The festive mood on the American stock exchanges came to an end on Friday as all three main indices closed lower in a broad sell-off. The market was influenced by expectations surrounding a traditionally strong period for stocks, and the selling pressure also affected technology and growth stocks that had previously driven the markets higher during the shortened trading week. The sell-off put an end to the seasonal Santa Claus rally, where stocks typically rise during the last five days of December and the first two days of January. Rising interest rates on US Treasury bonds have caught investors’ attention. Higher rates are seen as a hindrance to growth stocks because they increase the cost of borrowing for corporate expansion. The broad S&P 500 index closed down 1.1 percent, while the tech-heavy Nasdaq and the Dow Jones Industrial Average both declined by 1.5 percent and 0.8 percent, respectively.
Commodities traded mixed on Friday. Oil prices closed higher, marking a weekly gain in low trading volume ahead of the year-end, partly due to a larger-than-expected decline in US crude oil inventories last week. US crude oil inventories fell by 4.2 million barrels in the week ending December 20 as refineries increased activity during the holiday season, according to data from the US Energy Information Administration (EIA) on Friday. Optimism about China’s economic growth has also raised hopes of higher demand next year from the world’s largest oil importer. The conflict between Russia and Ukraine has once again increased in interest after several events this week that could affect oil supply next year. The number of active oil and gas rigs in the US remained unchanged at 589. WTI crude oil rose $1.0 to $70.6 per barrel, while Brent crude climbed $0.9 to $74.1 per barrel.
Base metals moved in different directions on Friday. Nickel dropped by 1.0 percent, and lead declined by 0.7 percent. Aluminum closed around flat, while copper and zinc both rose by 0.2 percent. Tin was the day’s winner, rising by 0.5 percent. Gold prices fell on Friday as high US Treasury bond yields reduced the attractiveness of the yield-free precious metal during a low-volume trading week ahead of the holidays. Markets focused on the incoming President Donald Trump’s return to office and the potential impact of his policies for 2025. Gold traditionally shines during periods of economic and geopolitical turmoil and benefits in a low-interest-rate environment. The gold price dropped $13.5 to $2,619.2 per ounce.
Among individual US companies, Nvidia lost 2.0 percent, while Tesla, which is set to report fourth-quarter deliveries next week, saw its market value decline by 5.0 percent. Netflix’s stock fell by 1.8 percent, partly due to lukewarm interest in the new season of the popular series Squid Game. However, the company set a new streaming record after the NFL games over the holidays. Tech giants Apple and Amazon both declined by 1.3 percent and 1.4 percent, respectively.
The yield on the US ten-year Treasury bond rose by 4 basis points to 4.62 percent.
Asian stocks started Monday cautiously as high US Treasury bond yields challenged the lofty valuations on Wall Street while supporting the high levels of the US dollar. Volumes were low with the New Year’s weekend approaching and an otherwise empty calendar for economic data this week. China will release its PMI figures for the industry on Tuesday, while the US ISM survey for December is expected on Friday. However, South Korea’s main index has not been as fortunate, having faced political uncertainty in recent weeks and lagging with losses of around 9 percent for the year. At 07:40, the Japanese Nikkei 225 index had decreased by 0.9 percent, while the Chinese Shanghai and Hang Seng indices had risen by 0.3 percent and 0.1 percent, respectively.
On the Stockholm Stock Exchange, things are quiet on the reporting front.
Monday is quiet on the macro level. The day starts with the release of Chicago’s purchasing managers’ index for December in the US at 09:45, followed by the country’s existing home sales for November a quarter later. At 18:00, South Korea’s monthly consumer price index will be announced, and at 20:30, China’s manufacturing industry purchasing managers’ index will be reported along with the composite purchasing managers’ index for December.
In collaboration with: Redeye.