Introduction: Markets in Santa rally as soft landing hopes build
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Global stock markets are embarking on an end-of-year ‘Santa rally’, as City traders and investors return to their desks after the Christmas break for the final push into 2024.
Optimism that central banks will start to lower interest rates in 2024, and cut several times next year, continues to push shares higher.
Yesterday the US stock market rallied again, with shares higher in light trading – lifting the S&P 500 index to its highest intraday level in almost two years.
That leaves the S&P 500 less than 1% below its closing all-time high of 4,796.56 set in January 2022.
The rally indicates investors are more confident that US policymakers can achieve a ‘soft landing’ – pushing down inflation without causing a recession. Last Friday, the US PCE index showed inflation decelerated last month.
Stephen Innes, managing partner at SPI Asset Management, says:
The prevailing sentiment suggests a “risk-on” environment in U.S. markets, with renewed optimism focused on anticipating swifter and earlier rate cuts.
The US stock market has been pushing higher since early November, on rising hopes that America’s economy can avoid a recession.
Jan Szilagyi, CEO and co-founder of Toggle AI, told CNBC:
“I don’t love the term, but if you were to describe what is happening it’s definitely Goldilocks for the market.
Inflation’s coming down, the economy is still chugging along, and the hiking cycle’s over. On all of these macro trends, the rally has been justified.”
Asia-Pacific have picked up the baton, with China’s CSI 300 index up 0.4% and Japan’s Nikkei gaining over 1%
Hong Kong’s Hang Seng index has jumped 1.8%, as Chinese regulators appeared to soften a new crackdown on online gaming by approving a batch of new games.
Recession worries are also looming over the City of London, though, after UK GDP data was revised down last Friday.
That showed the UK economy shrank slightly in the July-September quarter, adding to pressure on the Bank of England to cut interest rates in 2024.
European stock markets are set to open higher, with FTSE futures up 0.5%, Germany’s DAX up 0.45% in premarket trading, and the Eurostoxx 50 index of Europe’s largest companies up 0.55%.
The agenda
Key events
The UK’s transport minister has predicted that we could see cars with some self-driving technology on British roads by 2026.
Mark Harper told Radio 4’s Today programme that autonomous driving tech could be rolled out within three years, saying:
The legislation is going through Parliament at the moment so hopefully we’ll get that through Parliament by the end of 2024.
“Probably by as early as 2026, people will start seeing some elements of these cars that have full self-driving capabilities being rolled out.
“We already know the technology works. You can see the technology being rolled out with a safety driver in place.
“I’ve seen the technology being used in California for example, without a safety driver, so in full, autonomous mode.
“This technology exists, it works and what we’re doing is putting in place the proper legislation so that people can have full confidence in the safety of this technology, which I think is one of the important things we’ve got to do.”
Last month’s King’s Speech outlined plans for the Automated Vehicles Bill which will enable self-driving vehicles in the United Kingdom.
But while this technology has been under development for years, it remains problematic.
Earlier this month, Tesla said it would install new safeguards to its Autopilot advanced driver-assistance system on over 2 million vehicles in the US.
And in October, California suspended driverless cars operated by GM’s Cruise subsidiary in San Francisco, saying the vehicles were a risk to the public after a series of accidents.
Ford BlueCruise director Charles Nolan told Today that the technology to take a driver home from the pub was “certainly not there now”, adding:
“I think there is a way to go.”
European stock markets have now got into the Santa rally spirit.
In London, the FTSE 100 index is up 48 points or 0.6%, to 7745.
France’s CAC is 0.36% higher, with Germany’s DAX up 0.25% and Italy’s FTSE MIB 0.4%.
Oil is trading near its highest level since the end of November, as a spate of Houthi attacks disrupted shipping in the Red Sea.
Yesterday, the oil price climbed by 2.5%, with Brent crude settling $2 per barrel higher at $81.07, a one-month closing high. It’s slightly higher this morning.
Before Christmas the United States shot down four drones headed towards a US destroyer in the southern Red Sea, shortly after it launched Operation Prosperity Guardian to patrol Red Sea waters near Yemen.
