Different Economies, Different Interest Rate Outlook

In the week gone by, global stock markets witnessed a mixed performance amid various factors. 2024 witnessed significant events: a resurgence of a prominent political figure, the rise of artificial intelligence, and a rebound in cryptocurrency values, particularly Bitcoin. In this blog, we’ll know in detail what happened last week (December 23, 2024 to December 27, 2024) all across the globe.

Dow Jones Performance

The Dow Jones Industrial Average closed marginally higher, extending its winning streak despite subdued trading volume and rising US Treasury yields impacting some large tech companies.

However, recent stock market gains have slowed as investors assess the Federal Reserve’s less optimistic outlook for interest rate cuts in 2025, following the November election rally. The “Santa Claus rally” period, known for low liquidity and year-end investing activities, is currently underway.

Europe and Japan Interest Outlook

The European market experienced significant transformation, innovation, and resilience this year. The Bank of England maintained its interest rate at 4.75%, despite rising inflation. While flash PMI figures showed slight production improvements, employment declined in both the eurozone and the UK.

Europe is expected to face a challenging year ahead, with its financial markets already impacted by concerns over US trade policies, political instability, and weak economic growth.

The European Central Bank cut rates for the fourth time this year, and German politics remain uncertain following the collapse of the ruling coalition. In Japan, the Bank of Japan acknowledged the need to potentially raise interest rates but emphasized the need for caution given the uncertain economic outlook.

FII Turned Net Sellers in India

Back at home, the Indian stock market experienced volatility driven by both global and domestic factors. Foreign investors were net sellers, while domestic institutional investments provided support.

The Finance Ministry projected a 6.5% growth rate for the fiscal year 2024-2025, despite global uncertainties. The Indian rupee depreciated to a record low against the US dollar, prompting intervention by the Reserve Bank of India.

While the Indian economy demonstrates strong growth prospects, challenges like currency depreciation and global economic uncertainties require continued policy attention. Moving forward, Q3 earnings will be crucial for market direction.

Commodity Market Slightly Up

On the commodity market front, in the week gone by, commodities witnessed a marginal upside due to thin trading activity and limited data releases, as most markets remained closed for Christmas and Boxing Day.

Upside in the US Treasury Yield and dollar index capped the upside. The greenback has risen about 7% this quarter and remained pinned at a near two-year peak against major peers after the Federal Reserve signaled slower rate cuts in 2025. Bullion counter witnessed limited upside.

Gold, Silver, and Natural Gas Futures

Gold can trade in the range of ₹75,000 – ₹78,500 and silver in the price band of ₹88,000 – ₹92,000. In the energy counter, crude oil closed in a range with a marginal upside whereas natural gas couldn’t sustain at the higher side.

Natural gas futures hit $4.010 before falling to $3.800, driven by heavy selling pressure after the holiday break. However, continued cold forecasts for early January could provide the necessary support for prices to retest the $4.010 resistance level. On MCX, it can touch 340-345.

It will be a holiday-shortened week, in which we will have very little data like Chicago PMI, Manufacturing PMI of China, Initial Jobless Claim, ISM Manufacturing PMI, and ISM manufacturer Prices in the US, etc.

Conclusion

While major indices remain within a range, stock-specific opportunities still exist. Investors are awaiting fresh market catalysts to make significant investment decisions. Overall sentiment remains cautious, with markets expected to consolidate until the new year. So, open Demat account with SMC Global Securities and invest as per your investment objective and risk profile.

Reference:
SMC Global Securities’ Research Team

Author: All Content is verified by SMC Global Securities.