Asian Morning Briefing: U.S. Stocks Recover Some of Early Week Losses

Dow Jones05:30

MARKET SNAPSHOT

U.S. stocks finished higher and recovered some of the losses from the previous days.Treasury yields fell after November PCE inflation was milder than expected, fueling hopes the Fed might be able to go beyond the two rate cuts officials penciled in for 2025.Oil prices were little changed amid continued concerns about the demand outlook, particularly from China. The dollar weakened against its rivals, prompting gold to rise for the first time in seven sessions.

MARKET WRAPS

EQUITIES

The Dow Jones Industrial Average and the S&P 500 had their best day since last month's big postelection rally, ending an otherwise downbeat week for stocks on a high note.

The Dow added 1.2%, the day after the blue-chip index narrowly ended a 10-session skid. The S&P 500 rose 1.1% while the technology-heavy Nasdaq Composite gained 1%.

Each of the major U.S. indexes still ended the week down at least 1.8%, the result of Wednesday's selloff following the Federal Reserve's signal that interest rates might stay higher in 2025 than investors had expected. The Dow ended 2.3% lower, its third straight weekly decline.

The U.S. government was on the brink of shutdown. Rising yields in the aftermath of the Fed's Wednesday meeting had investors second-guessing expensive stocks.

Earlier Friday, Chinese shares ended mixed as investors await Beijing's next policy move to support the market. Semiconductor stocks rose while telecom and consumer stocks dropped broadly.

The benchmark Shanghai Composite Index fell 0.1%, the Shenzhen Composite Index rose 0.4% while the ChiNext Price Index closed down 0.2%. In Hong Kong, the Hang Seng Index fell 0.2%, with energy stocks leading the declines.

Japanese stocks ended lower, pressured by bank stocks as domestic bond yields fell across the yield curve. The Nikkei Stock Average shed 0.3%.

Stocks in Australia fell for the third consecutive session, as the S&P/ASX 200 Benchmark Index declined 1.2%. The blue-chip S&P/ASX 20 Index, which includes the country's major banks and iron-ore miners, lost 1.5%.

New Zealand's NZX-50 closed 1.2% higher and erased two days of losses, boosted by industrial, financial and utility stocks.

COMMODITIES

Oil futures settled little changed, but tallied losses for the week after feeling pressure from a surging U.S. dollar and concerns about the demand outlook.

West Texas Intermediate crude for February delivery edged up 0.1% to settle at $69.46 a barrel on the New York Mercantile Exchange. February Brent crude fell nearly 0.1% to $72.94 a barrel on ICE Futures Europe.

A surging dollar and a selloff in equities contributed to the negative tone in oil and other commodities after the Fed signaled it would likely deliver fewer interest-rate cuts in 2025 than policy makers had previously expected.

"As the year draws to a close, markets find themselves entrenched in tight ranges as the strengthening U.S. dollar dampens international demand," said Stephen Innes, managing partner at SPI Asset Management.

Front-month gold futures had a positive day, rising 1.4% to $2,628.70 an ounce -- the first gain in seven trading days. One reason behind the uptick was a weaker U.S. dollar.

   
 
 

TODAY'S TOP HEADLINES

PCE Inflation Lighter Than Expected in November

The Federal Reserve's favored measure of inflation showed prices increased 0.1% in November and 2.4% over the past 12 months, the Commerce Department said Friday.

The 12-month pace marked a re-acceleration from a 2.3% 12-month increase in the personal consumption expenditures price index in October, underscoring the challenge the Fed faces in getting inflation all the way back to its 2% target.

   
 
 

Currency Tailspin Forces Brazil's Leader to Do the Unthinkable: Cut Spending

SÃO PAULO-For months, Brazilian leaders have thrown almost everything they have in an effort to stop the country's currency from a precipitous yearlong plunge. But nothing had worked, including hiking its benchmark interest rate above 12%.

Now, as the Brazilian currency, the real, slipped in recent days to its lowest level against the dollar since its introduction in 1994, lawmakers rushed to do something that's anathema to leftist President Luiz Inácio Lula da Silva: cut government spending.

Da Silva and his leftist allies in Congress have spent lavishly on pensions and social benefits since he defeated the far-right firebrand Jair Bolsonaro in the 2022 election. But worries over Brazil's soaring deficit have torpedoed the currency of Latin America's biggest economy, just as this country of more than 200 million faces the prospect of a trade battle with President-elect Donald Trump that could weaken the real further.

