The Nifty 50 index has repeatedly notched fresh all-time highs, reaching yet another peak on Tuesday. The index is set for an eighth year of gains, up more than 15% year-to-date.
Optimism about India’s growth prospects, increased liquidity and greater domestic participation have all contributed to the surge in stock markets. In fact, India’s stock market value has overtaken Hong Kong’s to become the seventh largest in the world.
As of the end of November, the total market capitalization of the National Stock Exchange of India was $3.989 trillion versus Hong Kong’s $3.984 trillion, according to data from the World Federation of Exchanges.
Numbers from the WFE also showed that India’s NSE saw more new stock listings than the HKEX. India’s stock market had 22 new listings vs. Hong Kong’s seven, as of November.
India has been one of South Asia’s fastest growing economies, with expectations only building up for next year.
The world’s most populous country has grown at a consistently strong pace this year, with the most recent reading on third-quarter GDP showing a much higher-than-expected growth rate of 7.6%.
The Indian stock market has also shown sound fundamentals and robust earnings, which are expected to grow through 2024.
HSBC forecasts earnings growth of 17.8% for India in 2024 — among the fastest rates in Asia. Sectors such as banks, health care and energy, which have already done well this year are best positioned for 2024, according to HSBC.
Sectors such as autos, retailers, real estate and telecoms were also relatively well positioned for 2024, while fast-moving consumer goods, utilities and chemicals are among those HSBC said were unfavorable.
There has also been an uptick in domestic participation in Indian stock markets this year, especially in high-growth areas, according to research by HSBC.
“While foreign investors tend to be active in large caps, it is local investors that dominate the small and mid-cap space, which partly explains the outperformance – fund flows into midcap-small schemes of domestic MFs (i.e. mutual funds with a mandate to invest in small/midcaps) have been disproportionately high,” HSBC noted.
It also expects this trend to continue into the next year.
The Reserve Bank of India held its main lending rate steady at 6.5% last Friday and said its expects the country to grow at a pace of 7% this year. The central bank did warn that inflation, even as it continues to cool, still remains above its target as underlying price pressures were stubborn.
That, however, does not mean market players aren’t expecting rate cuts next year.
“We expect the policy pause to be extended for now and expect 100bp (basis points) of cumulative rate cuts starting from August 2024,” analysts at Nomura wrote in a client note.
Lower lending rates often boost liquidity and boost more risk-taking sentiment in stock markets.
“The ruling Bharatiya Janata Party (BJP) outdid its national and regional rivals at the recently held state elections. This strong run fed expectations of political stability at the upcoming general elections in April/May24, addressing earlier concerns that a weak showing at the state polls might have stoked a fiscally populist agenda in the coming months,” DBS senior economist Radhika Rao said in a client note.
Putin held his annual phone-in with the Russian public, which was combined with his end-of-year news conference. It’s a closely followed event, but also a carefully orchestrated and curated affair, giving Russian citizens a chance to speak directly with the president on a range of issues.
“Mr President, good afternoon, I am a student studying at St Petersburg Institute. Do you have a lot of twins? And another point, what is your attitude towards the dangers with neural networks and artificial intelligence?” the AI questioner asked, according to a live NBC News translation.
“I see you may resemble me and speak with my voice. But I have thought about it and decided that only one person must be like me and speak with my voice, and that will be me,” Putin responded.
The Kremlin recently dismissed long-standing speculation in the press and on social media that Putin uses body doubles at some events. Meanwhile, there is growing concern across the globe about the use of AI deepfakes to spread misinformation.
“Deepfake” is a term used to describe an AI-created image, sound or video of a real person. This tech is being used to spread false information by doctoring images or audio of political figures and celebrities.
Putin, like other world leaders, is attempting to position Russia as a front-runner in AI technology at a time when countries around the globe are vying for a leadership position.
The U.S., China, and European Union are racing to dominate in AI — while also paying attention to the risks surrounding the technology — as it is becoming more and more advanced, with some AI-generated avatars now nearly indistinguishable from humans.
