US equity markets had decided to take a little breather on Thursday morning. The Standard & Poor's 500 and the Dow Jones Industrial Average each took a 0.1% dip, while the Nasdaq, not wanting to be left out, slipped by 0.3%. All eyes were on the upcoming November Producer Price Index (PPI) report, scheduled for 8:30 am ET.

And it was a surprise for investors. It took a bigger leap than anticipated in November, rising 0.4% after a 0.3% increase in October. Analysts surveyed by Bloomberg had expected a modest 0.2% uptick. Energy prices inched up by 0.2%, but food prices surged by 3.1%, adding some spice to the mix. Stripping out the volatile food and energy sectors, the core PPI rose by 0.2%, aligning with expectations but slowing from the previous month's 0.3% climb. On a year-over-year basis, the PPI accelerated to 3% in November from 2.6% in October. Meanwhile, the core PPI held steady at 3.4% year-over-year. The higher reading sent futures deeper in the red, as investors fear this could slow down further rate cuts.

This follows the Bureau of Labor Statistics' revelation that consumer inflation rose by 0.3% in November, which was exactly what Wall Street had predicted. 

But wait, there's more! The economic calendar was busier than a squirrel in a nut factory. The weekly jobless claims report was also due at 8:30 am ET, with analysts expecting a decrease to 221,000 claims for the week ending December 7. But there again, claims came in at a higher-than-expected 242,000. 

The European Central Bank (ECB) has once again trimmed interest rates, marking the fourth cut this year. The deposit rate now stands at 3.0%, down from 3.25%. This is part of the ECB's strategy to make borrowing cheaper as inflation nears its target and the eurozone economy struggles. In a nod to potential future cuts, the ECB dropped its previous commitment to keep rates "sufficiently restrictive." Additionally, the ECB announced it would cease buying bonds under its Pandemic Emergency Purchase Programme this month.

Over in Switzerland, the Swiss National Bank (SNB) caught everyone off guard by slashing its key interest rate by 50 basis points to 0.5%, down from 1.0%. This move responds to a cooling inflation rate, which fell from 1.1% in August to 0.7% in November. 

Brazil's central bank, dancing to a different rhythm, hiked its key rate to 12.25% amid budget blues and inflationary issues, with the real's 23% tumble against the dollar setting the stage for more rate rises.

The Nasdaq 100 soared 1.85% yesterday, buoyed by the likes of Nvidia and Broadcom, and supercharged by Tesla's electric 6% surge, crowning it the darling of the Trump stock rally. Musk, the Silicon Valley sorcerer, now boasts a treasure chest of $447 billion, enough to make it rain $50 bills across the global populace. But don't expect him to empty his coffers; he's likely got an ace up his sleeve for any financial backflips needed.

While the Nasdaq parties like it's 2099, the Dow Jones took a modest 0.2% stumble, tripped up by UnitedHealth's exit after a bill threatened to splinter its profitable parts. The rest of the market is bathing in the neon glow of tech giants, leaving Wall Street's crystal ball gazers scratching their heads as their bets on small caps and neglected stocks are bulldozed by the Nasdaq's juggernaut.

The Nasdaq Composite, with its broader equity embrace, vaulted past the 20,000-point milestone, eyeing a 33.5% leap for 2024. Meanwhile, across the Atlantic, Europe marches to a more stately drumbeat, with the Stoxx Europe 600 up a modest 8.5% since the year's dawn.

Yesterday's US inflation data played the perfect opening act for next week's Fed rate cut show, with prices rising predictably. 

In a geopolitical plot twist, Trump has penciled in Xi Jinping for his inauguration guest list, while China braces to reveal its economic strategy, countering a yuan dip with a fixed-rate firewall after rumors of a deliberate devaluation to win a trade war edge.

Despite the rally in riskier assets, traditional safe havens like gold and bitcoin glittered with gains, and oil prices bubbled up on OPEC+'s production cut harmony.

This morning, Asia-Pacific markets mostly rode the US wave of green, with India and Australia taking a breather. European indicators, ever the cautious understudies, are waiting in the wings.

