December 15, 2024

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Notable market news this past week (15-Dec-24)

Here is the Skeptivest roundup of the latest market headlines for the week

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📈 Market breadth weakens as tech giants propel gains

Strength in technology high-flyers is offsetting softness everywhere else: Stock market breadth is weakening as the S&P 500 logged its ninth consecutive day of more decliners than gainers, the longest streak since 2004. Tech strength, led by the Magnificent Seven (Alphabet, Microsoft, Nvidia), offsets broader market softness, with their index gaining in eight of the past 10 days amid AI optimism.

Equal-weight S&P 500 falling: Meanwhile, the equal-weight S&P 500 is falling, extending its losing streak to eight of the past nine days, tied with 2018 for the longest slump. “Market breadth has been poor, and is on the verge of generating a sell signal,” said Lawrence McMillan, president and founder of McMillan Analysis.

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☕️ Quick fire happenings to note

🌏 Global macro

• US reported 2.7% inflation in Nov, up from 2.6% in Oct but in-line with expectations: US inflation remained relatively flat up from 2.6% in October, though in-line with expectations. Markets are now almost fully pricing in a 25bps cut next week with odds at 96%. The S&P jumped 0.7%, and the Nasdaq even higher at 1.79%.
  • Core Goods: Core goods, including cars and apparel, rose 0.3% monthly but fell 0.6% year-over-year, contributing to positive market sentiment.
  • Food: Food prices rose 0.4%, a modest increase compared to post-COVID levels, though there's still room for improvement.
  • Services: Core services inflation eased for the second month, with transportation prices, including air and ground, remaining unchanged, a stark contrast to last year's surge.
  • Housing: Housing inflation, which peaked at 8.3% in April 2023, eased to 4.7% in November, offering relief for renters, though it still accounts for 40% of the monthly CPI increase.
• China faces export slowdown and deflation risks amid trade tensions: According to data releases from China's General Administration of Customs Bureau, China’s exports grew only 6.7% in November, down from 12.7% in October, signaling broader economic challenges. With deflation risks rising and domestic consumption weak, the country’s export-dependent economy faces growing pressure, compounded by potential US tariffs.
• US to impose tariffs on Chinese cleantech imports: The Biden administration is poised to unveil steep new tariffs on imports of critical materials from China in its final effort to protect US manufacturing from the Chinese superpower’s dominant cleantech industry. The tariffs are expected to double to 50% on Chinese solar wafers and polysilicon, along with a 25% levy on tungsten products. ‍
• China considers weakening yuan amid trade war tensions: China is reportedly weighing a currency devaluation in response to potential US trade tariffs, which could impact global markets. The yuan’s depreciation could boost Chinese exports but risks retaliatory tariffs and stock market declines.‍
• OPEC to expected to continue oil output cuts: The moves comes with oil slid by nearly 11% since June. The overall changes means the producers will pump 800k barrels/day lesser than previously expected in 2025‍
• Trump's crypto push and political turmoil intensify ahead of January: Donald Trump’s crypto project, World Liberty Financial, is reportedly acquiring digital tokens worth millions amid speculation it may soon launch. His family has actively promoted the venture. Politically, Trump faces turbulence, with January approaching. He has backtracked on promises to lower food and gas prices, while defending controversial cabinet picks, including Pete Hegseth for defense secretary and Tulsi Gabbard for intelligence director, both facing public criticism. A new poll shows dissatisfaction with his choices.

🏦 Individual stocks/companies

• India’s second largest renewables plans Nasdaq delisting: ReNew is planning to leave the Nasdaq after losing more than 30% of its market share. India’s renewable industry is gaining US prosecutors attention after Adani being accused of orchestrating $265m bribery scheme to secure green deals with Indian officials.
• SpaceX valuation reaches $350bn: SpaceX and its investors will buy $1.25bn of the company’s existing shares at $185 per share, marking a 65% increase from its most recent deal at $112 per share in September. The company has achieved several milestones including transporting stranded astronauts on the International Space Station back to Earth
• Macy’s (-3% past 5 days) slashes 2025 profit outlook: The company slashed its annual profit outlook after discovering an employee hiding more than $150mn of delivery expenses. The accounting error raises questions about its internal controls. 2 members of its audit committee has since resigned after this incident. Share price of Macy’s were -16.1% year-to-date
• Warner Bros (+22.41% past 1 month) restructure for growth: Warner Bros. Discovery plans to restructure by mid-2025, splitting into cable/linear TV and streaming/studio segments to unlock value and focus on growth. This mirrors Comcast's shift as cable media declines.
• Adobe (-15.8% past 5 days) takes cautious AI approach: Adobe's cautious approach to AI, focusing on long-term growth over rapid monetization, led to its worst stock drop since last year despite strong earnings. Competitors' aggressive AI strategies pressure Adobe to act faster in a rapidly evolving market.
• Amazon launched Amazon Autos: Allowing US shoppers in 48 cities to buy Hyundai cars online, including financing and trade-ins. More manufacturers will be added next year.

🇸🇬 Singapore related

• Indonesia to build new oil storage facility near Singapore: Indonesia imports 60% of its oil from Singapore. The new storage facility will be able to store oil for up to 30 to 40 days, enabling state-owned energy firm Pertamina to purchase oil in bulk, reducing reliance on the volatile global market and Singapore.