Capital Markets Insights | 9 Dec - 13 Dec

• Performance: The week started with a retreat after a record high, but the Nasdaq hit 20,000 midweek, buoyed by tech stock gains following in-line U.S. inflation data. The Dow Jones ended the week with its longest losing streak since 2020, while the Nasdaq managed a slight gain, indicating a mixed market sentiment.

• Sentiment: Investors were caught between optimism for Fed rate cuts and caution due to potential policy shifts under the incoming Trump administration.

• Price Movement: Gold prices were volatile, touching near $2,700, driven by geopolitical uncertainties and the anticipation of rate cuts, which typically weaken the dollar, making gold more attractive.

• Price Trends: Oil prices rose, with Brent and WTI seeing gains due to increased geopolitical tensions, particularly around potential new sanctions on Russia and Iran, and optimism about Chinese economic stimulus for 2025.

• The U.S. Dollar (USD) emerges as the clear winner across these major forex pairs. The combination of favorable U.S. economic data, the anticipation of Federal Reserve rate cuts (which supports the dollar in the short term through yield differentials), and significant rate adjustments or expectations from other central banks like the SNB, ECB, and RBA, all contributed to the dollar's strength against key currencies this week. The Dollar's performance was notably robust against the Swiss Franc, Euro, Yen, and Australian Dollar, highlighting its status as a safe-haven currency amidst global uncertainties.

• The Swiss Franc (CHF) was the most significant loser this week, particularly evident in the USD/CHF pair, after an unexpected 50 basis point rate cut by the Swiss National Bank (SNB). This move, aimed at addressing a lower inflation outlook, led to a sharp depreciation of the Franc against the strengthening U.S. Dollar.

• Market Action: Bitcoin saw a rollercoaster, with a high above $100,000 but a subsequent fall to around $96,500, reflecting a post-election rally pause. There was a notable surge in Dogecoin, up 145% since Trump's election win, highlighting the speculative nature of crypto markets during political transitions.

• Key Events: The week was marked by significant geopolitical shifts, including the sudden collapse of the Assad regime in Syria, adding to global instability. There was also anticipation around U.S. policy changes under Trump, with threats of new tariffs causing market jitters.

• Inflation Data: The U.S. CPI for November came in line with expectations, supporting the narrative for a Fed rate cut, with markets pricing in a 25 basis point reduction.

• Central Bank Decisions: The ECB cut rates by 25 basis points, signaling more easing might be on the horizon due to a weakened economic outlook and external pressures.

• Other Notable Events: Key central bank meetings in Brazil, Canada, Australia, Taiwan, and Switzerland were also on the agenda, with most leaning towards easing monetary policy.

• Inflation and Rates: The week's focus was on inflation data, influencing expectations for monetary policy direction. The anticipation of rate cuts globally was a significant driver for market movements.

• Sector Performance: Tech stocks experienced both highs and corrections, with Nvidia and Adobe among those showing volatility. The broader market was influenced by sector rotation, with tech leading gains but also facing profit-taking.

This Week's Top Gainer in US Markets (excluding small caps under $2B market cap)

• Company: PDCO (Patterson Companies Inc)

• Gain: 35.6%

This Week's Top Loser

• Company: AGIO (Agios Pharm)

• Loss: -36.79%

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