European stock markets are reopening, after the Christmas break….
And the UK’s FTSE 100 share index has jumped by 35 points, or 0.45%, to 7732 points – towards the seven-month high set last week.
Mining companies are leading the risers, with Anglo American up 2.4% and Glencore gaining 1.9%.
Germany’s DAX and France’s CAC both gained 0.1% at the open.
Metal prices rise as China industrial profits jump
Some metal prices are rising this morning too, after China’s factories reported a rise in profits.
China’s November industrial profits rose by 29.5% year-on-year in November, the National Bureau of Statistics reported this morning, up from October’s 2.7% expansion.
#China‘s major industrial firms saw their profits surge 29.5% in November from the same period last year, data from the National Bureau of Statistics showed Wednesday.
In the first 11 months of the year, the profits of major industrial firms with annual main business revenue of… pic.twitter.com/Yip2ALdcFo— CGTN Global Business (@CGTNGlobalBiz) December 27, 2023
This has helped to nudge the benchmark copper contract in London up by 0.6% to $8,625 per metric ton just after 7am this morning, as trading resumed after the Christmas break.
Zinc is up 0.9% in London, Reuters reports, while lead has climbed 0.6%, nickel has added 1.5% and tin is up 2.8%.
Metal prices have also been pushed up by the weaker dollar, which is trading near a five-month low on expectations of US interest rate cuts in 2024.
Australia’s ASX 200 share index nears two-year high
Australia’s stock market saw a Santa Rally today too.
The S&P/ASX 200 index has gained 0.8%, and hit its highest level since late April 2022 as trading resumed for the week.
The index is on track for yearly gains of over 7%.
Optimism surrounding the Reserve Bank of Australia’s decision to hold steady on interest rates at its last meeting of the year, influenced in part by the more dovish stance of the Federal Reserve, has boosted Australian stocks.
Introduction: Markets in Santa rally as soft landing hopes build
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Global stock markets are embarking on an end-of-year ‘Santa rally’, as City traders and investors return to their desks after the Christmas break for the final push into 2024.
Optimism that central banks will start to lower interest rates in 2024, and cut several times next year, continues to push shares higher.
Yesterday the US stock market rallied again, with shares higher in light trading – lifting the S&P 500 index to its highest intraday level in almost two years.
That leaves the S&P 500 less than 1% below its closing all-time high of 4,796.56 set in January 2022.
The rally indicates investors are more confident that US policymakers can achieve a ‘soft landing’ – pushing down inflation without causing a recession. Last Friday, the US PCE index showed inflation decelerated last month.
Stephen Innes, managing partner at SPI Asset Management, says:
The prevailing sentiment suggests a “risk-on” environment in U.S. markets, with renewed optimism focused on anticipating swifter and earlier rate cuts.
The US stock market has been pushing higher since early November, on rising hopes that America’s economy can avoid a recession.
Jan Szilagyi, CEO and co-founder of Toggle AI, told CNBC:
“I don’t love the term, but if you were to describe what is happening it’s definitely Goldilocks for the market.
Inflation’s coming down, the economy is still chugging along, and the hiking cycle’s over. On all of these macro trends, the rally has been justified.”
Asia-Pacific have picked up the baton, with China’s CSI 300 index up 0.4% and Japan’s Nikkei gaining over 1%
Hong Kong’s Hang Seng index has jumped 1.8%, as Chinese regulators appeared to soften a new crackdown on online gaming by approving a batch of new games.
Recession worries are also looming over the City of London, though, after UK GDP data was revised down last Friday.
That showed the UK economy shrank slightly in the July-September quarter, adding to pressure on the Bank of England to cut interest rates in 2024.
European stock markets are set to open higher, with FTSE futures up 0.5%, Germany’s DAX up 0.45% in premarket trading, and the Eurostoxx 50 index of Europe’s largest companies up 0.55%.
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Pretty! This has been a really wonderful post. Many thanks for providing these details.