Inflation is rising in Germany. Silver prices hit a one-month high

The Dow Jones (US30) was down 0.35% on Tuesday. The S&P 500 Index (US500) closed negative 0.30%. The Nasdaq Technology Index (US100) fell by 0.34%. Investors were cautious ahead of Wednesday’s expected consumer inflation report, which could significantly impact Federal Reserve policy. Despite the market decline, the indices remain near record highs, driven by optimism that the inflation data could reinforce expectations of a soft landing and pave the way for a Fed rate cut in December. The Consumer Price Index is expected to rise slightly to 2.7% y/y in November from 2.6% y/y in October. Meanwhile, the Core CPI (excluding food and energy) is expected to be unchanged from October at 3.3% y/y in November.

Oracle (ORCL) is down more than 6% after reporting adjusted second-quarter revenue of $14.06 billion, below the consensus estimate of $14.12 billion. EBay (EBAY) shares are down more than 2% after Jefferies downgraded the stock to “unweighted” from “hold” with a $52 price target. Alphabet (GOOG) is up more than 5% and led the Nasdaq 100 stocks higher after it disclosed a breakthrough in quantum computing with its new Willow quantum chip.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE40) fell by 0.08%, France’s CAC 40 (FR40) closed down 1.14%, Spain’s IBEX 35 (ES35) dropped 0.38%, and the UK’s FTSE 100 (UK100) closed down 0.86%. Investor sentiment was dampened by disappointing trade data from China, which partially offset optimism from China’s announcement of fiscal and monetary policy easing for next year. Traders also refrained from making big bets ahead of tomorrow’s release of the US Consumer Price Index and Thursday’s ECB monetary policy decision.

German annual inflation rose to 2.2% in November 2024 from 2% in October, which is in line with preliminary estimates and the highest in four months. Core inflation, which excludes volatile food and energy prices, hit a six-month high of 3% in November. Norway’s annualized consumer inflation rate fell to 2.4% in November 2024 from 2.6% in the previous month. Meanwhile, the tax-adjusted Consumer Price Index excluding energy (CPI-ATE) rose to 3% year-over-year in November after rising 2.7% in October.

Silver prices (XAG/USD) traded near $32 an ounce on Tuesday, remaining near one-month highs as Chinese policymakers unveiled plans for additional economic stimulus, boosting demand prospects in the world’s top metals consumer. Like other precious metals, Silver also benefited from rising expectations that the US Federal Reserve will cut interest rates again this month.

WTI crude oil prices rose to around $69 a barrel on Wednesday, rising for the third consecutive session amid an improved demand outlook. This came after China announced plans to implement a sufficiently loose monetary policy next year to revitalize its economy, which could boost energy demand from the world’s largest oil importer. In support of that projection, China’s crude oil imports rose in November for the first time in seven months, rising more than 14% year-on-year.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) rose by 0.53%, China’s FTSE China A50 (CHA50) gained 1.04%, Hong Kong’s Hang Seng (HK50) fell by 0.50%, and Australia’s ASX 200 (AU200) was negative 0.36%. In Asia, market attention turned to China’s annual Central Economic Work Conference, which began today. This closed-door meeting, which usually lasts two to three days, is an opportunity for China’s top leaders to assess the state of the economy and set priorities for the coming year.

The Reserve Bank of New Zealand (RBNZ) has already cut the official money rate by 125 bps this year to 4.25%. Markets are now pricing in a 59% chance of another 50bp rate cut at the Central Bank’s next meeting in February, further weighing on the local currency.