Wall Street's Incredible Streak Continues
The Stock Market's Unstoppable Run and Bond Market Relief
Wall Street's record-breaking streak is still going strong, thanks to investors' hope for significant interest rate cuts next year and the good news about the yield on ten-year US government bonds staying under 4%. The Dow Jones Index and the Nasdaq-100 have hit all-time highs, with the S&P 500 and Nasdaq Composite also seeing gains of 0.6 and 0.7%, respectively.
On Monday, there were 2,303 gainers on the NYSE compared to 579 losers, with 57 stocks closing unchanged. Investment analyst Callie Cox of eToro said, "this is the kind of rally you want to see, a rally with broad participation." Low bond yields have kept interest rate cut speculation alive, supporting share prices and pushing them to new highs.
The US Real Estate Market's Upturn
The US real estate market set a positive note, with housing starts soaring in November despite expectations of a slight decline. Construction activity is heavily influenced by interest rate trends. This surge in housing starts underscores the significance of interest rate speculation in fueling market momentum.
The Fed and Interest Rate Cuts
The Fed announced interest rate cuts for 2024 last week, which has been further supported by statements from Mary Daly, Fed President of San Francisco, and Thomas Barkin, Fed President from Richmond. Daly suggested that it would be appropriate for the Fed to start cutting interest rates in 2024, as inflation has decreased this year. Barkin also attested to the central bank's progress in fighting inflation.
Interest rate cut speculation has intensified, encouraging investors to anticipate monetary easing. The confirmation of Japan's ultra-loose monetary policy further reinforces this expectations.
Currencies Under Pressure
The dollar weakened as bond yields decreased and interest rate cut speculation escalated. The dollar index dropped by 0.4%. In contrast, the yen saw a sharp decline after the Japanese central bank's announcements, although the losses were not as severe as anticipated. Analysts at Unicredit believe investors still presume the Bank of Japan will tighten its monetary policy next year. The fall in bond yields boosted the price of gold, also backed by the dollar's weakness.
Oil Prices Rise Again
Oil prices rebounded after their surges the previous day, with the focus on developments in the Red Sea. Both major shipping companies and oil and gas companies are now rerouting their routes due to escalating attacks by the Yemeni and Iranian-controlled Huthi rebels. Investors and consumers remain wary of the impact of disrupted supply chains on prices following the pandemic.
The recent rise in oil prices is mainly due to political tensions in the Middle East, particularly in the Red Sea, which could potentially disrupt oil supply chains.
Boeing's Upswing and Curevac's Slump
Boeing climbed 1.2% in the Dow, following Deutsche Lufthansa's decision to order short and medium-haul aircraft from the US manufacturer for the first time in a long time. Alphabet shares, the parent company of Google, rose by 0.6%, as Google settled one of several antitrust proceedings, paying 700 million USD and making changes to its app store.
Curevac, a competitor of vaccine developer Biontech, suffered a significant setback at the German Federal Patent Court. The patent court declared Curevac's patent EP 1 857 122 B1 invalid. As a result, Curevac stocks plummeted by 29.6%. Meanwhile, Biontech shares, also listed in the USA, surged by 3%, while its partner's share price, Pfizer, increased by 4.1%.
The shares of several other companies, including Bluebird Bio and FMC Corp, also witnessed significant movements in response to various corporate developments.
