Weekly News 2023/12/18-2023/12/22

 U.S. stocks closed mixed on Friday. The Dow Jones Industrial Average closed down 18.38 points, or 0.05%, at 37385.97 points. The Nasdaq Index rose 29.11 points, or 0.19%, to 14992.97 points. The S&P 500 Index rose 7.88 points, or 7.88 points. It was 0.17% and reported 4754.63 points. However, all three major U.S. stock indexes recorded gains this week. The Dow rose 0.22% for the week, the S&P 500 rose 0.75%, and the Nasdaq rose 1.21%. So far, all three major stock indexes have risen for the eighth consecutive week. This is the first time since 2017 that the S&P 500 has posted eight consecutive weeks of gains, and the Dow Jones has had its first eight consecutive weeks of gains since 2019. The U.S. core PCE increased by 3.2% year-on-year in November, indicating that inflation has cooled more than expected, strengthening market expectations for the Federal Reserve to cut interest rates next year.

Traders now generally believe the U.S. central bank will start cutting interest rates in March after government data showed price pressures continued to cool last month. The annual inflation rate in the United States slowed further to below 3% in November, and underlying price pressures continued to weaken. Inflation rates that are in line with the Fed's 2% target also indicate that monetary policymakers are already laying the groundwork for rate cuts in the coming quarters.

The continued easing of price pressures and the resilience of household demand are in line with the view of a soft landing for the economy.

John Spallanzani, an analyst at Miller Value Partners, said: “Basically, the trend is your friend. The trend in stocks right now is up. Small-cap and mid-cap stocks really like the Fed's easing policy.”

 Tesla (NASDAQ: TSLA) officially launched a new large-scale factory project in Shanghai with an annual output of 10,000 Megapack fixed battery banks. A land acquisition signing ceremony for the project was held in Shanghai on Friday morning, marking the official launch of what the company calls a “milestone project.”

The National Highway Traffic Safety Administration (NHTSA) said today that Tesla will recall 120,423 electric vehicles in the United States because the doors may be unlocked after a collision. The recall involves Model S and Model X vehicles produced from 2021 to 2023 because these models do not meet certain federal safety standards, especially for side impact protection. NHTSA also said that Tesla has released an OTA software update to solve the problem through remote upgrade.

Regulatory documents disclosed on Thursday showed that Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) increased its holdings of 5.2 million shares of Occidental Petroleum (NYSE: OXY) between December 19 and December 21, with a transaction value of $312.1 million, bringing its stake in the oil company to nearly 28%. Last week, Berkshire Hathaway bought nearly 10.5 million Occidental Petroleum shares for about $588.7 million after Occidental agreed to acquire U.S. shale oil producer Crown Rock for $12 billion.

Nike (NYSE: NKE) lowered its annual performance guidance due to factors such as more cautious consumer behavior and weaker online business trends. Nike executives predicted on a post-earnings conference call that full-year revenue is expected to grow about 1%, down from the mid-single-digit percentage growth previously forecast. In addition, the current third fiscal quarter includes the second half of the holiday shopping season, but due to low-single-digit sales growth compared with last year, Nike expects revenue to be slightly negative.

 Bitcoin price remained above $44,000 on Friday, with 87% of BTC holders currently in the black. Likewise, Ethereum is trading at $2,308 on Binance after the altcoin recently surpassed the $2,300 mark. Bitcoin's rise above $44,000 has supported altcoin price gains as multiple assets have relatively high correlations with BTC. Throughout December, large wallet holders of different altcoins were accumulating, moving their tokens off exchanges, reducing selling pressure on these assets and making way for higher gains at the end of the year.

On December 22, according to a circular from the Hong Kong Securities and Futures Commission, the Hong Kong Securities and Futures Commission has recognized virtual asset futures exchange-traded funds (ETFs) and is ready to accept other fund recognition applications involving virtual assets, including virtual asset spot ETFs. Luo Boren, head of securities product development at the Hong Kong Stock Exchange said that the Hong Kong Stock Exchange is ready to seize the opportunities brought by thematic investment and will work closely with issuers and all stakeholders to smoothly introduce this new type of new technology into the Hong Kong ETF market.

Cryptocurrency markets often experience unique trends during the Christmas season, with historical data suggesting the presence of “Santa Claus rallies.” This phenomenon observed in traditional markets involves a spike in asset prices between late December and early January. While Bitcoin has shown bullish and bearish moves during this period in different years, the shift from bearish to positive sentiment in 2023 sets the stage for a potentially bullish outlook in 2024. Factors such as Bitcoins recovery, reduced volatility, regulatory developments, and the Bitcoin halving in April 2024 are expected to drive this positive trend. However, challenges such as regulatory scrutiny and economic factors remain, making forecasts for the cryptocurrency market uncertain.

