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20 December 2024

Daily Navigator

Key highlights

Equities: US equities failed to recover from the selloff on Wednesday

US equities closed with modest losses on Thursday. Stocks failed to hold on to the earlier gains recovered from the sharp selloff on Wednesday and closed at near day low. The S&P 500 and the Nasdaq Composite both declined around 0.1%, while the Dow recorded a slight gain, breaking its longest losing streak of ten straight days of declines since 1978. European stocks also fell; the STOXX 600 Index dropped 1.5%, recording its largest single-day drop since early November. In Asia, echoing a fall in US equities on Wednesday after the Fed’s hawkish rate cut, most of the major equity markets retreated. China onshore CSI 300 was the key benchmark that rose on Thursday, while the Hang Seng index edged lower by 0.6%. Japan equities recovered from the early sell-off after the BoJ’s latest decision, with the Nikkei 225 index down 0.2%. South Korea led the losses in the region, with the KOSPI index dropping 1.8%, following the South Korea Finance Minister’s warning of short-term market volatility.

Bonds/Macro: US leading index rose for the first time since February 2022

The US leading index rose by 0.3% m/m in November, marking its first increase since February 2022. The final print of US Q3 GDP growth was also revised up to 3.1% from the original estimate of 2.8%, reflective of stronger consumer spending and exports. US existing home sales increased 4.8% y/y in November, posting the strongest y/y growth since June 2021. The next focus is the Core PCE price index due tonight. US government bond yields edged higher, with the 10-year yield rising by 5 bps to 4.56%. The Bank of Japan (BoJ) and the Bank of England (BoE) left the policy rate unchanged at 0.25% and 4.75%, respectively in their latest policy meetings, as expected by the market.

FX: USD/JPY rose after BoJ dovish hold

USDJPY rose 1.7%, after the BoJ kept its benchmark rate at around 0.25% and signaled little urgency to raise rates for now. Governor Ueda noted the need to watch the next spring wage negotiations to decide on future direction. Technically the pair is overbought; the major resistance remains at 161.8. GBP/USD fell 0.6% as the BoE held rates unchanged but indicated plan to continue to gradually ease. The focus now shifts to the UK retail data today. A firm break below 1.2440 could pave way to test 1.2300. The USD index (DXY) rose 0.4% amid the stronger US third quarter GDP and lower US jobless claims, reinforcing the Fed’s cautious approach to easing. The US PCE inflation will be closely watched today. The DXY index is likely to test its resistance at 108.9. Meanwhile, we have closed the bullish AUD/CAD position as it is close to our neutral target during intraday trading, and also closed the bearish EUR/CHF call to capture profit.

Chart of the day

US leading index rose in November for the first time since February 2022

Source: Bloomberg, Standard Chartered

Yesterday’s market moves

Summary table

Technical charts

Source: Bloomberg, Standard Chartered

Technical charts (cont.)

Source: Bloomberg, Standard Chartered

Technical charts (cont.)

Source: Bloomberg, Standard Chartered
Our 12-month asset class views at a glance
Economic and market calendar
The next support for the S&P 500 is at 5,798

Technical indicators for key markets as of 19 December close

Market diversity remains healthy across most asset classes

Our proprietary market diversity indicators as of 19 December close

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