Monday, December 9, 2024: Analysis of Key Events and Reports
Macroeconomic Events
02:50 (MSK): Japan – Q3 2024 GDP
Japan’s GDP data for Q3 2024 will shed light on the state of the world’s third-largest economy. A growth rate of 0.2% compared to the previous quarter, while positive, represents a slowdown from the revised 0.5% growth in Q2. This may signal challenges in Japan’s economic recovery, potentially impacting the yen and Asian stock markets. Any unexpected deviations could create ripple effects on global markets.
04:30 (MSK): China – Consumer Price Index (CPI) for November
China's CPI will provide insights into inflation trends and domestic demand in the world’s second-largest economy. A decrease in CPI suggests weakened internal consumption, which could impact global commodity demand. Any unexpected inflationary pressures may prompt changes in the People’s Bank of China’s monetary policy, affecting financial markets worldwide.
19:00 (MSK): USA – Consumer Inflation Expectations for November
The New York Federal Reserve’s report on consumer inflation expectations will indicate how U.S. households view future price growth. Elevated expectations may increase market speculation of further Federal Reserve interest rate hikes, potentially strengthening the dollar and influencing bond yields.
Central Bank Speaker: Ramsden (UK)
Dave Ramsden, Deputy Governor of the Bank of England, is expected to address topics related to the UK’s monetary policy. His comments may offer hints about potential policy adjustments amid ongoing economic challenges.
Impact on Europe and the United States
-
Europe:
The slowdown in Japan’s GDP growth and weakening inflation in China could result in reduced global demand for European exports, particularly in industrial machinery and luxury goods. Additionally, subdued activity in Asia might lead to increased pressure on the European Central Bank (ECB) to maintain a dovish stance to support the Eurozone’s recovery. -
United States:
Inflation expectations in the U.S. remain a critical factor for Federal Reserve policy. If consumers anticipate rising inflation, this could bolster expectations for further interest rate hikes. Meanwhile, China’s lower CPI may ease inflationary pressures in U.S. import costs, benefiting American consumers and manufacturers.
Impact on Investors
Investors should pay close attention to the following factors:
- Currency Markets: The yen’s performance following Japan’s GDP data and the dollar’s response to U.S. inflation expectations will be key areas of focus. Any surprises could lead to significant volatility.
- Commodity Markets: Weaker inflation in China may suppress global commodity demand, particularly for metals and energy products. Investors in these markets should consider the potential for reduced pricing pressure.
- Interest Rates and Bonds: Elevated U.S. inflation expectations may signal continued Federal Reserve tightening, which could increase yields on U.S. Treasury bonds and impact borrowing costs globally.
Diversification and a cautious approach are recommended as global market conditions evolve.
Key Corporate Reports
Pre-market:
- Hello Group Inc ADR (MOMO): The company is expected to post its quarterly financial results at 11:30 (MSK). Analysts forecast a potential decline of 12.1%, driven by weaker user engagement metrics and heightened competition in China’s tech sector.
After-market:
- C3.ai Inc Cl A (AI): Scheduled to release its earnings at 00:05 (MSK). Anticipated to report a 24.3% surge in revenue, driven by rising adoption of AI solutions across industries. However, profitability remains under scrutiny due to high operating expenses.
- Oracle Corp (ORCL): At 00:05 (MSK), Oracle will announce its quarterly results, with an expected increase of 9.1%. Cloud services continue to drive growth, although investors will be keen on updates regarding its AI-focused offerings.
- Planet Labs PBC (PL): The report is set for 00:05 (MSK), with projected revenue growth of 13.7%. Investors will watch for updates on the company's subscription model and customer retention rates.
- Toll Brothers Inc (TOL): At 00:30 (MSK), the homebuilder will release its earnings. Analysts expect a 4.6% increase in revenue due to strong demand for luxury housing. However, the market will focus on guidance amidst rising interest rates.
My Commentary on Monday’s Events
As the founder of Open Oil Market, I believe that today's macroeconomic data reflects critical global economic trends. Japan’s GDP growth slowdown highlights ongoing challenges in Asia’s recovery, which could influence global trade dynamics. Meanwhile, China’s lower CPI signals subdued domestic demand, potentially impacting global commodity flows.