Economic highlights of the day

The SNB and ECB rate decisions will be the focus of attention, as well as US producer prices and the latest weekly employment figures. See the full calendar here.

  • Dollar: EUR 0.9541 GBP 0.7858
  • Ounce of gold: USD 2,702
  • Brent crude: USD 73.40
  • US 10-year: 4.29
  • Bitcoin: USD 100,703

In corporate news:

  • Adobe fell 9% post-trade after its quarterly results.
  • Nordson lost 5.4% post-trading after its quarterly results.
  • A new bill in Congress aims to tighten the rules governing healthcare managers, including subsidiaries of Cigna, UnitedHealth and CVS Health, which are struggling on Wall Street.
  • Hershey‘s main shareholder is reportedly rejecting Mondelez’s offer.
  • Apple is working on an AI chip with Broadcom. The group is also updating its iPhone with ChatGPT's generative AI for six English-speaking countries.
  • Microsoft is to take an $800m charge on the termination of General Motors' Cruise programme.
  • Synopsys is proposing to sell two assets to obtain the green light from the EU for its $35 billion acquisition ofAnsys.
  • Albertsons put an end to its $25 billion merger with Kroger following court rulings against the combination. The group is suing Kroger for damages.
  • Google launched Gemini 2.0, a new artificial intelligence model designed to create intelligent agents.
  • Nvidia is stepping up recruitment in China to focus on AI-driven cars, according to Bloomberg.
  • CGI merges with Daugherty to expand its presence in the US.

Today's main earnings reports: Broadcom, Costco Wholesale Corporation, Ciena…

Analyst recommendations:

  • American Electric Power Company, Inc.: JP Morgan downgrades to neutral from overweight with a target price reduced from USD 109 to USD 102.
  • Caci International Inc: Goldman Sachs downgrades to sell from neutral with a target price reduced from USD 540 to USD 373.
  • Charter Communications, Inc.: KeyBanc Capital Markets upgrades to overweight from sector weight with a target price of USD 500.
  • Comcast Corporation: Seaport Global upgrades to buy from neutral with a target price of USD 46.
  • Equifax Inc.: Morgan Stanley upgrades to overweight from equal weight with a price target raised from USD 275 to USD 320.
  • Flowserve Corporation: Goldman Sachs upgrades to neutral from sell with a price target raised from USD 55 to USD 69.
  • General Dynamics Corporation: Goldman Sachs downgrades to sell from neutral with a target price reduced from USD 283 to USD 245.
  • Keurig Dr Pepper Inc.: Deutsche Bank upgrades to buy from hold with a target price raised from USD 37 to USD 39.
  • Leidos Holdings, Inc.: Goldman Sachs downgrades to neutral from buy with a target price reduced from USD 228 to USD 153.
  • Marsh & Mclennan Companies: RBC Capital upgrades to outperform from sector perform with a target price raised from USD 242 to USD 250.
  • Mondelez International, Inc.: Deutsche Bank downgrades to hold from buy with a target price reduced from USD 78 to USD 67.
  • Pepsico, Inc.: Deutsche Bank upgrades to buy from hold with a target price raised from USD 179 to USD 184.
  • T-Mobile Us, Inc.: KeyBanc Capital Markets downgrades to sector weight from overweight.
  • The Coca-Cola Company: Deutsche Bank upgrades to buy from hold with a price target raised from USD 68 to USD 70.
  • Xcel Energy Inc.: JP Morgan upgrades to overweight from neutral with a price target raised from USD 69 to USD 80.
  • Jet2 Plc: Redburn Atlantic downgrades to neutral from buy with a target price reduced from GBX 1787 to GBX 1750.
  • Pennon Group Plc: Barclays upgrades to overweight from equalweight with a price target raised from GBP 6.90 to GBP 8.
  • Rio Tinto Plc: Morgan Stanley maintains its overweight rating with a price target raised from GBX 6170 to GBX 6280.
  • United Utilities: Barclays upgrades to equalweight from underweight with a target price raised from GBP 9.75 to GBP 12.