Notable market news this past week (01-Dec-24)
Here is the Skeptivest roundup of the latest market headlines for the week
💸 Inflation gauge rises: Fed's challenges persist
Inflation inches up: The personal consumption expenditures (PCE) price index, the Fed's preferred inflation gauge, rose 2.3% in October, up from 2.1% in September. Core inflation, excluding food and energy, climbed to 2.8%. These increases signal that the fight against inflation is far from over, complicating the Fed’s path to its 2% target.
Consumer resilience amid high rates: Despite elevated interest rates, US consumer spending grew 0.4% year-over-year in October. Shoppers are still active, albeit cautiously, as mortgage rates rise and economic uncertainty looms. Consumer strength adds complexity to inflation dynamics.
Gradual rate cuts on the horizon: Analysts expect a 25bps rate cut in December, but the trajectory beyond remains uncertain. The Fed is likely to adopt a "slow and steady" approach to rate adjustments, as recent data show inflation progress has stalled, reinforcing a "higher for longer" stance.
☕️ Quick fire happenings to note
🌏 Global macro
- Chinese stocks surge on stimulus hopes ahead of key policy meeting: Chinese stocks surged for the second time this week amid rising expectations of enhanced economic support at December's key policy meeting. The CSI 300 Index climbed as much as 2.3% on Friday, marking its largest gain in three weeks, with technology, healthcare, and consumer staples sectors driving the advance. A Bloomberg Intelligence index of Chinese developer shares also rose over 3%. Growing speculation about additional stimulus ahead of the Central Economic Work Conference has fueled optimism. Investors are looking to Beijing to mitigate risks from heightened US trade tensions.
- Yen strengthens as BoJ rate rise expectations: The yen has rallied by about 3 per cent this week after better than expected consumer price index numbers. Core CPI increased by 2.2% YoY, fuelled by more expensive rice as the country faces weak harvest and long term farming policies
- Trump threatens Brics countries if they undermine dollar: Brics nations such as Russia and China have called for a bloc to challenge the dollar’s status as the reserve currency. Trump threatened tariffs of 100% against these countries unless their governments agreed not to create an alternative currency to the US dollar
- China’s long-term yields have fallen below Japan for the first time: China cut interest rates to boost its economy while Japan normalises its monetary policy after decades of deflation. Japan’s long-term bond yields, which for years were stuck below 1 per cent, have risen above China’s to 2.27% vs 2.24%
- Coffee futures hit 47-year high: Hot and dry weather in Brazil have raised concerns that output from the world’s biggest arabica producer will fall. The rush to secure more coffee beans has been exacerbated by US roasters as Trumps promises to impose tariffs once he takes office in Jan 2025
- Stablecoins hit record $190b, eyeing global commerce role: The stablecoin market has surged to a record $190 billion, recovering from losses after TerraUSD’s 2022 collapse, according to DeFiLlama. Traditionally used for transferring funds between tokens, stablecoins—cryptocurrencies pegged to fiat currencies like the US dollar—are now gaining traction as a potential tool for cross-border payments in global commerce.
- Australia bans social media for under 16: Australians under 16 will be banned from opening accounts on all major social media platforms including TikTok, Facebook, Instagram, Snapchat and Reddit — even with parental permission. Australia is a smaller market for TikTok with about 8.5m users, about a third of the population
🏦 Individual stocks/companies
- Blackstone invests over €500m in southern European hotels: Blackstone continues to expands its portfolio, capitalising on post-pandemic travel boom. Investors continue to seek growth in Europe where global hotel brands remain underpenetrated. The private equity giant has acquired Grand Hyatt Athens from real estate groups Henderson Park and Hines
- Apple hits hurdles while rolling out AI features in China: Apple would face a lengthy and complex approval process to run their own AI models and partnering with LLMs from Chinese partners would be their best option. Uncertainty over the regulatory process will push the timeline of the AI rollout to Q2 2025
- Samsung announces second management reshuffle: Executive VP Han Jin-man will be promoted to lead its foundry unit and Jun Young-hyun will head its memory chip business. Analysts said Samsung’s reshuffle was “disappointing”, as the tech group was continuing to rely on existing veterans rather than bringing in external talent
- Popmart (+23.68% past 1 month) pops: Stocks rise at the back of Q324 earnings beat, driven by the growing popularity of Labubu in recent months, robust online sales through Tmall and Taobao, and Pop Mart's expansion into new countries with fresh, popular product series.
🇸🇬 Singapore related
- S-REITs subject to single leverage limit The Monetary Authority of Singapore (MAS) set a unified leverage limit of 50% for all Singapore-listed REITs, alongside a minimum interest coverage ratio (ICR) of 1.5x. Previously, REITs could borrow up to 50% of asset value, reduced to 45% if their adjusted ICR fell below 2.5x.
- Singapore to hold World Aquatic Championships 2025: Work on the temporary facility in Kallang for the 2025 World Aquatics Championships has begun after being relocated from its original Russian venue in response to the invasion of Ukraine. The multi-discipline World Aquatics Championships will be held in Singapore from Jul 11 to Aug 3 next year
