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Wall Street had another positive night, with stocks showing strong momentum. The Dow Jones index rose 1.1%, the S&P 500 index gained 0.9%, and the Nasdaq increased by 0.7%. The U.S. 10-year Treasury yield fell 6 basis points to 4.57%, while oil prices dropped 2.6% to $75.90 per barrel.
President Trump announced possible 25% tariffs on Canada and Mexico, causing the AUD/USD exchange rate to plummet to a low of 0.6209 before stabilizing around 0.6260/65.
Asian stock markets closed higher across the board, with the Nikkei up 0.3%, Hang Seng up 0.9%, and Shenzhen up 0.1%. Australia’s ASX 200 performed strongly, rising 0.7%, led by gains in the financial and materials sectors.
Before European markets opened, the UK wage report was released. November’s average weekly earnings growth was lower than expected at 5.6% (vs. 5.7% forecast), but higher than October’s 5.2%. The ILO unemployment rate met expectations at 4.4% (previous 4.3%). The pound briefly fell to 1.2256, above the previous low of 1.2249. European stocks traded mixed in early trading but edged up at the close, with the CAC rising 0.5%, and both the FTSE 100 and DAX gaining 0.3% for the day. ECB’s Villeroy stated the need to remain vigilant on inflation but dismissed major concerns, noting that the ECB could reach a neutral 2% rate by summer.
Canada’s December CPI fell 0.4% month-on-month, in line with expectations, but the year-on-year growth was 1.8%, below the 1.9% forecast. Core measures were all in line with expectations. The USD/CAD showed little reaction.
Mid-market rates.
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Chart of the day
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