U.S. Market Overview
Major U.S. indices declined on Wednesday as persistent weakness in mega-cap technology stocks offset broader market gains ahead of the Thanksgiving holiday. The S&P 500 witnessed advances in most sectors but ended 0.38% lower, dragged down by tech-heavyweights. Similarly, the Dow Jones Industrial Average slipped 0.31%, and the Nasdaq Composite fell 0.60%.
Inflation Data Insights
The latest Personal Consumption Expenditures (PCE) price index, a key measure of inflation, aligned with expectations:
- PCE Index: Increased by 0.2% month-on-month and 2.3% year-on-year.
- Core PCE (excluding food and energy): Rose by 0.3% monthly and 2.8% annually.
Despite inflation matching forecasts, the bond market reflected optimism for a December interest rate cut by the Federal Reserve. Treasury yields dropped sharply, with the 10-year note hitting a one-month low of 4.24%. Futures now suggest a 66% probability of a 0.25% rate cut, up from 60% the prior day.
Global Market Update
Asian Markets
Most Asian equity markets faced declines on Thursday, reflecting cautious sentiment following strong U.S. inflation data.
- China and Hong Kong: Declined due to tariff concerns and subdued demand growth.
- Japan: Nikkei 225 and TOPIX gained modestly, buoyed by local optimism.
European Markets
European stocks closed lower on Wednesday, with the Stoxx 50 losing 0.6%. Key pressures included:
- Concerns over ECB policy and potential impacts of U.S. tariffs.
- Losses in French financials like AXA and BNP Paribas amid political uncertainties.
- Weakness in tech shares such as ASML, reflecting broader market caution.
Currency and Commodities
- USD Index: Remained subdued at 106.1 amid reduced market activity due to the U.S. holiday.
- EUR/USD: Stabilized near 1.0550, supported by hawkish European Central Bank comments.
- Oil Prices: Declined in Asian trading following a surprise increase in U.S. gasoline inventories, reflecting weaker fuel demand despite OPEC+ production cuts.
Equities on the Move
Amazon
Amazon is developing a next-generation generative AI model, code-named “Olympus,” capable of processing text, images, and videos. This initiative aims to reduce reliance on Anthropic’s AI tools and position Amazon against rivals like Google and Microsoft.
Microsoft
The U.S. Federal Trade Commission has launched an antitrust investigation into Microsoft’s practices across cloud computing and AI. Competitors are being consulted as part of this expanded inquiry.
BYD
Chinese automaker BYD has requested a 10% cost reduction from its suppliers starting January 1, signaling heightened price competition in China’s auto market. BYD recently surpassed Tesla as the top global EV seller, leveraging aggressive discount strategies.
EasyJet
EasyJet reported a 34% rise in annual profits, driven by robust demand for flights and holiday packages. With plans to expand seat capacity and its holiday business by 25% in 2025, the airline remains focused on cost management.
CrowdStrike
Downgraded to “hold” by HSBC, CrowdStrike faces limited short-term growth prospects despite strong quarterly results. Concerns over weaker demand and valuation tempered optimism.
Dell Technologies
Mizuho revised Dell’s price target from $155 to $150 following disappointing earnings. However, long-term prospects remain strong, supported by growth in AI servers and opportunities with next-gen chips.
Booking Holdings
Baird initiated coverage on Booking Holdings with an “outperform” rating and a price target of $5,850, citing strong international growth and a dominant position in global travel markets.
Upcoming Data and Events
- U.S. Markets: Closed for Thanksgiving on Thursday and will close early on Friday.
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