In its 2024 investment outlook, seen by CNBC, the British lender’s asset management division said that tight monetary and credit conditions have created a “problem of interest” for global economies, increasing the risk of an adverse growth shock next year that markets “may not be fully prepared for.”
HSBC Asset Management expects U.S. inflation to fall to the Federal Reserve’s 2% target in late 2024 or in early 2025, with the headline consumer price index figures of other major economies also set to drop to central banks’ targets over the course of next year.
The bank’s analysts expect the Fed to begin cutting rates in the second quarter of 2024 and to trim by more than the 100 basis points priced in by markets over the remainder of the year. They also anticipate that the European Central Bank will follow the Fed, and that the Bank of England will kickstart a cutting cycle but will lag behind its peers.
“Nevertheless, headwinds are beginning to build. We believe further disinflation is likely to come at the price of rising unemployment, while depleting consumer savings, tighter credit conditions, and weak labour market conditions could point to a possible recession in 2024,” Global Chief Strategist Joseph Little said in the report.
The rapid tightening of monetary policy by central banks over the last two years, Little suggested, is leading global markets towards a “new paradigm” in which interest rates remain at around 3% and bond yields stick around 4%, driven by three major factors.
Firstly, a “multi-polar world” and an “increasingly fragmented global order” are leading to the “end of hyper-globalisation,” Little said. Secondly, fiscal policy will continue to be more active, fueled by shifting political priorities in the “age of populism,” environmental concerns and high levels of inequality. Thirdly, economic policy is increasingly geared towards climate change and the transition to net-zero carbon emissions.
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VIDEO03:20
Expect European equities to outperform U.S. in first half 2024, strategist says
“Against this backdrop, we anticipate greater supply side volatility, structurally higher inflation, and higher-for-longer interest rates,” Little said.
“Meanwhile, economic downturns are likely to become more frequent as higher inflation restricts the ability of central banks to stimulate economies.”
Over the next 12 to 18 months, HSBC AM expects investors to place greater scrutiny on corporate profits and the ongoing debate over the “neutral” rate of interest, along with a heightened focus on labor market and productivity trends.
Markets are now largely pricing a “soft landing” scenario, in which major central banks return inflation to target without tipping their respective economies into recession.
HSBC AM believes the increased risk of recession is being overlooked and is positioning for defensive growth alongside a prevailing view that “bonds are back.”
“A weaker global economy and slowing inflation are likely to present a supportive environment for government bonds and challenging conditions for equities,” Little said.
“Therefore, we see selective opportunities in parts of global fixed income, including the U.S. Treasury curve, parts of core European bond markets, investment grade credits, and securitised credits.”
HSBC AM is cautious on U.S. stocks, due to high earnings growth expectations for 2024 and a stretched market multiple — the level at which shares trade versus their expected average earnings — relative to government bond markets. The report analysis sees European stocks as relatively cheap on a global basis, which limits downside unless a recession materializes.
“Japanese stocks may be an outperformer among developed markets, in our view, due to attractive valuations, the end of unconventional monetary policy, and a high-pressure economy in Japan,” Little said.
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VIDEO03:49
European markets could outperform U.S. in 2024, strategist says
He added that idiosyncratic trends in emerging markets also warrant a selective approach rooted in corporate fundamentals, earnings visibility and risk-adjusted rewards. If the Fed cuts rates significantly in the second half of 2024 as the market expects, Indian and Mexican bonds and Chinese A-share stocks — domestic shares that are dominated in yuan and traded on the Shanghai and Shenzhen exchanges — would be some of HSBC AM’s top emerging market picks.
India’s post-pandemic rebound and rapidly growing markets and Japan’s continued exit from unconventional monetary policy render them as attractive sources of diversification, Little suggested, while Chinese growth is widely projected at around 5% this year and 4.5% in 2024, but could also benefit from further fiscal policy support.
“Asian equities are in a stronger position in terms of growth and are likely to remain a relative bright spot in the global context,” Little said.
“Regional valuations are generally attractive, foreign investor positioning remains light, while stabilising earnings should be the key driver of returns next year.”