 Gold prices rose on Friday, hitting a two-week high, extending gains from the previous session after a modest downward revision to the final U.S. third-quarter gross domestic product (GDP) and weaker labor market data, which dragged the dollar down to Four-month low. Gold spot and futures prices are at two-week highs, rising more than 1% this week.

The final annual rate of U.S. gross domestic product (GDP) in the third quarter was 4.9%, down from the previously reported 5.2%, while the number of initial jobless claims also increased slightly last week. After the data came out, the market's initial reaction was to sell off the dollar sharply, with the dollar falling 0.5% and the 10-year U.S. Treasury yield also hovering at a five-month low. The current data situation may leave few investors still convinced that the Fed will not cut interest rates faster given the resilience of the U.S. economy. The Federal Reserve kept interest rates steady last week, with policymakers signaling in new economic forecasts that the historic tightening of monetary policy over the past two years has ended and that rates will be cut in 2024. Therefore, if economic data, especially data reflecting inflation, continues to show signs of decline, it will trigger strong expectations for interest rate cuts. Expectations that U.S. dollar interest rates will fall will prompt the U.S. dollar index to continue to decline, while gold is expected to continue to gain momentum.

Analysts expect that the reading will remain well above the Fed's 2% target. If the cooling trend is too slow, the Fed may maintain high interest rates for longer in 2024, that is, cut interest rates later. Previously, many Federal Reserve officials warned that bets on the Fed's early easing of monetary policy were too optimistic.

 On Friday, the settlement price of February 2024 West Texas Light crude oil futures on the New York Mercantile Exchange was US$73.56 per barrel, down US$0.33, or 0.45%, from the previous trading day; London brent February 2024 futures the settlement price was US$79.07 per barrel, down US$0.32, or 0.40%, from the previous trading day.

Angola exit from OPEC has raised questions in the market about the lack of unity within OPEC leading to ineffective production cuts. Analysts said the move itself was unlikely to have any impact on oil prices. Kieran Tompkins, commodities economist at Capital Economics, said in a note that insufficient investment has made it difficult for the country to increase production, making it unlikely that its output will exceed previous OPEC quotas. But Tompkins also said, “This does suggest, however, that a conflict may be developing in OPEC, oil prices will face downward pressure. ”

Tensions in the Red Sea continue to support oil market sentiment, with tankers sailing around the Cape of Good Hope in Africa, increasing shipping costs and delaying delivery times. More shipping companies say they are avoiding the Red Sea due to attacks on shipping vessels by the Houthi armed group backed by a country in the Middle East.

U.S. inflation data was weaker than expected, boosting investor optimism that the Federal Reserve will lower borrowing costs next year. Lower interest rates lower borrowing costs for consumers, which can boost economic growth and demand for oil. Expectations that the Federal Reserve is more likely to cut interest rates next year also helped the dollar fall to its lowest level since July against a basket of other currencies for a second day in a row. A weaker dollar makes oil cheaper for buyers using other currencies, increasing oil demand.

 The U.S. personal consumption expenditures price index (PCE) rose less than expected in November, suggesting underlying price pressures are easing. This trend may further solidify financial market expectations for a rate cut by the Federal Reserve in March next year. The latest data showed that the U.S. core PCE price index increased at an annual rate of 3.2% in November, lower than the expected 3.3%. In addition, the core PCE price index increased by 0.1% monthly, also lower than the 0.2% expected. Meanwhile, personal spending rose 0.2% monthly, below expectations of 0.3%. These data indicate that the U.S. economy seemed to have experienced some difficulties at the beginning of the fourth quarter but is now returning to a certain growth rate.

After the PCE data was released on Friday, the U.S. dollar index rose more than 15 points in the short term at 101.73. The euro EUR/USD fell nearly 30 points in the short term at 1.1007; the pound GBP/USD fell more than 30 points in the short term at 1.2703; the dollar USD/JPY rose 50 points in the short term at 142.35.

The euro continued to gain ground against a weaker dollar this week, hitting levels last seen more than four months ago. The euro rose against a range of currencies this week as markets trimmed expectations for a rate hike. In contrast, the U.S. dollar continues to slide lower, with the U.S. dollar index returning to levels last seen at the end of July. U.S. Treasury yields are also near multi-month lows as traders prepare for a series of U.S. interest rate cuts next year. The market is currently pricing in a rate cut starting in March 2024.

OnePro Special Analyst

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