The American stock markets experienced a decline in yesterday’s trading session as the market evaluated Wednesday’s inflation figures. Much of this week’s trading has been driven by expectations and the outcome of the inflation numbers, which were reported in line with estimates, and the unexpected increase in unemployment figures last week. However, these data are not expected to deter the Federal Reserve, the American central bank, which is anticipated to lower the interest rate by 25 basis points next week. The market currently sees a 95 percent probability of that outcome. On the stock front, Adobe saw a drop after its 2025 forecast came in lower than expected, while Warner Bros Discovery surged after announcing plans to separate its cable TV business from its streaming operations. The broad S&P 500 index and the Dow Jones Industrial Average both traded down 0.5 percent, while the tech-heavy Nasdaq composite index lost 0.7 percent.
Commodities took a hit across the board on Thursday. Oil slid, weighed down by the Organization of the Petroleum Exporting Countries’ (OPEC) forecast of declining demand for the commodity, which also found support in expectations of the Fed’s interest rate decision next week. Furthermore, US crude oil inventories unexpectedly increased last week, while imports from China rose for the first time in seven months by over 14 percent on an annual basis. WTI crude oil decreased by 0.2 dollars to 70.1 dollars per barrel, while Brent crude oil traded sideways at 73.5 dollars per barrel.
Base metals also traded downwards yesterday. Tin was the biggest loser, dropping by 2.0 percent, followed by lead and zinc, which lost 1.5 and 1.2 percent, respectively. Copper decreased by 1.1 percent, aluminum by 0.1 percent, while nickel was the day’s winner, rising by 1.9 percent. Gold followed the same trend as other commodities with its first decline in six days. However, during the trading day, the precious metal reached a five-week high, leading to profit-taking among investors. The price of gold has had strong momentum this week due to expectations of a rate cut in the US, a trend seen globally with a double cut of 50 basis points in Canada and 25 basis points in Europe by the European Central Bank. In a low-interest rate environment and amid geopolitical and economic uncertainties, gold becomes a more attractive investment. Gold decreased by 33.3 dollars to 2,684.3 dollars per ounce.
Among listed American companies, Adobe fell by 13.7 percent on yesterday’s earnings miss, while Warner Bros Discovery surged by 15.4 percent after announcing plans to separate their cable TV and streaming businesses. Among the heavyweights, Tesla dropped by 1.6 percent, Nvidia by 1.4 percent, and Alphabet by 1.8 percent, while Apple increased by 0.6 percent.
The American ten-year Treasury bond rose by 6 basis points to 4.34 percent.
Asian markets opened lower on Friday morning. In China, Xi Jinping held the annual planning meeting where Beijing stated that they will borrow more in the future in an attempt to boost the economy. This comes after the state introduced several stimulus packages in the fall with the goal of ramping up production and economic activity to try to reach their target of 5 percent growth. In Japan, the Tankan survey suggests that business sentiment among large suppliers and manufacturers is more positive than expected, providing a basis for the Bank of Japan’s interest rate decision next week. The outcome is still uncertain according to a Reuters survey showing that 55 percent of analysts expect it to remain unchanged. At 07:45, the Chinese Shanghai index was down 1.6 percent, and the Hang Seng index was down 1.7 percent. The Japanese Nikkei 225 index fell by 0.9 percent.
On the Stockholm Stock Exchange, it’s quiet on the earnings front. Among today’s new recommendations, SEB lowered the target price for Sectra to 275 Swedish kronor (from 280), maintaining a hold recommendation, while they raised the target price for Assa Abloy to 345 Swedish kronor (from 335), with a hold recommendation. Swedbank and SEB had their target prices lowered to 199 Swedish kronor (from 215) and 127 Swedish kronor (from 130) by Barclays, which reiterated its equal-weight and underweight recommendations, respectively.
On the macroeconomic front, it will be a calm day. Friday started in Japan with October’s industrial production coming in below expectations at 2.8 percent at 05:30. Later in the morning, the UK Gross Domestic Product and trade balance for October will be announced at 08:00, along with Swedish unemployment figures for November and the German trade balance for October. At 08:45, the French consumer price index will be released, followed by the Spanish consumer price index at 09:00, and industrial production for October in the eurozone at 11:00. In the US, November’s export price index and import price index will be reported at 14:30, and Baker Hughes’ total rig count, the last event of the week, will be announced at 19:00.