Asian credit should also enjoy a much better year as global rates peak, most regional economies perform well and Beijing offers an additional fiscal boost, he added.
The 30-stock Dow closed at a record high, ending the day up 158 points, or 0.43% at 37,248.35. On Wednesday, it marked its first-ever close above 37,000. The S&P 500 added 0.26% to end the day at 4,719.55, while the Nasdaq Composite gained 0.19% to 14,761.56.
“The Fed delivered the dovish pivot that we expected heading into the December meeting,” Michael Gapen, chief U.S. economist at Bank of America, wrote on Wednesday. “While we did not expect the Fed to move to an outright easing bias, we did expect it to move to a more balanced reaction function and, in the event, we think it did just that.”
Solar stocks ticked higher as yields fell. The Invesco Solar ETF (TAN) climbed more than 8.1%, with constituents SunRun and Enphase gaining 20% and 12%, respectively. Shares of Moderna climbed 9.3% after trial data showed its experimental cancer vaccine reduced the risk of death or reoccurrence when used alongside Merck’s Keytruda.
The S&P could soon join the Dow in record territory, as the index is less than 1.6% away from reaching its all-time close set in January of 2022. The Nasdaq is about 8% away from its closing record and roughly 9% further to go to reach its intraday record.
Stocks closed higher on Thursday, with the Dow Jones Industrial Average continuing its rally after notching its best ever close a day earlier.
The 30-stock Dow gained 158 points, or 0.4%, to close at 37,248.35. The S&P 500 added 0.3% to finish the session at 4,719.55, while the Nasdaq Composite gained 0.2% to 14,761.56.
Bank stocks may outperform the rest of the U.S. stock market in 2024 as they did in 1995 — when they soared 54% to the S&P 500′s 34% advance, according to RBC Capital analysts led by Gerard Cassidy in a 124-page report out Thursday.
“In the second half of 2024, we see continued improvement in the fundamentals as the Federal Reserve gradually lowers the Federal Funds rate, loan growth starts to accelerate, loan loss provisions begin to fall and capital return through share repurchases begins to accelerate,” RBC said.
Until the bank stocks outperform, they’ll continue to offer solid income, Cassidy wrote. “Going forward, we expect dividends will be maintained or increased over the next 12-18 months, which is a significant contrast to 2008-09 when 18 out of the top 20 banks either cut or eliminated their dividends.”
Regional banks that had seen sharp declines earlier in 2023 have soared this week after Federal Reserve policymakers acknowledged that lower interest rates are in store — three in 2024. While the SPDR S&P Regional Banking ETF is ahead 9.4% this week and almost 19% in December, many individual banks have done ever better. Western Alliance Bancorp has risen 17% this week and 29% this month; Citizens Financial has climbed 14% and 24%; Columbia Banking System has gained 11% and 24%.
2023′s narrow market rally doesn’t concern, Deutsche Bank chief U.S. equity and global strategist Bankim Chadha. The ‘Magnificent Seven’ stocks that have outperformed this year were the same stocks that sold off last year, Chadha told CNBC’s “Power Lunch” on Thursday.
“So why would we expect everybody else to rally when they didn’t really fall that much?” said Chadha, referring to stocks outside the mega cap tech sphere.
Chadha, who has a 5,100 base case for the S&P 500 in 2024, believes growth may be in other areas besides the large cap tech names next year.
“I wouldn’t be short on [mega cap tech] because they do grow their earnings a lot faster than everybody else does. But we are looking for the rally to broaden so I would look elsewhere for now,” Chadha said.
Oil prices settled 3% higher on Thursday on a weaker dollar and slight upgrade to demand growth in 2024.
The West Texas Intermediate contract for January gained $2.11, or 3.04%, to settle at $71.58 a barrel, while the Brent contract for February rose $2.35, or 3.16%, to settle at $76.61 a barrel.
The U.S. dollar also dropped to a four-month low Thursday after the Federal Reserve indicated the rate hikes were over. A weaker dollar makes oil cheaper, which can lift demand.
