Futures Flat As Markets Wind Down For 2024

US equity futures entered the last week of 2024 gingerly and steady in subdued trading as traders, already on the ski slopes or in various warm, non-extradition countries, assessed the outlook for economic growth and interest rates. The dollar gained after a US government shutdown was averted in the last minute. As of 8:10am, contracts on the Nasdaq 100 added 0.4% and those on the S&P 500 were little changed, erasing an earlier gain, following a sharp rebound on Friday after the core PCE index increased at the slowest pace since May. Europe’s stock benchmark edged higher. Market gains will likely be capped by the continued rise in rates which has seen 10Y yields rise 2bps to 4.55%. Oil, gold and bitcoin all dropped while a Bloomberg gauge of the dollar rose after sliding 0.5% on Friday. Today's macro data include the Chicago Fed, Durable Goods, New Home Sales and the Conference Board Consumer Confidence.

In premarket trading, Qualcomm rose 2% as the company prevailed at trial against Arm Holdings Plc’s claim that it breached a license for chip technology that the world’s largest maker of mobile-phone processors acquired when it bought a startup in 2021. Arm slips 3%. Applied Therapeutics fell 3% after William Blair stepped away from its bullish rating due to increased uncertainty around the future of the Govorestat drug and a limited cash runway. Here are some other notable premarket movers:

• Despegar.com (DESP), a Latin American online travel agency, jumps 31% after Prosus entered into a definitive agreement to acquire the booking site.
• Playa Hotels & Resorts (PLYA) rises 11% after executing an exclusivity agreement with Hyatt Hotels Corp. (H) where Playa agrees to negotiate exclusively with Hyatt regarding potential strategic alternatives.
• Rumble (RUM) jumps 43% after the video-sharing platform said Tether is set to acquire a stake in the company for $7.50/share.
• Rigetti Computing and other stocks linked to quantum computing rise on optimism over Alphabet’s Willow chip capabilities. Rigetti (RGTI) +13%, D-Wave Quantum (QBTS) +18%
• Xerox (XRX) rises 2% after agreeing to buy the laser printer maker Lexmark International Inc. from a consortium of Asian investors in a deal valued at $1.5 billion.

As we close out the year, investors are taking a step back after a stream of robust US economic data saw the Federal Reserve scale back the number of cuts it anticipates in 2025. The PCE data reignited hopes of deeper rate cuts, though overall sentiment remains cautious as investors brace for the prospect of sweeping global tariffs imposed by US President-elect Donald Trump, and as China continues to see a lackluster economic recovery.

“Friday’s PCE data was enough to cheer the mood and reignite hopes about the possibility of lower inflation next year, which would allow the Fed to cut rates faster,” said Daniela Hathorn, a senior market analyst at Capital.com. “The avoidance of a US government shutdown over the weekend has also helped ease some of the negative pressure on stocks.”

“There are still hopes that the US stock markets in particular will end 2024 with a positive undertone,” Dana Malas, a strategist at SEB, wrote in a note. “After two explosive weeks of central banking and news, to say the least, it is time for the market to recharge batteries and update forecast models for the world that begins on January 20 with Donald Trump in the White House.”

Europe’s Stoxx 600 index turned higher as drugmaker Novo Nordisk A/S staged a partial recovery from the biggest slump in more than two decades on Friday. Among other individual movers, Evolution AB plunged after the UK Gambling Commission began a review of its Malta operations. Direct Line Insurance Group Plc shares rose after Aviva Plc agreed to buy the insurer in a deal valuing the firm at around £3.7 billion ($4.7 billion). Here are some of the biggest movers on Monday:

• Novo Nordisk shares rise as much as 10%, clawing back some of Friday’s 21% plunge, after the Danish drugmaker’s experimental obesity shot CagriSema failed to meet its own bar for success.
• Direct Line shares rise as much as 3.6% after Aviva agrees to buy the UK insurer in a £3.7 billion ($4.65 billion) deal.
• European Defense shares rise after the Financial Times reported that Donald Trump will demand NATO members increase their defense spending to 5% of their respective GDP, citing people familiar.
• VusionGroup shares rise as much as 14% as the maker of digital shelf labels extends a contract with Walmart to cover the retailer’s 4,600 US stores.
• SBB shares rise as much as 14% after the Swedish landlord said the outcome of its tender and exchange offers had significantly reduced risks in regard to the ongoing litigation in the English High Court.
• Volkswagen shares fall as much as 2.3%, as analysts at Jefferies and Bernstein say the German firm’s agreement with labor unions to cut capacity significantly misses the carmaker’s original goals.
• Fagron falls as much as 16%, the most in almost nine years, after the Belgian supplier of raw ingredients to the pharmaceutical industry said it received an FDA warning letter for its Wichita site, following an inspection.
• Evolution shares slide as much as 12% after the gaming firm says the UK Gambling Commission has started a review of Evolution Malta Holding Limited’s operating license.
• Enagas slips as much as 4.1% after the World Bank’s International Centre for Settlement of Investment Disputes made a ruling over a dispute with Peru over the Gasoducto Sur Peruano concession.