   
 
 

Consumer Confidence Climbs Driven by Republican Sentiment

Consumer confidence in the U.S. jumped this month as buying conditions improved, though with enduring differences down party lines.

The University of Michigan's index of consumer sentiment for the end of December surged to 74.0 from 71.8 in November, matching the mid-month reading of 74.0 and economists' expectations.

Like in November, sentiment climbed for Republicans and declined for Democrats this month. For independents, expectations were essentially unchanged, the survey said.

   
 
 

Trump Warns Europe to Buy More U.S. Oil and Gas or Face Tariffs

BRUSSELS-President-elect Donald Trump has threatened to impose tariffs on European imports unless the continent buys more American oil and gas, in a move that could frame early discussions between European leaders and his administration.

Since winning a second term at last month's presidential election, Trump has made tariffs a central part of his plans for when he returns to the White House next month. He has threatened to increase import duties on China, with which the U.S. has the largest trade deficit, and pledged new tariffs on allies including Canada and Mexico in a bid to boost U.S. manufacturing.

In a post on his Truth Social platform, Trump raised concerns about the U.S. trade deficit with the European Union, showing how the president-elect is doubling down on the use of tariff threats as a negotiating tactic.

   
 
 

Volkswagen Aims to Reduce Workforce by 35,000 in Deal With Union

Volkswagen said it had agreed to a deal with its union to reduce its workforce by more than 35,000 and cut billions of dollars a year in costs, while averting immediate factory closures in Germany.

Under the agreement announced Friday, VW said it would gradually reduce staffing levels "in a socially responsible way," through early retirement and other measures. Workers will also forgo pay increases and lose certain bonuses. In exchange, the company agreed to not make any forced job cuts until 2030 and to keep all its German factories open.

The cost-cutting plan comes as VW and other European carmakers contend with a tough economic environment, high domestic costs, abrupt shifts in demand for electric vehicles and increasing competition from lower-cost Chinese EV makers.

   
 
 

Novo Nordisk Shares Plunge After New Obesity Shot Disappoints

Novo Nordisk's big bet to improve on the success of its weight-loss drug franchise hit a stumbling block Friday, wiping out nearly $100 billion of the drugmaker's stock-market value.

The Danish company-which had become Europe's biggest by market capitalization on booming sales of Ozempic and Wegovy-reported disappointing results of a closely watched clinical trial testing an experimental anti-obesity treatment that the company hoped would be its next big weight-loss product.

The two-drug combination, dubbed CagriSema, helped study volunteers lose a significant amount of weight, some 22.7% on average after more than a year's treatment. And the drug might still make it to market. But the magnitude of weight loss it induced in the study fell short of the company's and investors' expectations.

   
 
 

Starbucks Baristas Walk Out and Picket in Three Cities in Bid for Contract

Starbucks baristas launched protests at some union-represented locations in Chicago, Los Angeles and Seattle on Friday after the union said contract talks with the coffee chain hit an impasse.

Seattle-based Starbucks said workers in roughly 10 U.S. stores called out of their shifts or picketed outside locations, leaving some of those stores unable to open.

Starbucks Workers United said it was set for a five-day walkout in the three cities and beyond, with baristas leaving their posts in other markets through Christmas Eve if the company doesn't respond to the union's demands for wage increases, other economic concessions and legal disputes outstanding.

   
 
 

Netflix Scores Next Two FIFA Women's World Cups

Netflix has secured the U.S. rights to stream the next two women's soccer World Cups, taking a major step forward in its bet on live sports.

The deal, announced Friday, means the streamer will broadcast the FIFA Women's World Cup in 2027 and 2031. The value of the deal wasn't given.

The move marks the first time Netflix has bought all of the rights for such a high-profile international competition.

   
 
 
   
 
 

Expected Major Events for Monday

05:00/SIN: Nov CPI

08:00/TAI: Nov Employment / Unemployment

08:00/TAI: Nov Industrial output

21:00/SKA: Dec Consumer Sentiment Index

23:30/JPN: Oct Final Labour Survey - Earnings, Employment & Hours Worked

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This article is a text version of a Wall Street Journal newsletter published earlier today.

 

(END) Dow Jones Newswires

December 22, 2024 16:30 ET (21:30 GMT)

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