And the International Energy Agency on Thursday said global oil demand would grow by 1.1 million barrels per day in 2024, up slightly from its previous forecast of 930,000 barrels per day.
— Spencer Kimball
11 HOURS AGO
Former Dallas Fed leader says market shouldn’t overreact on latest moves
Former Dallas Federal Reserve President Robert Kaplan cautioned Thursday against reading too much into his former colleagues’ actions this week.
Specifically, he addressed comments from Chair Jerome Powell, who said the Fed is now looking into how restrictive it wants to be on policy now that inflation is receding and the economy has avoided recession.
“This was a conversation destined to happen. He had to preview it at some time, and chose yesterday,” Kaplan said during an interview on CNBC’s “Squawk on the Street.” “People should not overreact to what he said. He left his options open. He thinks they’re done, it’s likely the next move will be down, but he’s keeping his options open.”
The layoffs, which primarily affected commercial operations and related corporate functions, are the latest turmoil for the robotaxi startup and come one day after Cruise dismissed nine “key leaders” for the company’s response to an Oct. 2 accident in which a pedestrian was dragged 20 feet by a Cruise self-driving car after being struck by another vehicle.
The company had 3,800 employees before Thursday’s cuts, which also follow a round of contractor layoffs at Cruise last month. Affected employees will receive paychecks until Feb. 12 and at least an additional eight weeks of pay, plus severance based on tenure.
In a statement, a Cruise spokesperson said, “We shared the difficult news that we are reducing our workforce, primarily in commercial operations and related corporate functions. These changes reflect our decision to focus on more deliberate commercialization plans with safety as our north star. We are supporting impacted Cruisers with strong severance and benefits packages and are grateful to the departing employees who played important roles in building Cruise and supporting our mission.”
A Cruise representative also told CNBC that the company’s goal is now to work on a fully driverless L4 service, as well as relaunching ride-hailing in one city to start.
GM added, “GM supports the difficult employment decisions made by Cruise as it reflects their more deliberate path forward, with safety as the north star. We are confident in the team and committed to supporting Cruise as they set the company up for long-term success with a focus on trust, accountability and transparency.”
A barrage of safety concerns and incidents have plagued Cruise, majority-owned by GM, since it received approval in August for round-the-clock robotaxi service in San Francisco.
Since the October accident, Cruise’s robotaxi fleet has been grounded, pending the results of independent safety probes; its leadership has been gutted; production of a new robotaxi has been halted; hundreds of vehicles have been recalled; and local and federal government officials have launched their own investigations, among other concerns.
In October, the California Department of Motor Vehicles suspended Cruise’s deployment and testing permits for its autonomous vehicles, alongside a statement that said, “When there is an unreasonable risk to public safety, the DMV can immediately suspend or revoke permits.”
Cruise’s decision to suspend all trips on public roads last month came after a board meeting at the company’s headquarters, after which it also announced a reorganization, more oversight from GM, an independent “safety expert” that would assess the company’s safety operations and an expanded probe into Cruise’s tech and safety systems by Exponent, the engineering consulting firm Cruise hired to analyze the Oct. 2 crash. Exponent’s investigation is still ongoing, according to Cruise.
We knew this day was coming, but that does not make it any less difficult—especially for those whose jobs are affected.
Today, we are making staff reductions that will affect 24% of full-time Cruisers, through no fault of their own. We are simplifying and focusing our efforts to return with an exceptional service in one city to start with and focusing on the Bolt platform for this first step before we scale. As a result, we are reducing our employee counts in operations and other areas. These impacts are largely outside of engineering, although some Tech positions are impacted also. As you might have learned, yesterday, we took action to part ways with several SLT members.
Craig and I believe this is a necessary step, and our leadership team and the board are fully aligned with how our go-forward U.S. staffing needs will map to the priorities ahead of us, and set up Cruise for the long term. We have also ended additional assignments of contingent workers who support our driverless operations, as we refined our go forward plans.
In a few moments, you will receive an email letting you know whether or not you are affected by this staffing reduction. If you are impacted, you will get details about what happens next in a subsequent email.