For Europe, these developments emphasize the need for resilience amid shifting global demand. The ECB may face increased pressure to maintain accommodative policies to support growth. In the U.S., inflation expectations will remain a central theme, influencing Federal Reserve decisions and broader market sentiment.
Corporate earnings from major players like Oracle and C3.ai will set the tone for global equity markets. Strong performance could instill confidence, while disappointing results may reinforce concerns over economic fragility. At Open Oil Market, we focus on helping our clients navigate these changes by staying informed and adaptable to global market dynamics.
Financial Market Overview for December 9, 2024
Indices and Futures
Commodities
Cryptocurrencies
Data as of December 9, 2024.
Japan: GDP Report for Q3 2024
Japan's economy grew by 0.3% quarter-on-quarter in Q3 2024, exceeding analyst expectations (+0.2%) but falling short of the previous figure (+0.5%). Annual GDP growth was reported at 1.2%, outperforming forecasts (+1%) and significantly surpassing the prior year’s performance (+0.9%).
What this means:
The data indicates stable economic recovery in Japan despite global challenges. The stronger annual growth suggests a rebound in consumer demand and improved external economic conditions, crucial for an export-driven economy. However, the slowdown in quarterly growth may reflect the impact of inflation and weak domestic demand.
Impact:
China's Consumer Price Index (CPI) for November showed a sharper decline than expected:
This marks the lowest inflation rate in five months. Prices fell faster than anticipated on both a monthly and yearly basis.
Low inflation reflects weak domestic demand, potentially due to slowing consumer activity and deflationary pressures in certain sectors. It also highlights challenges in economic recovery post-pandemic and decreasing demand for export goods.
Chinese and Hong Kong Stocks Surge Following Politburo Statements
On December 11–12, China will hold its Central Economic Work Conference to discuss economic growth targets through 2025 and stimulus plans.
What this means:
The Politburo's remarks have bolstered investor confidence in the government’s commitment to supporting the economy. The focus on stimulus and economic reforms drives market gains, particularly in the tech sector, which is highly responsive to state support.
Impact:
Record NEV Sales in China for November
Retail sales of new energy vehicles (NEV) in China reached a record 1.268 million units in November 2024, up by 5.9% month-on-month and 50.5% year-on-year, according to the China Passenger Car Association (CPCA). This marks the fourth consecutive month that NEV sales in China have exceeded 1 million vehicles.
What this means:
China remains the global leader in the production and sale of NEVs. The consistent sales growth reflects strong consumer demand and effective government support policies. Infrastructure expansion for charging stations and subsidies for NEV purchases continue to drive market growth, promoting eco-friendly transportation.
Impact:
Global Chip Sales Surge by 22.1% in October to $56.9 Billion
Global semiconductor sales reached $56.9 billion in October 2024, marking a 22.1% increase compared to the same period last year, according to the Semiconductor Industry Association (SIA).
What this means:
The surge in semiconductor sales reflects a strong recovery in global demand driven by advancements in technologies like artificial intelligence, the Internet of Things, and 5G. Additionally, the growing adoption of electric vehicles, servers, and data storage devices is fueling this trend.
Impact:
The global semiconductor market continues to exhibit robust growth, bolstered by rapid digitalization and the global transition to future-forward technologies.
Tesla Sets Record Sales in China in November 2024
Tesla sold 73,490 vehicles in China in November 2024, marking the strongest month of the year. However, exports from the Giga Shanghai plant fell to 5,366 vehicles, the lowest level since June 2022, according to data from the China Passenger Car Association (CPCA).
What this means:
The record domestic sales highlight strong demand for Tesla vehicles in China, likely driven by popular models like the Model Y and Model 3, along with an effective pricing strategy. Meanwhile, the drop in exports suggests the company is prioritizing local market fulfillment.
Impact:
Outlook:
Tesla’s continued expansion in China, including investments in charging infrastructure and a broader vehicle lineup, positions the company for sustained growth. If domestic demand remains high, Tesla may need to recalibrate its export strategies to balance international supply.