Earlier in the session, Asian stocks rose, rebounding from last week’s selloff, as tech shares rallied after US inflation data supported the case of further interest-rate cuts by the Federal Reserve next year. The MSCI Asia Pacific Index advanced as much as 1.4%, poised for its first gain in seven sessions, with TSMC and Toyota Motor among the biggest contributors to the benchmark’s move. Taiwanese stocks led gains in the region, after AI powerhouse Nvidia Corp.’s Friday rally and local media reports boosted investor sentiment. A below-than-expected reading on the Fed’s preferred inflation gauge helped cool investor concerns after the central bank’s relatively hawkish stance at its meeting last week. Still, expectations of further trade tariffs by Donald Trump and thin liquidity heading into the holiday season have kept a lid on overall sentiment.

In FX, a Bloomberg gauge of the dollar rose after sliding 0.5% on Friday, and Treasury yields ticked higher. President Joe Biden signed funding legislation to keep the US government operating until mid-March, avoiding a year-end shutdown and kicking future spending decisions into Trump’s presidency.

In rates, treasuries are slightly cheaper across the curve, following wider losses seen across core European bonds over early London session after ECB President Christine Lagarde said in an FT podcast that policymakers remain alert to lingering price pressures in the services sector. Treasury yields cheaper by around 0.5bp to 1.5bp across the curve with spreads broadly within one basis point of Friday’s close. US 10-year yields trade around 4.55% with bunds and gilts lagging by 0.5bp and 1bp in the sector. US session focus includes start of this week’s auctions which kick-off with 2-year note sale Monday, followed by 5- and 7-year notes Tuesday and Thursday. Busy data slate also includes durable goods orders and consumer confidence.

US economic data calendar includes November building permits, Chicago Fed national activity, durable goods orders (8:30am), November new home sales and December consumer confidence (10am). No Fed members are scheduled to speak on the day

Market Snapshot

• S&P 500 futures up 0.3% to 6,020.00
• STOXX Europe 600 up 0.3% to 503.51
• MXAP up 1.2% to 181.37
• MXAPJ up 1.3% to 573.37
• Nikkei up 1.2% to 39,161.34
• Topix up 0.9% to 2,726.74
• Hang Seng Index up 0.8% to 19,883.13
• Shanghai Composite down 0.5% to 3,351.26
• Sensex up 0.6% to 78,511.21
• Australia S&P/ASX 200 up 1.7% to 8,201.58
• Kospi up 1.6% to 2,442.01
• German 10Y yield up 3.5 bps at 2.32%
• Euro down 0.1% to $1.0415
• Brent Futures up 0.5% to $73.27/bbl
• Brent Futures up 0.5% to $73.27/bbl
• Gold spot up 0.2% to $2,629.43
• US Dollar Index up 0.27% to 107.91

Top Overnight News

• US Trade Representative Office has launched a new investigation into Chinese-made legacy chips, may lead to more tariffs.
• US President-elect Trump has selected David Fink to serve as the Administrator of the Federal Railroad Administration: Reuters.
• Brian McCormack, a long-time energy consultant, and Andrew Peek, a seasoned Middle East adviser, will take senior roles on Trump's National Security Council: CBS
• US government has enacted a budget to avert a shutdown, but the deal does not include President-elect Donald Trump's proposal to raise the federal borrowing limit: BBC.
• US jury has found that Qualcomm (QCOM) did not breach Nuvia's license agreement with Arm (ARM) and determined that Qualcomm's custom CPUs are licensed under its agreement with Arm: Reuters.
• Japan's antitrust watchdog is set to conclude that Google (GOOG) violated the law in a search-related case: Nikkei.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks opened firmer across the board on a holiday-thinned week, following a similar performance from Wall Street on Friday, with broad risk-on sentiment through the US afternoon, albeit with indices closing off peaks. ASX 200 saw its gains supported by gold miners following the rebound of the yellow metal, with IT also among the top performers after a similar stateside sectoral performance on Friday. Nikkei 225 conformed to the broader risk tone amid a lack of macro drivers, whilst a stable JPY also boded well for the Nikkei. Hang Seng and Shanghai Comp traded firmer alongside the region as sentiment from Wall Street reverberated through APAC. However, macro news flow remained quiet, and the indices drifted off their best levels.

