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Stocks gain as inflation fuels Fed’s pivot bets ahead of rate decision

Macro Scenes:  

  • Wall Street hit year-highs: The US stock markets extended gains following the November CPI data, which was in line with expectations. The headline inflation slightly fell to 3.1%, while core CPI stayed at 4% year on year. Three major averages posted a four-day winning streak, reaching the respective new year-highs. The fear gauge, the CBOE VIX, fell 4% to just above 12.
  • Oil and gas tumbled: Crude prices tumbled more than 3% as oversupply concerns continued to pressure the demand outlook. The US Energy Information Administration (EIA) reduced its 2024 forecast for oil prices by more than 11%.
  • Fed’s decision looms: The Fed is set to decide on the interest rate tomorrow. While markets widely expect another rate hike pause and a possible rate cut in May 2024, the Fed may not satisfy investors with a dovish tone. It will most likely keep its stance for higher for longer rates.
  • Chinese stock markets stabilized: The Chinese stock markets eased losses following the Communist Party’s annual economic work conference. The Chinese government laid out a 9-point plan, including focusing on technology innovation and boosting domestic demands.
  • Asian markets to open higher: The ASX 200 futures rose 0.05%, the Hang Seng Index futures climbed 0.07%, and Nikkei 225 futures were up 0.30%.

Chart of the Day:

ASX 200 (Cash), daily – The ASX 200 has formed a potential head-and-shoulder bottom reversal pattern since October. It has bullishly broken up the neckline level of 7,130, heading to further potential resistance of 7,300 at the 23.6% retracement of Fibonacci. Its near-term support can also be the neckline level of about 7,130.

Source: CMC Markets as of 13 December 2023

Company News:    

  • Netflix (NDX: NFLX) released the global half-year viewer data for the first time. The data tells how many views each of its films receive. “Night Agent was the most-watched show globally in 1H 2023, followed by Season 2 of Ginny & Georgia.
  • Oracle (NYSE: ORCL) plunged 12% due to the disappointing growth of its cloud division, Oracle Cloud Infrastructure. The software company missed revenue expectations while slightly beating the earnings per share estimate.  

Today’s Agenda:

  • Japan’s Q4 Tankan Manufacturing and Non-Manufacturing Index
  • US PPI for November

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