European Midday Briefing : Stocks Hover in Thin Trading

MARKET WRAPS

Stocks:

European stocks struggled for momentum in thin trading on Thursday as investors continued to bet global inflation will ease and the Federal Reserve will cut interest rates in 2024.

However, some analysts were wary that investors may be a bit optimistic about the speed of Fed easing.

"If global equity markets have one Achilles Heel going into January 2024, it is the expectation that the Fed will be methodically and consistently cutting interest rates throughout the year," DataTrek Research said.

But that is not necessarily a bearish argument for stocks, it added, especially if economic growth remains strong enough that corporate earnings grow by seven to 10% in 2024.

"Against that backdrop, the Fed will be able go slow on rate cuts. While that might leave rates higher than they would otherwise have been, earnings growth should buoy investor confidence and allow valuations to expand modestly next year," DataTrek said.

U.S. Markets:

Stock futures pointed to a mixed start, a day after the Dow Jones Industrial Average closed at an all-time high and the S&P 500 inched toward its own record.

Economic updates set for release include the weekly initial jobless benefit claims report, November readings of the trade balance in goods, retail and wholesale inventories, and pending home sales for November.

Stocks to Watch

Apple closed with a slight gain on Wednesday, putting an end to a four-session losing streak. Apple was up 0.3% premarket.

Microsoft rose 0.2%. Analysts at Wedbush raised their price target on the stock to $450 from $425 and maintained an Outperform on the shares.

Energy:

Oil prices inched higher as a weaker dollar provided support for commodities backed by the greenback.

Trading remained thin during the holiday period, with worries around the situation in the Middle East adding further support to prices.

Metals:

Metal prices traded at multimonth highs, fuelled by a weaker dollar, though prices in thin festive trading on Thursday morning were slightly lower.

Despite the slight move lower, copper prices were still trading at their highest level since July 31, while the continuous gold contract hit an all-time high of $2,093.10 an ounce on Wednesday. Gold prices in London also hit a record level on Wednesday at $2069.40 an ounce, according to the London Bullion Market Association.

"Gold continues to be the safe-haven of choice in periods of uncertainty and high volatility," LBMA said.

EMEA HEADLINES

Singapore Fines Credit Suisse for Bankers' Misconduct

Singapore imposed a penalty of 3.9 million Singapore dollars (US$3.0 million) on Credit Suisse for failing to prevent or detect misconduct by its relationship managers.

Credit Suisse bankers in Singapore had provided customers with inaccurate or incomplete post-trade disclosures, which led to clients being charged spreads above bilaterally agreed rates for 39 over-the-counter bond transactions, the Monetary Authority of Singapore said in a statement on Thursday.

Why Turkey Could Be the Turnaround Story in Emerging Markets Next Year

Investors are starting to believe in the Turkey U-turn story, a little.

Flows into the country's equity markets turned positive in November and hit more than $1 billion a week in December, according to researcher GlobalSource Partners. Yields on benchmark 10-year dollar bonds have dropped 200 basis points in the past two months, to about 7%. Central bank currency reserves have swelled 40% from a trough this summer.

Inside Saudi Arabia's $3 Trillion Plan to Move Past Oil

Saudi Arabia has embarked on a grand experiment-a Middle East version of "if you build it, they will come."

Facing an existential threat to oil, the country's lifeblood, Saudi Arabia is spending more than $3.2 trillion to transform its economy by 2030. While oil remains essential, the country is trying to fashion itself as a high-tech hub and destination for global business and leisure, preparing for the end of the fossil fuel era.

GLOBAL NEWS

The Dominant Dollar Faces a Backlash in the Oil Market

Some major emerging economies are dabbling in trading commodities without using the dollar, as they seek to reduce their reliance on the U.S. currency.

Faced with U.S. sanctions and other restrictions, Russia and Iran in particular have stepped up oil sales in alternative currencies, and have found buyers in China, India and elsewhere that are happy to buy these exports, often at lower prices.

Santa Might Have One Last Gift for Investors

It looks as though Santa hasn't left town just yet.

The S&P 500 is poised to cap a roaring comeback this year with a Santa Claus rally, or the gain that stocks often get heading into the new year. That would mark the eighth straight year stocks got a Santa bump, which hasn't happened since the eight-year winning streak ending in 1976, according to Dow Jones Market Data.

2024 Could Be a Winner for Oil, Gas, and Gold

Natasha Kaneva, the head of global commodities strategy at J.P. Morgan, correctly predicted the decline in oil demand growth this winter that caused the commodity price to drop sharply. Prices could rebound in 2024 as demand rises again and the Organization of the Petroleum Exporting Countries holds back supply. But Kaneva thinks it is worth peering a little deeper into the well.

The energy market's biggest players are at a crossroads. After posting record earnings in 2022 and seeing their stocks soar, most oil companies trailed the market by double digits in 2023.

China Wants to Move Ahead, but Xi Jinping Is Looking to the Past

A song called "Tomorrow Will Be Better" became a sensation in mainland China in the 1980s, when the nation was emerging from the poverty and turmoil of Mao Zedong's rule.

Its inspirational lyrics, which exhorted listeners to "look upward for the wings in the sky," came to represent a generation that was starting to believe in a brighter future.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

12-28-23 0552ET