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US stocks lose steam as tech retreats, RBA to decide on rates

Reserve Bank of Australia

Macro Scenes:  

  • Wall Street fell, but small caps: The tech-led rally lost steam after a record month as the stock markets may have been overbought. The US bond yields climbed following the sharpest monthly drop since 2008. At a sector level, Technology and Communication Services were the laggards in the S&P 500. But notably, the small-cap index, the Russel 2000, outperformed, up 0.8%, suggesting peaking rate bets may continue to fuel the stock market rally in December.
  • USD rebounded: The USD index was higher following the rising US government bond yields. The Australian dollar fell the most against the greenback, down 0.8% to finish above key support of 0.66.  
  • Gold swung back: Gold sharply retreated after hitting a record high of above US$2,100 per ounce. The pullback may have been due to profit-taking. However, gold could persist in the uptrend if the US dollar weakens further this month.
  • Bitcoin topped 42,000: Bitcoin benefited from the macro tailwind, coupled with the spot ETF optimism. The world’s largest token soared about 160% this year. The momentum may take it higher to further resistance of above 44,000.
  • Crude oil extended losses: Crude oil prices extended losses for the third-straight trading day after OPEC+ failed to impress traders with promising output cuts. A strengthened USD also added pressure to commodity prices in general.
  • Asian markets to open lower: The Reserve Bank of Australia will decide on its Official Cash Rate (OCR) later today The bank is expected to keep the rate on hold at 4.35% following lighter-than-expected October CPI data. The ASX 200 futures fell 0.42%, the Hang Seng Index futures were flat, and Nikkei futures were down 0.49%.

Chart of the Day:

Bitcoin, daily – The bullish breakout of the key resistance of 40,000 may take the token to test 44,000. However, bearish divergence surfaced with RSI and price moving in opposite trends. This could cause a pullback in the near term. The potential support can be found around 35,000 near the 61.80% Fibonacci retracement.

Source: CMC Markets as of 5 December 2023

Company News:   

  • Spotify (NYSE: SPOT) jumped 8% after the company said it would cut 17% of its workforce. CEO Daniel Ek said the firm had employed too many staff in 2020 and 2021. Spotify reported a 65 million euro in profit for the third quarter. Its shares rallied about 160% this year.
  • Uber (NYSE: UBER) rose more than 5% before cutting gains as the ride-hailing company was selected to join the S&P 500 on 18 December. This means that fund managers will add the stock to their portfolio, which boosts its share price.
  • Evergrande (HKG: 3333) reached an agreement with creditors, which provided relief to the most indebted Chinese developer. A Hong Kong court has adjourned the proceedings to 29 January.

Today’s Agenda:

  • RBA Rate Decision
  • US ISM Services PMI for November
  • JOLTS Job Openings for October