleged members of Hamas suspected of planning to attack Jewish institutions in the region-the first suggestion that the Gaza conflict might be spilling over beyond the Middle East.
Germany's federal prosecutor said one of the men, acting under order from Hamas leaders in Lebanon, had in the spring begun searching for a cache of weapons the organization had clandestinely assembled in the past.
The Race to Defend Against Drone Warfare Plays Out in Ukraine
TORETSK, Ukraine-On any single day, up to 20 Russian drones can fly over Yevhen Shovkovplyas's front-line position in Ukraine, and his aging battery of Soviet-era antiaircraft guns has to stop them.
As drones take an increasingly prominent role in modern warfare, the need to bring them down is growing in importance.
Putin Vows to Push On With Ukraine War
Russian President Vladimir Putin vowed to press on with his war in Ukraine during an end-of-year audience in which he showed no sign of seeking a swift conclusion to the devastating conflict, saying there would only be peace once Russia had achieved its goals.
For the first time since launching the war, Putin fielded questions from the international media and ordinary Russians for more than four hours on Thursday, in a stage-managed event that cast the president as listening to his people, spotlighted Moscow's invasion of Ukraine and sought to present Russia as resilient to the impacts of the conflict.
Putin Says Russia Wants to Reach Agreement on Return of WSJ's Evan Gershkovich
Russian President Vladimir Putin said that Russia wants "to reach an agreement" on the return of Wall Street Journal reporter Evan Gershkovich, who is currently in Russian custody on an allegation of espionage that he, the Journal and the U.S. government vehemently deny.
During a press conference Thursday, Putin was asked about the recent declaration by the Biden administration that the Russian government rejected a new offer aimed at freeing the American reporter, as well as former U.S. Marine and Michigan corporate-security executive Paul Whelan, who is also in Russian custody.
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Expected Major Events for Friday
00:01/UK: Dec UK Consumer Confidence Survey
06:00/FIN: Oct Retail sales
07:00/NOR: Nov External trade in goods
07:00/SWE: Nov Labour Force Survey
07:00/ROM: 3Q Employment and unemployment
07:30/HUN: Oct Construction
07:45/FRA: Nov CPI
08:00/SVK: Oct New orders in industry
08:15/FRA: Dec France Flash PMI
08:30/GER: Dec Germany Flash PMI
09:00/BUL: Nov CPI
09:00/POL: Nov CPI
09:00/POL: Oct Merchandise trade
09:00/ITA: Nov CPI
09:00/EU: Dec Eurozone Flash PMI
09:30/UK: Dec Flash UK PMI
09:30/UK: 3Q Bank of England statistics on UK banks' external claims
10:00/ITA: Oct Foreign Trade EU
10:00/EU: Oct Foreign trade
10:00/CRO: Nov CPI
10:00/EU: 3Q Labour Cost Index
11:00/IRL: Oct Goods Exports and Imports
15:59/UKR: Oct Trade
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12-15-23 0017ET
