Asian stock markets went up after good news from Wall Street, where top technology companies helped stocks reach new highs. Japan and South Korea saw their stock indexes rise, and Australian shares also went up. Futures for Hong Kong and the US markets stayed steady. Now, all eyes are on upcoming financial reports and comments from the Federal Reserve (Fed), which will help us understand what might happen with interest rates.
The S&P 500, a big US stock index, hit another record high for the year, while the tech-focused Nasdaq 100 gained over 1%. The US dollar ended its three-day drop after President-elect Donald Trump warned nations in the BRICS group about their economies. Meanwhile, French stocks and bonds faced pressure as the euro dropped by 1.1% due to political issues in the country.
Traders are preparing for a busy week of important economic data, especially Friday’s jobs report, which is expected to show an increase in US hiring after problems from hurricanes and a major strike. On Wednesday, Fed Chair Jerome Powell will speak, and investors are hoping for updates about the job market and inflation.
This week is really important for economic data, according to Tom Essaye from The Sevens Report. If the news is positive, it could lead to a gentle slowdown in the economy and a potential interest rate cut in December. Currently, the S&P 500 increased by 0.2%, while the Nasdaq 100 rose by 1.1%. Tesla Inc. saw a drop in after-hours trading after a judge rejected a huge pay package for its CEO, Elon Musk. The Dow Jones Industrial Average went down by 0.3%, and Treasury yields increased.
In a move aimed at limiting China’s tech advancements, the US announced new restrictions on China’s access to important parts needed for chips and AI. These new rules could impact companies like SK Hynix and Samsung in South Korea, as well as Micron Technology in the US.
Chinese investors are anxious for signs of government help to boost their struggling economy, especially since there was no update after a major meeting of the Communist Party. They are looking forward to the upcoming Politburo gathering, which usually focuses on economic issues.
In Europe, political tensions are rising as Marine Le Pen has threatened to bring down Prime Minister Michel Barnier’s government due to budget disagreements.
Back on Wall Street, the mood is optimistic. Fed’s Waller mentioned he might support a rate cut later this month, which is in contrast to concerns from a year ago when many feared a tough 2024 for the economy and stock market. A lot of people now believe the stock market will end the year strong.
Experts suggest we are in a “Goldilocks” zone, where the economy is good enough to support company earnings but also weak enough to allow for rate cuts. December historically brings good market performance, especially when stocks have done well earlier in the year.
According to Bespoke Investment Group, when the S&P 500 is up more than 20% through November, it usually gains about 1.77% in December.
