General Market Analysis | 20 December 2023
Santa Rally Drives Stocks Higher – Dow up 0.7%
US stock markets continued their relentless drive higher yesterday as the Santa rally extended further on the back of rate cut optimism. The Dow led the way higher, closing the day up 0.68%, closely followed by the S&P up 0.59% and the Nasdaq which finished up 0.66% to notch up another all time high. The dollar fell against most of the majors with the exception of the UsdJpy which saw a big move north after the BOJ held rates and remained relatively dovish. Gold jumped again in line with the weaker dollar sentiment and Oil rose again as tensions increased on the Red Sea.
Stocks in Buoyant Mood for Christmas
Wall St is in a buoyant mood for Christmas with two of the three major indices hitting fresh record highs yesterday and the third within touching distance of a new peak. The Santa Claus rally normally associated with the run-in to Christmas has been exceptional this year and investors are in no mood for the good times to stop just yet. The latest move has of course been triggered by a more dovish Fed that kept rates on hold last week and despite efforts of some Fed members to warn that the fight against inflation is not yet won, the market is pricing in a 70% chance that we will see a rate cut by March next year. For the moment traders are happy to let the good times roll, but there are some that fear we might see stocks come down hard with the Christmas decorations once the new year rolls in.
More Risk Ahead on the Event Calendar Today
Asian markets are opening on the front foot today as Wall St once again provides positive momentum for global markets. Investor focus will move to China early in the APAC session with the release of their latest Loan Prime rate numbers due out, with traders once again hoping for more stimulus ahead. The European session see’s UK markets on alert with the key CPI numbers due out on the London open, expectation is for a 4.3% print for the year-on-year headline number. The US session promises to be lively again with the CB Consumer Confidence data due out alongside Existing Home Sales data and the Crude Oil Inventories release.