Please know that our first priority is to treat departing Cruisers with fairness, and I will describe more about how we are doing that below.
Cruise today vs Cruise moving forward As we’ve shared, our goal is to focus our work on a fully driverless L4 service that meets a new AV performance bar, prioritize the Bolt platform, relaunch ridehail in one city to start, and enhance our safety standards and processes before we scale. We are ceasing work on the Origin MY24 but not losing sight of our work on future programs. This is very different from our prior plans to expand into more than a dozen new cities in 2024.
As a result of our decision to slow down commercialization, we are restructuring to focus on delivering the improvements to our tech and vehicle performance that will build trust in our AVs.
Many of you will be impacted because we aren’t commercializing as quickly, and therefore don’t need support in certain cities or facilities. In other cases, we restructured teams based on the work we’re prioritizing. We didn’t take any of these decisions lightly, though I know that isn’t much of a consolation if you’re someone affected by the actions we are taking today.
How we’re helping departing employees We know there’s no “good” way to lay off employees, but treating people fairly on their way out was a key principle that guided our approach, and our top priority was determining how we could provide a strong severance package, while treating departing Cruisers with respect. In short, we are offering departing Cruisers pay, at minimum, through April 8, 2024 (approximately 16 weeks), plus continued subsidized health benefits, RSU vesting, the January 5 bonus, and additional immigration support for those holding work visas.Severance details include:
Severance pay: Departing employees will remain on payroll through Feb. 12 and are eligible for an additional 8 weeks of pay, with long-term employees offered an additional 2 weeks’ pay per every year at Cruise over 3 years.
Bonus: All impacted employees will receive their 2023 bonus (eligible target payout) on Jan. 5, 2024.
Medical, Dental, Vision: we will provide Cruisers and their dependents who are currently enrolled in Cruise benefits the option to receive Cruise-subsidized medical, dental and mental health/EAP benefits through the end of May.
Perks Wallet: We will give Cruisers two months to access the perks most important to them via our Perks Wallet.
401(k): We will give Cruisers two months to continue contributions into their 401(k) plan, including our employer match.
RSU vesting: All Cruisers, including those impacted and those remaining, will receive their January 15th RSU vest. In addition, we will provide liquidity for all of these January 15th shares in Q1 based on an updated 409A fair market valuation that we will conduct in the first quarter. Tax obligations for these January 15th vested shares will not be incurred until we provide you liquidity for these shares.
Career support: Departing employees will receive a year-long subscription to LinkedIn Premium, and we will create an opt-in alumni directory to connect potential employers with impacted Cruisers. Cruise Talent Acquisition will also run workshops on resume building, networking, and interview prep with departed Cruisers in the new year.
Immigration support: We are offering continued time on payroll through March 24 in lieu of a lump-sum severance payment to allow visa holders additional time to help transition and manage their immigration status. Eligibility for the Perks Wallet and 401(k) contributions and match will also continue through this time. We also have dedicated support lined up to help Cruisers based on their needs.
Our message to other employers in the market is that each departing Cruiser is a talented, driven, and mission-focused team member who will contribute and achieve great things elsewhere. They are departing us through no fault of their own. Other companies will be privileged to have these professionals on their teams, as we were privileged to have them here during their time at Cruise.
What’s next As mentioned, in a few moments, you will receive an email letting you know whether or not you are affected by this staffing reduction, and if you are impacted, you will get details about what happens next. I am so sorry we have to do this by email, as I would prefer that we have a conversation with each of you. Unfortunately, given the scale of this change, this approach allows us to communicate to those who are impacted at the same time. We know you will want to say goodbye to your colleagues, so you will have access to Cruise email and Zoom for the next couple of hours (until 10am PT).
This is one of the hardest days we’ve had so far because so many talented people are leaving. I’m thankful we had the chance to work together, and I know I speak on behalf of so many Cruisers who will be reaching out to those departing to help with our professional networks and references. On behalf of the SLT, the Cruise Board and GM, I’m truly grateful to everyone who has played a role in building Cruise and who has poured so much into the promise of making our roads safer and our world better.
