Global stock markets presented a mixed picture on Thursday as the US stock market observed a National Day of Mourning for former President Jimmy Carter. This closure created a ripple effect, influencing market behavior across continents. Concurrently, renewed concerns about potential trade friction under the incoming Trump administration and key economic data releases further contributed to market volatility.
Table Content:
London Buoyed by Weak Pound, Asian Markets Mostly Down
London’s FTSE 100 experienced a significant surge, climbing 0.8% to 8,319.69. This rise was largely attributed to the declining value of the British pound against the US dollar, sparked by anxieties surrounding the UK’s economic outlook and government finances. A weaker pound often benefits UK exporters by making their goods more competitive internationally, thus boosting their stock prices.
In contrast, Asian markets predominantly trended downwards as caution resurfaced regarding the possibility of escalating trade disputes following President-elect Donald Trump’s inauguration. Japan’s Nikkei 225 index fell 0.9% to 39,605.09 after the country reported robust wage growth for November, a factor that could potentially lead the central bank to raise interest rates. Hong Kong’s Hang Seng index dipped 0.2% to 19,240.89, while the Shanghai Composite index in mainland China lost 0.6% to 3,211.39. This decline followed China’s release of economic data showing a 0.1% year-on-year increase in the consumer price index for December and a 2.3% drop in wholesale prices, indicating continued sluggish demand in the world’s second-largest economy.
Elsewhere in the Asia-Pacific region, Australia’s S&P/ASX 200 retreated 0.2% to 8,329.20. South Korea’s Kospi edged up marginally by less than 0.1% to 2,521.90, despite strong performance in the technology and automotive sectors. Taiwan’s Taiex experienced a sharper decline of 1.4%, and India’s Sensex was down 0.7%. Thailand’s SET index also saw a significant drop of 1.8%.
“What If” Trading Landscape Dominated by Trump Uncertainty
Stephen Innes of SPI Asset Management characterized the current market environment as an unpredictable “what if” trading landscape shaped by the uncertainties surrounding Trump’s presidency. Initial optimism about potential tax cuts has been tempered by growing concerns over proposed tariffs and unconventional geopolitical ambitions.
In the US, the bond market remained operational until its recommended closure at 2 p.m. Eastern time. Yields remained relatively stable after a recent surge that had negatively impacted the stock market. The yield on the 10-year Treasury hovered around 4.69%, having surpassed 4.70% the previous day, nearing its highest point since April. This represents a significant increase from the 3.65% level seen in September. Rising yields exert downward pressure on stocks by increasing borrowing costs for companies and households, and by diverting some investors from stocks to bonds. The recent climb in yields has been driven by better-than-expected US economic reports and concerns about potential inflationary pressures stemming from Trump’s preferred tariff, tax, and other policies.
Focus Shifts to US Jobs Report
Market attention is now firmly fixed on Friday’s release of the latest monthly US jobs report by the Labor Department. Investors hope the report will strike a balance – demonstrating sufficient strength to alleviate recession fears but not so much as to deter the Federal Reserve from continuing to lower interest rates.
Meanwhile, oil prices saw modest gains, with US benchmark crude oil rising 0.8% to settle at $73.92 per barrel and Brent crude, the international benchmark, increasing 1% to $76.92 per barrel.
Conclusion: Market Volatility Persists Amidst Uncertainty
Global markets remain in a state of flux, responding to a confluence of factors including the US market closure, trade anxieties, and evolving economic data. The upcoming US jobs report will be a crucial indicator, potentially influencing both market sentiment and future monetary policy decisions. As investors grapple with the uncertainties surrounding the Trump administration and global economic trends, market volatility is likely to persist.
