United States
US markets rebounded on Monday as a rally in major technology stocks offset earlier losses spurred by disappointing consumer confidence data. The S&P 500 gained 0.5%, while the tech-heavy Nasdaq 100 climbed 0.9%, driven by strong performances in Tesla Inc. and Nvidia Corp. The “Magnificent Seven” megacap stocks advanced over 1%, buoying sentiment during a thin trading session with volumes approximately 20% below the monthly average.
Despite concerns about the Federal Reserve’s hawkish stance, analysts remained optimistic. “Primary uptrends remain intact for equities despite the recent profit-taking,” said Craig Johnson of Piper Sandler. “Given the short-term oversold conditions, we expect a ‘Santa Claus Rally’ to be a strong possibility this year.”
Treasury yields continued to climb, with the benchmark 10-year yield rising five basis points to 4.57%, reflecting investor caution over the Fed’s policy trajectory. The Bloomberg Dollar Spot Index rose 0.4%, further highlighting the US dollar’s recent strength. In economic data, consumer confidence for December was weaker than forecast, coming in at 104.7 vs 113.2 expected, with the survey’s measure of future expectations declining to 81.1 from 92.3, reflecting less optimism among consumers.
Among notable corporate moves, Qualcomm Inc. surged after a legal victory against Arm Holdings Plc, while Rumble Inc. experienced its best trading day on record after Tether announced plans to acquire a stake in the platform.
The S&P 500 has gained 25% year-to-date, largely propelled by the top seven technology firms, which account for more than half of the index’s advance. Analysts anticipate a strong close to the year, though some warn of a potential correction early in 2025. Historically, the “Santa Claus Rally” has been a reliable indicator of investor sentiment, typically coinciding with an average annual S&P 500 gain of 10.4% in positive years.
Europe
European markets ended slightly higher, with the Stoxx Europe 600 Index rising 0.1%, led by a rebound in healthcare stocks. Danish pharmaceutical giant Novo Nordisk recovered from last week’s sharp losses, boosting the sector. The UK’s Direct Line Insurance Group surged after Aviva Plc announced plans to acquire the company in a deal worth approximately £3.7 billion, creating the UK’s largest motor insurer.
Despite the modest gains, sentiment remains fragile due to uncertainty surrounding Federal Reserve policy and subdued growth forecasts for the eurozone. A Bloomberg survey revealed a downgraded GDP growth outlook for the region next year, though analysts see opportunities for European equities given their relatively low valuations. In bond markets, Germany’s 10-year yield rose four basis points to 2.32%, while the UK’s 10-year yield matched the increase, settling at 4.55%. Investors are cautiously optimistic that European markets could rebound in 2025 as political and economic uncertainties subside.
Australia
The ASX 200 staged its largest single-session gain in six months, jumping 1.7% to close at 8201.6. The rally was broad-based, with all 11 sectors advancing as bargain hunters capitalised on last week’s sharp selloff. Banks led the recovery, with Commonwealth Bank climbing 2.9% to $154.68 after a 5% decline last week. Other major financials, including Westpac, ANZ, and NAB, each rose more than 2%. Consumer discretionary stocks also bounced back, with Wesfarmers up 3.3%, JB Hi-Fi gaining 3.7%, and Super Retail Group surging 5%.
Mining stocks saw mixed performance. Iron ore heavyweights BHP and Rio Tinto posted gains of less than 1%, while uranium and lithium producers outperformed. Deep Yellow soared 7%, and Pilbara Minerals advanced 3.9%. News Corp added 3.3% after announcing the $3.4 billion sale of Foxtel to DAZN Group. Telstra, a stakeholder in the deal, edged up 1% to $4.02. In corporate drama, EML Payments plunged 22% after its board unexpectedly dismissed CEO Ron Hynes, citing the need for alternative leadership to execute the company’s revised strategy.
Commodities
The Australian dollar weakened further, sliding 0.3% to US$0.6223 as the US dollar strengthened. Gold prices fell 0.5% to US$2,580 per ounce, while oil markets were mixed. West Texas Intermediate crude edged up 0.2% to US$69.70 per barrel, and iron ore prices held steady at US$104 per tonne, reflecting subdued demand from China. Bitcoin extended its losses, dropping 2.5% to US$92,500 amid a risk-off mood in broader financial markets. Ether, however, managed a slight gain of 0.8%, rising to US$3,308.
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This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
