At the end of Friday, the Dow Jones (US30) was down 0.28% (for the week -0.63%). The S&P 500 Index (US500) was up 0.25% (for the week +0.83%). The Nasdaq Technology Index (US100) added 0.92% (up +3.10% for the week). The S&P 500 and Nasdaq indices set new record highs on Friday, helped by a stronger-than-expected November employment report reinforcing optimism for a Federal Reserve rate cut this month. Nonfarm Payroll Employment rose by 227,000, exceeding the estimate of 214,000, recovering from the bad weather and strikes seen in October. Following the report, traders raised the probability of a December rate cut to 90% from 70%. The rally was led by major technology stocks, with Amazon (+2.9%), Tesla (+5.3%), and Meta (+2.5%) all rising, reflecting confidence in the labor market and potential Fed policy changes.

The Canadian dollar weakened to 1.41 per dollar in December, the lowest level since April 2020, as investors embraced softer-than-expected labor market data. Canada’s unemployment rate rose to 6.8% in November from 6.5%, beating projections of 6.6% and marking the highest level since September 2021. This is in line with the Bank of Canada’s concerns about a weakening labor market and increased expectations of a 50 bps rate cut this week. In addition, tariff threats by US President-elect Donald Trump, including tariff hikes of 25% for Canada and Mexico and 10% for China, dampened sentiment given Canada’s reliance on US energy and auto demand.

Equity markets in Europe traded flat on Friday. Germany’s DAX (DE40) rose by 0.13% (for the week +4.08%), France’s CAC 40 (FR40) closed 1.31% higher (for the week +3.91%), Spain’s IBEX 35 (ES35) fell by 0.39% (for the week +4.27%), and the UK’s FTSE 100 (UK100) closed down 0.49% (for the week +0.26%). Economists seem to have missed the political situation in France, where President Macron has promised to appoint a new Prime Minister in the coming days and form a new “government of common interests.” In Germany, despite economic woes and political problems at home, the benchmark DAX Index (DE40) has shown surprising resilience, achieving roughly a 20% gain over the past year. This strength is due to globally oriented companies benefiting from international revenue streams and a weakening euro, which improves export competitiveness.

The Eurozone economy grew by 0.4% in Q3, the strongest pace in two years, following 0.2% growth in Q2 and in line with previous estimates. Among the largest economies, Germany’s GDP grew by 0.1%, down from 0.2% in the preliminary estimate but avoided recession. In addition, France’s GDP grew by 0.4%, and the Spanish economy remained resilient (+0.8%). On the other hand, the Italian economy stalled, and the Dutch economy slowed down (+0.8%).

According to banks and industry consultants, OPEC+’s decision to postpone the resumption of supply until April will reduce global oil production next year, which will tighten the balance somewhat, but a glut is still expected. Nevertheless, rising supply, especially from non-OPEC+ countries in the Americas, and weak demand from China remain major concerns. Morgan Stanley raised its estimates for Brent crude oil prices for the third and fourth quarters of 2025 to $70 a barrel from $68 and $66, respectively. ING Groep NV raised its prognosis for Brent to $71 a barrel from $69.

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) rose by 2.29%, China’s FTSE China A50 (CHA50) gained 1.13%, Hong Kong’s Hang Seng (HK50) added 2.18%, and Australia’s ASX 200 (AU200) was negative 0.18%.

China’s annual inflation rate unexpectedly fell to 0.2% in November 2024 from 0.3% in the previous month, missing market estimates of 0.5% and the lowest since June. The slowdown showed the country’s growing deflation risks despite recent government stimulus measures and the Central Bank’s supportive stance on monetary policy. Inflation remains subdued, which will require continued stimulus.