Global stock markets had a mixed week as investor focus returned to monetary policy
The prospect of further rate cuts in China provided a boost to stocks in Asia, while the US Federal Reserve is still expected to cut borrowing costs in the United States next week, despite inflation remaining stubbornly above the official 2% target. Central banks in the eurozone, Switzerland and Canada have cut rates in recent days, although disappointing economic data from the US and Europe weighed on share prices towards the end of the week.
Elsewhere, oil prices have remained volatile: geopolitical concerns in the Middle East following the fall of the Assad regime in Syria pushed up prices on Monday, but forecasts of surplus production in the months ahead helped to partly redress the balance on Wednesday and Thursday.
United States
On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 1.6% down for the week so far, with the S&P 500 losing 0.6%. The week started positively after one of the US’s biggest software companies reported positive results from a trial of quantum computing technology. Investors reacted calmly on Wednesday to news of the slight uptick in inflation in October, but share prices declined on Thursday. This was in response to fresh data that showed an unexpected increase in producer price costs in November alongside a rise in unemployment claims to their highest level in two months.
UK
In the UK, the FTSE 100 closed on Thursday 0.1% up for the week so far with blue-chip stocks supported by rising crude prices. Economic data in Britain remains underwhelming, however, with a sharp drop in new job vacancies reported in November, as well as further falls in business confidence. In the water industry there were fresh signs of distress at one of the UK’s biggest utilities, while Bank of England officials warned of potential instability across the financial system in 2025.
Europe
In Frankfurt, the DAX index ended Thursday’s session up 0.2% for the week, while France’s CAC 40 fell 0.1%. The European Central Bank cut interest rates by 0.25% on Thursday as expected. However, a number of officials were reported to have pushed for a larger reduction, perhaps in recognition of the economic difficulties facing a number of European nations. Analysts said they expected growth in France to stagnate in the final quarter of 2024, while forecasts for 2025 suggested further headwinds for the German economy.
Asia
In Asia, the Hang Seng index in Hong Kong gained 2.7% as disappointing inflation figures at the start of the week made it more likely that the Chinese government would step up its stimulus efforts. Indeed, significant gains were recorded across China’s markets on Tuesday after officials indicated they would relax monetary policy and take a more proactive approach to fiscal policy in 2025. Japan’s Nikkei 225 index of leading shares, meanwhile, advanced 2% thanks to the positive news out of China and the near certainty of US rate cuts next week. There were some concerns around rising producer prices and waning business confidence, however, while another Bank of Japan interest rate hike before the turn of the year remains a possibility.
December 6 | December 12 | Change (%) | |
|---|---|---|---|
FTSE 100 | 8306.5 | 8311.8 | 0.1 |
FTSE 250 | 21044.0 | 20949.0 | -0.5 |
S&P 500 | 6090.3 | 6051.3 | -0.6 |
Dow Jones | 44642.5 | 43914.1 | -1.6 |
DAX | 20384.6 | 20426.3 | 0.2 |
CAC 40 | 7430.4 | 7420.9 | -0.1 |
ACWI | 873.7 | 868.9 | -0.6 |
Hong Kong Hang Seng | 19867.2 | 20397.1 | 2.7 |
Nikkei 225 | 39048.7 | 39849.1 | 2.0 |
Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 12 December 2024.
