Market Update 19/12/2024

• Earlier yesterday, the Federal Reserve implemented a 25 basis point rate reduction, aligning with widespread market expectations. Following the announcement, Wall Street experienced a decline, with the Nasdaq falling 1.4%, the S&P 500 index decreasing by 1.2%, and the Dow Jones Industrial Average dropping 1%. The yield on 10-year U.S. Treasury notes rose by 8 basis points to 4.48%, while crude oil prices increased by 0.5% to $70.30 per barrel. Significant demand for the U.S. dollar drove the AUD/USD exchange rate down to a low of 0.62345, the EUR/USD to 1.0355, and the GBP/USD to 1.2582.

• Asian equity markets once again closed with mixed results. The Nikkei index declined by 0.7%, while the Hang Seng index appreciated by 0.8%. Australia’s ASX 200 index remained unchanged.

• The United Kingdom’s November Consumer Price Index (CPI) data broadly met expectations. The headline CPI registered a year-on-year increase of 2.6%, in line with estimates, while the core CPI rose by 3.5% year-on-year (against an estimate of 3.6%). The British pound faced downward pressure, declining from a high of 1.2730 to a low of 1.26805 against the U.S. dollar. The Eurozone’s final November CPI was also released, showing a 2.2% year-on-year increase (compared to an estimate of 2.3%). The EUR/USD exchange rate exhibited minimal reaction, trading near its previous closing level of 1.0495.

• U.S. economic data releases were limited in significance. November housing starts in the United States decreased by 1.8% to 1.289 million units, falling short of the anticipated 2.6% increase to 1.345 million units. However, building permits rose by 6.1% to 1.505 million units, surpassing expectations of a 1.0% increase to 1.430 million units.