📉 Market Report.
📊 Investors are cautious as an 85% chance of a U.S. rate cut next week is already priced in, and with Wall Street indexes around record highs, there is room for disappointment if the inflation data does not exceed expectations. The median forecast is for a 0.3% month-on-month increase in both headline and core U.S. consumer prices in November, leaving markets vulnerable to a surprise if the data comes in higher.
🇫🇷 The central bank of France estimates that the post-Olympic pullback would reduce fourth quarter growth by 0.2 percentage points, implying the French economy would otherwise grow 0.2% from the previous quarter. The head of the French employers’ federation said the economy was probably already in recession, though the central bank’s survey suggests activity is still expanding moderately in the service sector. Industrial companies reported order books had fallen to levels not seen since the COVID crisis, and manufacturers were operating at lower capacity levels.
🇬🇧 British grocery price inflation edged higher for the third month in a row in November, reaching 2.6% in the four weeks to Dec. 1, up from 2.3% in the previous period. UK supermarkets have warned that tax rises in the Labour government’s first budget and another rise in the national minimum wage will be inflationary. The average cost for a traditional Christmas dinner for four is expected to rise 6.5% to £32.57 this year.
📈 Market View:
🏛️ The S&P 500 continues to slowly retreat ahead of today’s inflation data. The index currently stands at 6,050 points, where it seems to have found some support. The Nasdaq 100 is following a similar pattern, trading at 21,450 after reaching 21,700 on Monday.
💵 The dollar rebounded yesterday, taking the dollar index to 106.50 points. However, if today’s inflation data shows a rebound, it is very likely that the dollar will experience a downward move in response. Consequently, the EUR/USD has retreated back towards the 1.0515 area.
📉 Futures in Europe also reflect caution ahead of tomorrow’s data, as a rate cut by the ECB is expected tomorrow. In this context, the DAX 40 is currently trading at 20.365 points, while the EuroStoxx 50 is slightly above 4.950 points.
🛢️ Oil prices are showing a slight rebound, with Brent crude rising to 72.50 dollars. However, we have already pointed out that this is a downtrend characterised by declining highs.
🥇 As for gold, the wedge chart mentioned a few days ago seems to have been activated, as since Monday its price has risen by more than 2.7%. Gold currently stands at 2,725 dollars per ounce.
💰 Bitcoin, meanwhile, remains little changed, moving within a range close to $98,000.
🌐 Geopolitics:
🇫🇷 Macron will seek to name a new prime minister within 48 hours. Macron wants to avoid another government collapse, given the political cost of the instability, and will first try to find a coalition that will work before appointing a new prime minister. However, any new prime minister will face the same political constraints as Barnier, and might be short-lived, as Macron navigates the fractured political landscape.
🇷🇴 Romanian authorities are investigating the annulment of a presidential election, which saw candidate Calin Georgescu win the first round. Police have raided Georgescu’s supporters’ homes in a clear deterioration of democracy, when the establishment does not like the result voted for. Georgescu’s victory was fueled by voters’ grievances over corruption, inflation, and culture war issues. The top court’s decision to scrap the contest has further complicated the situation.
🇬🇧 In UK, the nationalism seen in France and Germany is also on the rise, a poll by More in Common shows that Nigel Farage’s Reform party has gained 3 percentage points due to the UK’s record-breaking immigration figures. The survey showed Reform at 21%, up from 18% the previous week. Labour dropped 2 points to 26%, and the Conservatives fell 1 point to 28%. The surge in immigration is benefiting Farage’s Reform party, which is gaining ground on the main political parties due to concerns about immigration’s impact on housing and infrastructure.
🇮🇱 The revelations about Israel’s support for jihadist groups like al-Nusra in the Syrian civil war undermines its claim as a bulwark against radical Islam. Despite claiming to fight terrorism, Israel has provided medical care, weapons, funding, and air support to these extremist groups, allowing them to gain a stronger foothold.
🇮🇱 Yesterday, multiple media outlets reported Israeli military incursions into Syrian territory, taking advantage of Assad’s fall. There were also Israeli bombings against Syrian infrastructure and the destruction of Syrian army installations. IDF Tanks Reach Just 25km From Damascus As Netanyahu Declares Golan Is ‘Ours Forever’.