In a surprise announcement late Thursday, EU summit chair Charles Michel, who is the European Council president, said leaders had decided to start accession talks with Ukraine and Moldova.
“The European Council has decided to open accession negotiations with Ukraine & Moldova,” he said via X, formerly Twitter.
″#EUCO granted candidate status to Georgia. And the EU will open negotiations with Bosnia and Herzegovina once the necessary degree of compliance with the membership criteria is reached and has invited the commission to report by March with a view to taking such a decision,” he added.
“A clear signal of hope for their people and for our continent.”
The agreement comes despite Hungary pledging to block this decision during the current two-day EU summit. A handful of other member states, such as Italy, have also raised issues over enlarging the EU.
Speaking via X, Zelenskyy replied to Michel saying it was “a victory” for his country and Europe. “A victory that motivates, inspires, and strengthens,” he said, according to a Reuters translation.
Hungary’s prime minister, Viktor Orban, meanwhile, called it a bad decision and said via Facebook that his country did not participate in the decision-making process. Orban left the room when the vote among EU leaders started on Thursday evening, according to one EU official.
The House backed the National Defense Authorization Act, or NDAA, by 310 to 118, with strong support from Republicans and Democrats. It was more than the two-thirds majority required to pass the measure and send it to the White House for President Joe Biden to sign into law.
Separate from the appropriations bills that set government spending levels, the NDAA authorizes everything from pay raises for troops — this year’s will be 5.2% — to purchases of ships, ammunition and aircraft.
Because it is one of the few major pieces of legislation that becomes law every year, members of Congress use it as a vehicle for a wide range of initiatives. It is also closely watched by major defense companies, such as Lockheed Martin, RTX Corp and other firms that receive Department of Defense contracts.
The vote for this year’s bill, which is nearly 3,100 pages long and authorizes a record $886 billion, up 3% from last year, meant that Congress has passed an NDAA for 63 straight years.
The final version of the NDAA left out provisions addressing divisive social issues, such as access to abortion and treatment of transgender service members, that had been included in the version passed by the Republican-majority House over the objections of Democrats, threatening to derail the legislation.
The fiscal 2024 NDAA also includes a four-month extension of a disputed domestic surveillance authority, giving lawmakers more time to either reform or keep the program, known as Section 702 of the Foreign Intelligence Surveillance Act (FISA).
That provision faced objections in both the Senate and House, but not enough to derail the bill. The Senate defeated an attempt to remove the FISA extension from the NDAA on Wednesday before voting to pass the defense measure.
The House and Senate had each passed their own versions of the NDAA earlier this year. The measure approved this week was a compromise between the two parties and two chambers.
The bill extends one measure to help Ukraine, the Ukraine Security Assistance Initiative, through the end of 2026, authorizing $300 million for the program in the fiscal year ending Sept. 30, 2024, and the next one.
However, that figure is a tiny compared to the $61 billion in assistance for Ukraine Biden has asked Congress to approve to help Kyiv as it battles a Russian invasion that began in February 2022.
That emergency spending request is bogged down in Congress, as Republicans have refused to approve assistance for Ukraine without Democrats agreeing to a significant toughening of immigration law.
Ukrainian President Volodymyr Zelenskyy met with lawmakers at the Capitol on Tuesday to make his case for the funding requested by Biden, but emerged from the meetings without Republican commitments.
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Strong retail sales U.S. retail sales rose 0.3% in November, rebounding from the 0.2% decline in October and defying estimates of a 0.1% fall. “The rebound in retail sales in November provides further illustration that the continued rapid decline in inflation is not coming at the cost of significantly weaker economic growth,” said Andrew Hunter, deputy chief U.S. economist at Capital Economics.
[PRO] JPMorgan’s favorites Fueled by a frenzy over artificial intelligence, Big Tech has dominated most of the stock gains this year. Will next year see a continuation of their strength? JPMorgan Chase’s top internet analyst names his three favorite picks for 2024 — and one of them isn’t from the “Magnificent Seven.”
