Market Talk – January 3, 2024

ASIA:

China has unexpectedly issued oil import quotas for 2024, allocating 179.01 million tons (3.59 million barrels a day) to private refiners and traders. This nearly matches the total allowances for the previous year. The move surprised the market, and with a preliminary allocation in December, the total for 2024 now stands at 183.69 million tons, slightly below the quotas for 2023.

Emerging markets are set for a significant election year, with investors closely watching fiscal policies and populist movements that may impact markets and create uncertainty in key economies. In 2024, more than half the world’s population and over 60% of global economic output will be represented in elections across various countries. The election year begins with high stakes voting in Taiwan in January, a geopolitical event, and concludes with elections in Ghana in December, as the country seeks to recover from a debt crisis.

The major Asian stock markets had a mixed day today:

• NIKKEI 225 closed
• Shanghai increased 4.97 points or 0.17% to 2,967.25
• Hang Seng decreased 142.14 points or -0.85% to 16,646.41
• ASX 200 decreased 104.60 points or -1.37% to 7,523.20
• Kospi decreased 62.50 points or -2.34% to 2,607.31
• SENSEX decreased 535.88 points or -0.75% to 71,356.60
• Nifty50 decreased 148.45 points or -0.69% to 21,517.35

The major Asian currency markets had a mixed day today:

• AUDUSD decreased 0.00300 or -0.44% to 0.67301
• NZDUSD decreased 0.00050 or -0.08% to 0.62471
• USDJPY increased 1.266 or 0.89% to 143.246
• USDCNY increased 0.01300 or 0.18% to 7.16326

The above data was collected around 16:28 EST.

Precious Metals:

• Gold decreased 17.45 USD/t oz. or -0.85% to 2,041.43
• Silver decreased 0.637 USD/t. oz or -2.69% to 23.007

The above data was collected around 16:30 EST.

EUROPE/EMEA:

British company executives are calling on the Bank of England to promptly cut interest rates as confidence in the economy has hit a four-month low, with the Institute of Directors’ Economic Confidence Index dropping to minus 28 in December, down from minus 21 the previous month. Recession concerns have contributed to this decline, marking the lowest level since August and nearing the low point in 2023. The index measures directors’ optimism regarding the UK economy for the next 12 months.

The European Central Bank (ECB) has announced plans for a unique stress test on banks in the eurozone, focusing on their response to cyberattacks. In this unprecedented test, 109 banks will be evaluated on their ability to recover from a successful cyberattack rather than preventing it. The scenario assumes a disruption to daily operations due to a cyberattack, examining emergency procedures and plans for restoring normalcy. A subset of 28 banks will undergo a more rigorous assessment, considering the potential spillover of cyberattacks into other areas. The results, to be published later this year, will not impact banks’ obligations to build capital buffers against financial risks, according to the ECB.

The major Europe stock markets had a negative day today:

• CAC 40 decreased 119.00 points or -1.58% to 7,411.86
• FTSE 100 decreased 39.19 points or -0.51% to 7,682.33
• DAX 30 decreased 230.97 points or -1.38% to 16.538.39

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.00268 or -0.24% to 1.09202
• GBPUSD increased 0.00505 or 0.40% to 1.26645
• USDCHF decreased 0.00045 or -0.05% to 0.84945

The above data was collected around 16:34 EST.

US/AMERICAS:

The Federal Reserve meeting in December 2023 indicated a likelihood of interest rate cuts in 2024, with a plan for three quarter-percentage point cuts by the end of the year. The minutes report emphasized uncertainty regarding the timing and implementation of the cuts, and the officials stressed the importance of a careful and data-dependent approach to monetary policy decisions. Despite market expectations of aggressive rate cuts, the officials expressed caution and a commitment to a restrictive policy stance until inflation shows sustained downward movement. The minutes also highlighted the Fed’s effort to reduce its bond holdings on the balance sheet, having shaved about $1.2 trillion by allowing maturing proceeds to roll off rather than reinvesting them as usual. The meeting reflected the Fed’s cautious approach, considering the potential downside risks to economic growth and the need for a measured policy to address them. While the officials anticipate rate cuts, they also emphasized the importance of maintaining a careful and data-dependent approach to making monetary policy decisions.

US Market Closings:

• Dow declined 284.85 points or -0.76% to 37,430.19
• S&P 500 declined 38.02 points or -0.8% to 4,704.81
• Nasdaq declined 173.73 points or -1.18% to 14,592.21
• Russell 2000 declined 53.59 points or -2.66% to 1,959.2

Canada Market Closings:

• TSX Composite declined 53.56 points or -0.26% to 20,818.58
• TSX 60 declined 1.96 points or -0.16% to 1,258.9

Brazil Market Closing:

• Bovespa advanced 137.32 points or 0.1% to 132,833.95

ENERGY:

The oil markets had a green day today:

• Crude Oil increased 2.506 USD/BBL or 3.56% to 72.886
• Brent increased 2.408 USD/BBL or 3.17% to 78.297
• Natural gas increased 0.1128 USD/MMBtu or 4.39% to 2.6808
• Gasoline increased 0.0596 USD/GAL or 2.85% to 2.1545
• Heating oil increased 0.0729 USD/GAL or 2.89% to 2.5987

The above data was collected around 16:35 EST.

• Top commodity gainers: Natural Gas (4.39%), Crude Oil (3.56%), Brent (3.17%) and Orange Juice (3.42%)
• Top commodity losers: Coffee (-2.05%), Oat (-2.13%), Butter (-2.65%) and Silver (-2.69%)

The above data was collected around 16:41 EST.

BONDS:

Japan 0.616% (+2.6bp), US 2’s 4.33% (+0.007%), US 10’s 3.9199% (-2.41bps); US 30’s 4.07% (-0.013%), Bunds 2.000% (-6.4bp), France 2.545% (-5bp), Italy 3.70% (-2.1bp), Turkey 24.78% (+48bp), Greece 3.171% (+5.2bp), Portugal 2.789% (-2bp); Spain 2.981% (-4.8bp) and UK Gilts 3.642% (+0bp)

The above data was collected around 16:44 EST.