Global News Summary 2nd till 7th December 2024

This week, markets were buoyed by expectations of Federal Reserve rate cuts, driven by a slight uptick in the U.S. unemployment rate, which signaled a moderating labor market. The S&P 500 hit its 57th record close of the year, while Bitcoin rallied past $100,000, reflecting optimism for continued monetary easing. Globally, geopolitical tensions persisted with China’s sanctions on U.S. firms and European political uncertainty. Despite these headwinds, investor sentiment remained strong, highlighting confidence in equities and the potential for a robust start to 2025. The rise in the unemployment rate further fueled bullish sentiment, as investors saw it providing the Federal Reserve with more flexibility to lower interest rates, reinforcing positive market momentum.

United States (USD):

   •   Economic Growth & Jobs: The Federal Reserve remains cautious about rate cuts, with a 0.3% increase in inflation in November (YoY 2.8%). The unemployment rate edged higher, reflecting a moderating labor market. Federal Reserve officials support gradual easing, with swap traders pricing an 80% chance of a December rate cut.

   •   Debt Securities: Treasury yields saw fluctuations, with the 10-year yield at 4.15%, reflecting market optimism for rate cuts amid mixed economic signals.

   •   AI: OpenAI plans to monetize its ChatGPT product, while Musk’s xAI secured $6 billion in funding, valuing the startup at over $40 billion. Google DeepMind unveiled a breakthrough AI weather model, and US restrictions targeted semiconductor exports to contain China’s tech ambitions.

   •   Cryptocurrencies: Bitcoin surged past $101,600 (+2.6%), while Ether rose 5% to $4,054.23.

United Kingdom (GBP):

   •   Economic Growth: House prices rose 3.7% YoY in November, driven by solid wage growth and lower mortgage rates. However, a Bank of England survey found that businesses expect reduced profits and higher prices due to increased national insurance contributions.

   •   Inflation: The Bank of England forecasts four rate cuts in 2025 due to faster-than-expected inflation declines. The OECD recommends raising taxes for sustainable public finances.

Eurozone (EUR):

   •   Political Turmoil: French PM Barnier was ousted in a no-confidence vote, creating political instability. Macron criticized opposition parties for “chaos” but pledged to continue his term.

   •   Economic Growth & Debt: EU countries discussed a €500 billion fund for defense projects and arms procurement. Germany’s factory orders fell 1.5% MoM in October, but signs suggest the manufacturing recession may be bottoming. Italian GDP growth for 2024 was revised down to 0.5% (prev +1%).

   •   AI: European defense AI companies ramped up autonomous weapon development amid the Ukraine conflict.

Japan (JPY):

   •   Jobs: Base pay for full-time workers rose 2.8% YoY in October, while real cash earnings remained flat, supporting speculation of a Bank of Japan rate hike.

   •   Monetary Policy: Market expectations of a December BOJ rate hike fell after reports warned against premature tightening.

China (CNY):

   •   Trade & Sanctions: China imposed sanctions on 13 US military companies over Taiwan arms sales and retaliated against US tech restrictions with a ban on specific mineral exports.

   •   Monetary Policy: The PBOC reaffirmed its accommodative stance for 2025 to counteract economic challenges.

Australia (AUD):

   •   Economic Growth: GDP rose 0.3% QoQ in Q3 (cons 0.5%), driven by government spending but held back by weak exports and consumer demand.

   •   Monetary Policy: Expectations shifted to a central bank rate cut in May rather than February, reflecting ongoing inflation concerns and stronger labor market resilience.

Artificial Intelligence (AI):

   •   Global investments surged, with Musk’s xAI raising $6 billion and OpenAI introducing new revenue models. China escalated its semiconductor retaliation, urging companies to reassess American chip purchases. Google DeepMind’s AI weather model highlighted technological advancements.

ESG:

   •   OPEC+ anticipated extending production cuts, awaiting details of Trump’s oil sanctions on Iran and Venezuela. Meanwhile, environmental challenges persist across global ESG-related investments.

Inflation & Recession Risks:

   •   United States: Inflation remains a focal point, with the Fed awaiting further data before confirming rate cuts.

   •   Eurozone: Inflation pressures eased, supporting ECB rate-cut bets, though political instability in France and fiscal challenges across the region present risks.

   •   Japan: Rising base wages signal economic improvement but leave the BOJ cautious on further policy moves.

   •   Australia & China: Slower growth and weak consumer demand highlight economic vulnerabilities, with monetary policy increasingly accommodative.

Markets generally showed optimism, buoyed by easing prospects, rising stock indices, and AI-driven investments, though inflationary concerns and geopolitical tensions remain significant watchpoints.