U.S. Markets See Broad Gains Led by Technology
U.S. equity markets closed mostly higher on Monday, driven by strong performances in growth sectors, particularly technology and communication services. The S&P 500 gained over 0.5%, while the Nasdaq rose by more than 1%, fueled by a rally in semiconductor shares. Nvidia, Advanced Micro Devices (AMD), and Micron Technology recorded significant gains, following Microsoft’s announcement of an $80 billion investment to develop AI-enabled data centers. This boosted overall market sentiment, lifting the tech sector.
Despite the positive momentum, the Dow Jones Industrial Average experienced a slight decline. Defensive sectors like utilities and consumer staples underperformed, alongside the real estate sector, which faced pressure from rising interest rates. Nevertheless, the technology-driven optimism suggests continued market growth heading into the near term.
European Markets Respond to Tariff Speculation
European markets rose following a report that President-elect Trump’s tariff proposals might be scaled back to focus only on key industries like steel and aluminium, rather than applying universally to all imports. Although Trump later denied the report, the U.S. dollar weakened, while bond yields edged higher. Shares of Ford and General Motors rose following the tariff news, though these gains pared back after Trump refuted the story.
The STOXX 600 climbed 0.9%, with France’s CAC 40, Germany’s DAX, and Spain’s IBEX 35 posting gains. European tech stocks surged by 3.9%, driven by Microsoft’s AI investment.
Asian Markets Advance, China Lags
On Tuesday, Asian equities generally advanced, with tech-heavy indices like Japan’s Nikkei and South Korea’s KOSPI leading gains, driven by a rebound in tech shares. However, Chinese stocks underperformed following losses in Tencent and CATL, which were added to a U.S. blacklist. This move heightened concerns about deteriorating trade relations between the two countries.
U.S. Futures and Market Sentiment
U.S. equity futures edged higher on Tuesday, continuing Monday’s rally in the S&P 500 and Nasdaq as investors remained optimistic about potential tariff adjustments under President-elect Trump.
Currency and Bond Market Updates
The U.S. dollar index held below 108.5 on Tuesday, reflecting speculation that the incoming administration may pursue a more targeted tariff strategy. The euro strengthened to 1.0402 against the dollar, with traders awaiting key economic data and guidance from the Federal Reserve.
The yield on the U.S. 10-year Treasury note stayed above 4.6%, hovering near an eight-month high as markets anticipated crucial economic reports, including jobs data, JOLTS figures, and Fed official speeches.
Oil Prices Edge Lower
Oil prices eased this morning, extending losses from the previous session, amid concerns about weaker global economic data and rising supply from non-OPEC countries. However, supply constraints from Russia and Iran helped cap further declines, supporting oil market sentiment.
Key Market Movements and Corporate Announcements
Nvidia’s New Product Launch at CES
At the Consumer Electronics Show (CES), Nvidia CEO Jensen Huang unveiled the new RTX 50 series GPUs, promising double the performance of the previous generation, and announced that the Blackwell AI chips were now in full production. Nvidia highlighted AI models and domain-specific AI agents as part of its ongoing expansion into AI technology.
U.S. Blacklists Chinese Tech Giants
The U.S. Department of Defense added several Chinese firms, including Tencent and CATL, to its blacklist, citing links to China’s military. This led to significant share price declines for both companies, despite their dismissal of the designation as erroneous. The listing underscores growing tensions between the U.S. and China over security concerns and trade relations.
Samsung Forecasts Slower Growth
Samsung Electronics is expected to report slower profit growth in the fourth quarter, with operating profit estimated to rise to 8.2 trillion won, down from the previous quarter. Despite some relief from a weaker South Korean won, demand for traditional chips remained subdued, while competition from Chinese manufacturers intensified, pressuring margins.
Plug Power Surges on Hydrogen Credit
Plug Power shares soared nearly 20% after the Biden administration eased regulations on a key hydrogen production tax credit, benefiting clean energy firms. The new guidelines are expected to boost domestic manufacturing and hydrogen adoption.
Ulta Beauty Raises Guidance
Ulta Beauty raised its full-year sales and profit outlook, following robust holiday demand. The company now anticipates annual sales between $11.1 billion and $11.2 billion, with profits projected at $23.20 to $23.75 per share.
AbbVie Cuts Profit Forecast
AbbVie lowered its 2024 adjusted profit forecast to $10.02-$10.06 per share, down from the prior estimate of $10.90-$10.94, citing $1.6 billion in acquisition and R&D costs. Q4 profit is expected to fall to $2.06-$2.10 per share, compared to $2.79 last year.
MicroStrategy Increases Bitcoin Holdings
MicroStrategy purchased 1,070 Bitcoin for $101 million, continuing its aggressive cryptocurrency investment strategy. Analysts maintain a bullish outlook, citing the company’s commitment to expanding its Bitcoin reserves.
Economic Calendar and Key Data
Today’s key economic data releases include:
- UK Halifax house prices
- Italy and France CPI figures
- Eurozone unemployment rate
- U.S. ISM non-manufacturing PMI
Additionally, Federal Reserve Bank of Richmond President Thomas Barkin is scheduled to speak, which may provide insight into the Fed’s future monetary policy direction.
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