The American markets closed broadly lower yesterday after trading sideways for most of the day. On the macro front, new data shows that economic confidence among American small businesses rose more than expected in November, from 93.7 in October to 101.7 in November. However, investors are awaiting the final macroeconomic figures to be reported later today, which could impact the Federal Reserve’s interest rate decision next week, namely the consumer price index. On the company level, Google’s parent company Alphabet rose after unveiling its new quantum chip Willow, described as a breakthrough in the quantum world, while semiconductor giant Nvidia weighed down without any specific reason behind the decline. The broad S&P 500 index fell 0.3 percent, while the Dow Jones Industrial Average and the tech-heavy Nasdaq composite index dropped 0.4 percent and 0.3 percent, respectively.
Commodities traded on both sides of the fence yesterday. Oil saw a slight uptick as Chinese imports on an annual basis increased for the first time in 7 months, indicating a rising demand. China, the world’s largest buyer of the commodity, has recently shown a decreasing demand, which yesterday’s figures suggest may change, a positive sign for the oil price. Furthermore, investors have started to trade more of the commodity amid rumors of low supply in Europe ahead of the winter season. In the Middle East, the geopolitical situation seems to have calmed somewhat after the fall of Syrian President al-Assad over the weekend. At 20:35, WTI oil rose by 0.2 dollars to $68.6 per barrel, while Brent oil remained unchanged at $72.1 per barrel.
Base metals moved in different directions yesterday, with aluminum being the day’s winner, rising by 0.7 percent, followed by zinc, which increased by 0.6 percent, and copper trading sideways. Lead fell by 0.1 percent, tin by 0.4 percent, and nickel saw the biggest decline at 1.4 percent. Gold continued to rise yesterday due to the Chinese central bank announcing a resumption of its gold purchases after a six-month hiatus earlier in the week, as well as increased geopolitical tensions in the Middle East, which boost demand for gold as a safe investment in uncertain times. Expectations that the Fed will further lower interest rates next week, a trend seen in other central banks worldwide, also have a positive impact on the gold price, thriving in a low-interest environment. Gold rose by $32.3 to $2,691 per ounce.
Among individual U.S. publicly traded companies, Alphabet increased by 5.6 percent on the news of its new quantum chip Willow, and Tesla by 2.9 percent as it approaches record levels from November 2021. Boeing, which has resumed production of the 737 Max aircraft model, rose by 4.5 percent, while Walgreen surged by 17.7 percent due to discussions about the company’s acquisition. On the other side of the spectrum, Nvidia fell by 2.7 percent, and Oracle by 6.7 percent. AMD and Broadcom also declined by 2.4 percent and 4.0 percent, respectively. Moderna dropped by 9.1 percent.
The U.S. ten-year bond yield increased by 3 basis points, rising to 4.23 percent.
Asian markets traded mixed during Wednesday morning as the major economic conference kicked off in China. During the conference, Beijing will determine the economic goals for the coming years, but no news has been released so far. The South Korean market continues to recover from last week’s political turmoil, where the parliament approved next year’s budget. In Japan, statistics show that inflation continues to rise for the third consecutive month, with producer prices increasing more than expected to 3.7 percent on an annual basis. Next week, the Bank of Japan will meet for a two-day conference where they are expected to raise the benchmark interest rate by 25 basis points. At 07:45, the Japanese Nikkei 225 index rose by 0.1 percent, while the Chinese Shanghai index increased by 0.4 percent. The Hang Seng index fell by 0.5 percent.
On the Stockholm Stock Exchange, the reporting front is quiet. Among today’s new recommendations, Jefferies downgraded its recommendation for Lundin Gold from buy to hold with a target price of 279 SEK (286). Goldman Sachs lowered its target price for Fabege to 71.2 SEK (65.6) and reiterated sell, while HSBC raised the target price for Essity to 360 SEK (340), maintaining a buy recommendation. Citigroup raised the target price for Boliden to 360 SEK (350) and reiterated neutral, while SEB raised the target price for Clas Ohlson to 206 SEK (190), maintaining a hold recommendation.
On the macro front, it will be a calm but important day. At 00:50, Japan began the day with the fourth quarter business sentiment index, which landed at 6.3, and the capital goods price index at 3.7 percent. At 11:00, the Organization of the Petroleum Exporting Countries (OPEC) will release its monthly report, followed by the U.S. consumer price index at 14:30. In Canada, the central bank’s interest rate decision will be announced at 15:45, and the U.S. crude oil inventories at 16:30. The day will end with the U.S. Department of the Treasury’s monthly report at 20:00 and Brazil’s benchmark interest rate decision at 22:30.
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