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Stock markets seek direction - Nikkei in Tokyo hits 33-year high

Equity markets are eagerly awaiting evidence on the US economy and the Federal Reserve's next steps. Capital markets currently expect the Fed to ease interest rates this year. The question is when and how often. This will depend on how the economy develops, the US central bank recently said. Meanwhile, the World Bank predicts that global economic growth will remain weak through 2024. In Tokyo, the Nikkei 225 surpassed 34,000 for the first time since March 1990.

Alessandro Fezzi, LGT
Temps de lecture
5 minutes
Investor in light and shade
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On Wall Street, indices were mixed on Tuesday. The Dow Jones Industrial closed 0.42% higher at 37,525.16, while the S&P 500 lost 0.15% to close at 4,756.50. The Nasdaq posted modest gains of around 0.15%. Investors seem to be searching for direction now. US CPI data due on Thursday and the corporate reporting season starting on Friday are likely to provide fresh impetus.

In the bond market, the yield on ten-year US Treasuries was virtually unchanged from the previous day at 4.02%. Investors are still looking to lock in higher yielding Treasuries before key interest rates are cut later in the year. With both the Fed and the European Central Bank (ECB) holding rates steady recently, interest rates are expected to fall in the coming months.

As reported yesterday, the US trade deficit narrowed in November. Contrary to expectations, the trade deficit fell by USD 1.3 bn month-on-month to USD 63.2 bn (consensus USD 64.9 bn). Both exports and imports fell by just under 2% monthly.

Asia-Pacific markets were mostly lower on Wednesday, although Japanese stocks extended their gains after hitting a 33-year high in the previous session. In Tokyo, the Nikkei 225 rose 2.2%, driven by healthcare technology and consumer services stocks, and broke above 34,000 for the first time since March 1990. South Korea's Kospi was down 0.7% for the day after the country's unemployment rate hit a 23-month high. Hong Kong's Hang Seng Index fell 0.45%, while mainland China's CSI 300 was down 0.1%. Sydney's S&P/ASX 200 fell 0.7% after snapping a four-day losing streak on Tuesday. Meanwhile, inflation in Australia hit a near two-year low.

According to the World Bank, the global economy will grow at a slower pace in 2024 for the third year in a row. Global GDP growth is expected to be 2.4%, down from 2.6% last year. At the regional level, growth will slow the most this year in North America, Europe and Central Asia, and Asia-Pacific, mainly due to slower growth in China. From a low base, Latin America and the Caribbean are forecast to see a slight improvement, while the Middle East and Africa are expected to see a more pronounced upturn.

Unemployment in the euro area fell to a record low in November last year. The jobless rate fell from 6.5% to 6.4%. This means that around 11 million people were registered as unemployed in the euro area as a whole.

Corporate news in focus: Sika sales 2023, CropEnergies Q3 figures.

Economic data in focus: France industrial production November (08:45), Italy retail sales November (10:00), US MBA weekly mortgage applications (13:00), Wholesale inventories and sales November (16:00).



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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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