MARKET WRAPS

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No major economic or corporate trading updates expected

Opening Call:

European stock futures were muted early Monday, as Asian benchmarks declined amid South Korea's political turmoil and data showing continued demand weakness in China. The dollar and Treasury yields were steady; while oil rose and gold fell.

Equities:

Stock futures were little changed at the start of the week, as markets looked ahead to a week of central bank rate decisions across the globe.

The discussion around the appropriate neutral policy rate for the European Central Bank has started and is expected to gain traction in the coming months, Pimco's Konstantin Veit said. "Given uncertainty around the neutral policy range and still too high domestic inflation ... policy rates are likely to continue the descent towards neutral in a gradual fashion," the portfolio manager said.

Market pricing of a terminal ECB rate of around 1.8% for the second half of 2025 remains broadly consistent with Pimco's estimates for a neutral policy rate for the eurozone, Veit said.

The ECB and Swiss National Bank rate decisions are due Thursday.

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Fitch Ratings has reduced its 2025 growth projections for France following the collapse of Prime Minister Michel Barnier's government just three months after it was formed. Fitch now expects growth next year of 0.9%.

The agency also expects fiscal deficits above 5%, leading to a rise in government debt toward 118.5% of GDP by 2028.

Forex:

A compression in yield differentials between the U.S. and Europe has allowed EUR/USD to recover, seeing the pair briefly push above resistance at 1.0600 on Friday, said David Scutt, market analyst at FOREX.com

Unless there's a big surprise in the U.S. core inflation data on Wednesday, moves in spreads and EUR/USD may be determined by the ECB policy meeting this week, he said.

Bonds:

The two arms of the Fed's monetary policy, its interest-rate setting and its balance sheet, may be working at cross purposes, said Gibson Smith of Smith Capital Investors.

Smith thinks the fed-funds rate is at a restrictive setting, cooling consumer demand by making it more expensive to fund certain types of household borrowing tied to shorter-term Treasury yields.

On the other hand, the Fed's still-large balance sheet is artificially suppressing longer-dated Treasury yields, Smith said, making mortgages--admittedly expensive--more affordable than they otherwise would be.

Energy:

Oil's near-term outlook remains bearish, said XTB MENA senior market analyst Hani Abuagla. There are ongoing concerns about weak demand, particularly from China.

Even with OPEC+ extending its supply cuts until end-2026 and postponed planned output increases until April next year, this is unlikely to offset broader concerns over demand weakness, the analyst added.

Metals:

An improving U.S. dollar outlook has put Commonwealth Bank of Australia's gold-price call of $3,000/troy ounce in 4Q 2025 in doubt, said analyst Vivek Dhar. CBA now forecasts the U.S. dollar to rise 4% from current levels to a peak in 3Q 2025. That's changed from an earlier projection that the greenback would fall 8% by late next year.

"Our bullish outlook over the next 12 months was underpinned by gold's ability to find support in any environment next year, but particularly when the U.S. dollar weakens," said Dhar. But if the U.S. dollar does rise in coming quarters, it's hard to be confident that gold will also continue to gain, he added.

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Recent Chinese stimulus measures have revived demand for steel and thereby for iron ore amid improving home sales in China, ANZ said. The country's iron-ore inventories fell to 130 million tons last week, the lowest level since August, ANZ added.

Investors will pay attention to China's Central Economic Work Conference later this week for details on any fiscal package and other potential supportive measures.


TODAY'S TOP HEADLINES

China Inflation Data Signals Continued Demand Weakness

China's consumer price growth slowed in November, while factory-gate prices improved but stayed in decline, suggesting persistent weak domestic demand despite Beijing's push to revive spending.

China's consumer-price index rose 0.2% from a year last month, compared with the 0.3% gain seen in October, according to data released Monday by the National Bureau of Statistics. Economists polled by The Wall Street Journal had expected a 0.5% increase.


Can Stocks Pull Off a Third Consecutive Year of Big Gains?

Wall Street is grappling with whether another year of robust gains is possible for a stock market that is looking precariously expensive.

The S&P 500 has surged 28% in 2024 and is on pace for back-to-back annual jumps of more than 20% for the first time since a four-year stretch that ended in 1998.


Trump Says He Has No Plan to Remove Powell at Fed

President-elect Donald Trump said he had no plans to remove Federal Reserve Chair Jerome Powell, whose term ends in May 2026.

During an interview on NBC's Meet the Press, Trump fielded a question about whether he planned to replace Powell, who has said he would not leave the job even if asked to do so. "No, I don't think so. I don't see it," Trump answered.


U.S. Scrambles to Shape Post-Assad Syria But Has to Overcome Years of Disengagement

WASHINGTON-The unexpectedly rapid downfall of President Bashar al-Assad in Syria has turned the country's future from a back-burner issue to a suddenly high stakes concern for the departing Biden administration-and almost certainly for Donald Trump.

U.S. officials are scrambling to assess the intentions of the rebel groups that drove Assad into exile, especially Hayat Tahrir al-Sham, which is expected to play a pivotal role in whatever government emerges in Damascus but which is on the U.S. list of foreign terrorist organizations.


The Italian Scion Trying to Keep Jeep Maker Stellantis From Spiraling

John Elkann spent much of this past week in a role that has defined much of his adult life: playing peacemaker.

The scion of Italy's famous Agnelli clan-which spawned Fiat and controls Ferrari-is once again trying to keep the family business from spinning out of control.


Meet the Small AI Chip Maker Now More Valuable Than Intel

Matt Murphy has no interest in running a chip company 10 times the size of his current one. It is the smarter move, and actually the more ambitious one.

Murphy, who has served as chief executive officer of Marvell Technology since 2016, has been among the few names floated as potential replacements for the recently ousted Pat Gelsinger at Intel's corner office. That led to the rare sight of a CEO using his own earnings call to deny that he is on the market.


Apple Tops the List of Best-Managed Companies of 2024

Technology companies continue to hold most of the top spots in the annual Management Top 250 ranking of America's best-run companies, with Apple unseating Microsoft at No. 1.

Rounding out the top four are Nvidia, Microsoft-which came in at No. 1 the previous four years-and Intel.


Write to singaporeeditors@dowjones.com


Expected Major Events for Monday

00:01/UK: Nov KPMG and REC UK Report on Jobs

07:00/GER: 3Q Labour cost index

07:00/DEN: Oct Balance of payments (provisional figures)

07:00/DEN: Oct External trade (provisional figures)

07:00/NOR: Nov PPI

08:00/CZE: Oct Industry, Construction

08:00/CZE: Oct External trade

08:00/CZE: Nov Unemployment data

08:00/SVK: Oct Foreign trade

08:00/SWI: Nov Consumer Sentiment Index

10:00/CRO: Nov PPI

10:00/MLT: Oct Industrial Production Index

10:00/CRO: Oct Foreign Trade

11:00/IRL: Oct Industrial Production and Turnover

15:59/UKR: 3Q GDP

All times in GMT. Powered by Onclusive and Dow Jones.

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This article is a text version of a Wall Street Journal newsletter published earlier today.


(END) Dow Jones Newswires

12-09-24 0016ET