The pace of the rally cooled on Thursday as Big Tech, which has a disproportionately large impact on the indexes, saw losses. Microsoft fell 2.25%, Amazon lost 0.95% and Meta dipped 0.47%.
Deutsche Bank chief U.S. equity and global strategist Bankim Chadha thinks market growth next year could be more pronounced outside of Big Tech. “We are looking for the rally to broaden so I would look elsewhere for now,” Chadha said.
Big Tech’s losses Thursday, however, were more than offset by gains in other sectors.
And they might continue doing better than the general U.S. stock market in 2024, according to RBC Capital analysts.
“In the second half of 2024, we see continued improvement in the fundamentals as the Federal Reserve gradually lowers the Federal Funds rate, loan growth starts to accelerate, loan loss provisions begin to fall and capital return through share repurchases begins to accelerate,” RBC said.
So the rally could broaden next year, as more sectors benefit from the Fed’s gradual interest rate cuts.
Furthermore, if November’s much-better-than-expected retail sales are anything to go by, consumer spending, which makes up almost 70% of U.S. gross domestic product, will hold steady or even increase, boosting hopes of a soft landing.
Shortly before the Israel-Hamas war, a peace agreement was in the works between Israel and Saudi Arabia. A trilateral agreement similar to the Abraham Accords was supposed to be brokered by the U.S. and all sides had an interest in flourishing business relations.
“The thinking was that greater integration and commercial connectivity would reduce regional tensions,” said Sanam Vakil, director of the Middle East and North Africa Program at Chatham House.
“I don’t think the current Israeli government can conduct serious negotiations with Saudi Arabia, if a peace with Saudi would require serious concessions by Israel on the Palestinian front,” said Amnon Aran, professor of international politics at City, University of London.
Has the war indefinitely derailed normalization efforts in the Middle East? Will Saudi Arabia prioritize its partnership with Washington or the Palestinian cause?
Japan’s manufacturing activity contracted in December for the seventh straight month, according to a private survey.
A flash reading of the au Jibun Bank Japan manufacturing purchasing managers’ index shrank to 47.7 in December from 48.3 in November, signaling the quickest deterioration in manufacturing business conditions for ten months.
The survey said services growth remained softer than the average seen over 2023 as a whole. Total new business expanded at a slightly quicker but mild pace in December, despite a slight drop in new export sales.
China boosts liquidity injections, holds rates for both short- and medium-term loans
China’s central bank announced that it has conducted a reverse repurchase operation of 50 billion yuan ($7.06 billion) as well as injecting 1.45 trillion yuan of medium-term facility loans, so as to “maintain reasonable and sufficient liquidity in the banking system.”
The rate on the medium-term facility loans were held at 2.5%, while the rate for the seven day reverse repurchases were also maintained at 1.8%.
Reuters reported that 650 billion yuan worth of MLF loans are set to expire this month, which means that the operation results in a net 800 billion yuan fresh fund injection into the banking system.
Fewer investors are pessimistic about the outlook for stocks over the next six months than at any time since 2017, according to the latest weekly survey from the American Association of Individual Investors.
The percentage of bearish investors tumbled to just 19.3% in the latest week, down from 27.4% last week and an historical average of 31.0%.
Bullish investors grew to 51.3%, the most since mid-July and up from 47.3% last week and an historical average of 37.5%. “Optimism is now unusually high,” AAII said, noting that bullishness is above its historical average for a sixth straight week and 7th week in 10.
These sentiment levels are bad news for contrarian investors who might interpret them as meaning the stock market is overbought and that investors are closer to being done buying than they are being done selling.
Scholastic — Shares dropped 11% after Scholastic reported second-quarter revenue that fell from the year-ago period. Revenue came in at $562.6 million, roughly 4% lower than the $587.9 million one year ago.
Quanex Building Products — Shares dropped nearly 7% after Quanex posted fourth-quarter adjusted earnings of 95 cents per share, topping the FactSet consensus estimate of 70 cents per share. Revenue came in at $295.5 million, more than the $291.0 million estimated by analysts polled by FactSet.