Top Asian News

• NIO (NIO, 9866 HK) CEO William Li stated that the company will accelerate the construction of battery swapping stations in Europe, with costs for those designed for Firefly EVs reduced by a third compared to stations for NIO-branded cars, according to Reuters.
• Nippon Steel (5401 JT) and US Steel (X) have alleged that the White House exerted impermissible influence over the CFIUS review of their proposed tie-up, a claim the White House denies. The companies have vowed to challenge the expected block of the deal, according to Reuters, citing a letter.
• Nvidia (NVDA) reportedly plans to build an offshore headquarters in Taipei, Taiwan, according to CTEE.

European bourses are generally sitting in negative territory, despite a mostly positive handover from overnight APAC trade. In recent trade, a couple of indices are attempting to climb into the green. European sectors opened with a strong negative bias, but are now mixed. Healthcare is by far the clear outperformer today, as Novo Nordisk (+6%) attempts to pare some of the hefty losses seen on Friday. Autos sits towards the lower half of the pile, but with downside in the sector pretty much in-fitting with peers. Volkswagen (-1%) initially opened higher after traders digested news that VW reached a deal with IG Metall to cut 35k jobs and avert a strike; though, did slip into negative territory thereafter. US equity futures are modestly firmer, with slight outperformance in the NQ, in a continuation of the gains seen on Wall St in the last trading day. Honda (7267 JT) and Nissan (7201 JT) announce the signing of the basic agreement to consider integration; Cos and Mitsubishi Motors (7211 JT) sign an MOU on collaborative considerations. Intend to set up the holding Co. in August 2026

Top European News

• ECB's Lagarde said still believe that ECB should be very vigilant about service; getting very close to that stage when ECB can declare that we have sustainably brought inflation to our medium-term 2% target, via FT; coming close to the end of that process where wages have caught up with price.
• ECB's Makhlouf said the outlook for next year was probably clouded by “more uncertainty than there was when we went into lockdown; and argued against calls for the ECB to start cutting rates by 50bps at a time in early 2025, via FT. He said his preference was still “for gradual moves rather than big leaps”, unless “the facts and the evidence” suggest otherwise.
• BoE Governor Bailey and FCA CEO Nikhil Rathi will reportedly join UK Chancellor Reeves as part of Britain’s delegation to China next month, according to Sky News.
• Hungarian PM Orban stated that when the dollar strengthens, the forint automatically weakens, adding that the current weakening of the forint is not driven by Hungary's economic fundamentals, according to Reuters.

FX

• DXY is slightly firmer and currently trades towards the upper end of a 107.68-108.01 range, just eclipsing the round 108.00 mark, but still someway off Friday’s best at 108.54. Docket ahead includes, US Consumer Confidence & Durable Goods.
• EUR is incrementally softer vs the Dollar and also losing vs the GBP; EUR/USD currently holds towards the upper end of Friday’s 1.0342-1.04471 range. German Import Prices printed above expectations, metrics which ultimately sparked little move in the Single-Currency.
• JPY is incrementally lower, with USD/JPY sitting within a very tight 156.33-80 range, given the holiday-thinned conditions. If some pressure appears in the pair, could see a test of Friday’s low at 155.94.
• Cable is flat and currently trades within a 1.2554-1.2588, a little short of the 1.26 mark at best. Further upside could see a test of Friday’s peak at 1.2613 and then its 21 DMA at 1.2659 thereafter. From a macro perspective, the UK posted its Q3 GDP metrics, which saw the YY and QQ both revised a touch lower, with the QQ figure showing no growth within the period. Figures which had little impact on the Pound.
• Antipodeans are very modestly in positive territory, with modest outperformance in Aussie. The Aussie holds towards the upper end of Friday’s 0.6214-0.6274 range; NZD is also a little firmer, and holds around 0.5660.
• PBoC set USD/CNY mid-point at 7.1870 vs exp. 7.2880 (prev. 7.1901)

Fixed Income

• USTs are contained in narrow ranges with catalysts light so far. A very slight bearish-bias in play as the US risk tone is robust following the nation avoiding a gov’t. shutdown. As it stands, in a narrow 108-27+ to 109-00+ band which is entirely within Friday’s 108-19+ to 109-08+ parameters, ahead of US Consumer Confidence and Durable Goods.
• Bunds came under modest pressure early doors and remains the fixed income underperformer. Pressure which occurred in limited trade with volumes very light and as such is perhaps not worth reading extensively into, though a better than expected set of import data likely influenced. Spent the morning at the low-end of a 133.72 to 134.06 band, dipping below Friday’s base and matching last week's trough; however, in recent trade the benchmark has trimmed some downside.
• Gilts opened lower by 21 ticks before extending to a 92.48 base. Pressure which came given the lead from peers and despite downward revisions to UK Q3 GDP and very bleak CBI commentary from its latest indicator. 92.48 base remains comfortably above Friday’s 92.18 low and the contract trough from Thursday thereafter at 91.87.