Super Micro Receives Nasdaq Listing Extension, Shares Rise 8%
Super Micro Computer announced that Nasdaq has granted the company an extension to comply with its reporting requirements. The new deadline allows Super Micro until February 2025 to resolve its issues and maintain its listing. Following the announcement, Super Micro's shares rose by 8%.
What this means:
The extension provides Super Micro with an opportunity to retain its public company status, rebuild investor confidence, and avoid the potential reputational and financial impacts of delisting. Nasdaq’s decision demonstrates a willingness to support the company in resolving its challenges.
Impact:
Record NEV Sales in China for November
🇨🇳 Retail sales of new energy vehicles (NEV) in China reached a new record in November 2024, totaling 1.268 million units. This represents a 5.9% increase month-on-month and a 50.5% rise year-on-year, according to the China Passenger Car Association (CPCA). It marks the fourth consecutive month with NEV sales exceeding 1 million vehicles.
What this means:
The record sales highlight the rapid growth of the electric vehicle market in China, driven by government support, investments in charging infrastructure, and subsidies. The NEV segment continues to gain popularity as demand for eco-friendly transportation rises.
Impact:
Citi Adjusts Forecast for December Fed Rate Cut
Analysts at Citigroup Inc. have revised their expectations regarding the Federal Reserve's December interest rate decision. Previously anticipating a 0.5% cut, they now expect a 0.25% reduction.
Implications:
Cautious Fed Approach: This adjustment suggests that the Fed may opt for a more gradual easing of monetary policy, considering current economic conditions and inflationary risks.
Market Reaction: The reduced expected rate cut could lead to a reassessment of investment strategies, particularly in interest-sensitive sectors like real estate and high-yield bonds.
Impact:
Financial Markets: A smaller rate cut may limit the rise in stock and bond prices as investors adjust their expectations regarding borrowing costs and asset yields.
Lending and Consumption: With a modest rate reduction, consumer and business loans remain relatively expensive, potentially restraining growth in consumer spending and investments.
Inflation: A gradual rate cut allows the Fed to manage inflationary pressures, preventing economic overheating.
Outlook:
The Fed's December decision will hinge on incoming economic data, including inflation, employment, and GDP growth figures. Investors should closely monitor Fed communications and macroeconomic indicators to adjust their strategies in line with evolving expectations.
El Salvador Reconsiders Bitcoin Policy to Secure IMF Loan
El Salvador is nearing an agreement with the International Monetary Fund (IMF) for a $1.3 billion loan. To facilitate this, the country plans to revise its stance on Bitcoin, which was adopted as legal tender in 2021. Under the agreement, El Salvador will remove the legal requirement for businesses to accept Bitcoin, making its use voluntary. Additionally, the government commits to reducing the budget deficit by 3.5% of GDP over three years and increasing reserves from $11 billion to $15 billion.
Implications:
IMF Collaboration: Revising Bitcoin policy reflects El Salvador's intent to strengthen relations with international financial institutions and ensure economic stability.
Economic Stability: Reducing the budget deficit and increasing reserves aim to fortify the country's financial system.
Impact:
El Salvador's Economy: Securing the IMF loan could attract additional funds from the World Bank and the Inter-American Development Bank, promoting economic growth.
Cryptocurrency Market: Making Bitcoin acceptance voluntary may influence its adoption in other countries and cause fluctuations in its value.
International Relations: Engaging with the IMF and adjusting Bitcoin policy may enhance El Salvador's relations with other nations and international organizations.
Note: El Salvador's decision could serve as a precedent for other countries considering the integration of cryptocurrencies into their financial systems.
Nasdaq Golden Dragon China Index Posts Record Daily Gain
The Nasdaq Golden Dragon China Index, which tracks Chinese companies listed on U.S. exchanges, surged by 7% in a single day, marking its strongest daily gain in a year.
Reasons for the Increase:
What This Means:
Impact:
Note: Investors should remain mindful of risks related to geopolitical tensions and regulatory changes when making investment decisions.