Commodities

• WTI & Brent were firmer, taking impetus from the APAC/US risk tone; however, they have succumbed to some recent selling pressure to trade around flat currently. Brent Feb'25 briefly dipped below USD 73/bbl, currently pivoting the mark.
• Gold is marginally firmer, benefitting from the tepid European risk tone though with any real advance prohibited by the indications from US futures. At a USD 2633/oz peak, resistance comes into play at USD 2643/oz where the 21-DMA resides and coincides with the peak from last Wednesday.
• Dutch TTF was around flat, but caught a slight bid after Russia's Kremlin said the situation with European countries that get Russian gas is complicated and needs further attention (somewhat in contrast to weekend comments where Fico said Russia confirmed a readiness).
• US NatGas outperforms on commentary from Qatar.
• 3M LME is firmer, continuing action from APAC trade which saw modest gains for the complex in-fitting with the broader risk tone. However, 3M LME Copper is still yet to comfortably/lastingly eclipse the USD 9k handle.
• Qatar has warned that it will "stop" gas sales to the EU if fined under the due diligence law, according to the Financial Times.
• Slovak PM Fico noted that Russian President Putin confirmed Russia's readiness to continue supplying gas to the West and Slovakia, according to Reuters.
• Libya's Acacus Oil Company has achieved oil production of 301.5k BPD, while the Sirte Oil Company has reached 103k BPD over the past two days, its highest output since 2007, according to the NOC spokesman.
• Oil transit through Russia's Druzhba pipeline resumed on Saturday, according to Belarus' BelTa state news agency. Earlier, Reuters reported that oil flows from Russia and Kazakhstan to Hungary, Slovakia, the Czech Republic, and Germany via the Druzhba pipeline had been halted since Thursday due to technical issues at a Russian pumping station.
• Russia's Kremlin says Putin discussed gas, Ukraine and bilateral ties with Slovakia's Fico; situation with European countries that get Russian gas is complicated and needs further attention.

Geopolitics

• Iranian Foreign Ministry says the nuclear deal will be discussed with Europe in January.
• "Israel plans to launch an attack on Yemen", according to Sky News Arabia.
• "Israel is considering helping the Kurds in Syria in a non-military way", according to Sky News Arabia; "Israel is concerned about Turkey's intention to launch a large-scale military operation against the Kurds in northern Syria".
• US military announced that it carried out airstrikes targeting Iran-backed Houthi missile storage and command/control facilities in Yemen, according to Reuters. US military stated that it conducted precision airstrikes targeting a missile storage facility and a command-and-control facility operated by Iran-backed Houthis in Sanaa, according to Reuters.
• Yemeni Houthis have confirmed targeting central Israel with a ballistic missile, according to Reuters
• China is considering allowing seafood imports from Japan and may lift the ban as early as the first half of 2025, according to Nikkei.
• China condemned the latest US military aid to Taiwan on Sunday, stating that the USD 571mln package violates the "one China principle" and the terms of the joint communique between China and the US, according to Reuters.
• China's Defence Ministry on Saturday expressed its dissatisfaction over a US report released this week on China's military, which it said distorted its defence policy and "grossly interferes" in its internal affairs, according to Reuters.
• Chinese Foreign Ministry announced that China will take countermeasures against two Canadian institutions and 20 personnel, specifically targeting Canada's Uyghur Rights Advocacy Project and the Canada-Tibet Committee, according to the ministry.

US Event Calendar

• 08:30: Nov. Durable Goods Orders, est. -0.3%, prior 0.3%
• 08:30: Nov. Durables-Less Transportation, est. 0.3%, prior 0.2%
• 08:30: Nov. Cap Goods Orders Nondef Ex Air, est. 0.1%, prior -0.2%
• 08:30: Nov. Cap Goods Ship Nondef Ex Air, est. 0.2%, prior 0.3%
• 08:30: Nov. Chicago Fed Nat Activity Index, est. -0.15, prior -0.40
• 10:00: Nov. New Home Sales MoM, est. 9.8%, prior -17.3%
  • Nov. New Home Sales, est. 670,000, prior 610,000
• 10:00: Dec. Conf. Board Consumer Confidence, est. 113.0, prior 111.7
  • Dec. Conf. Board Present Situation, prior 140.9
  • Dec. Conf. Board Expectations, prior 92.3