At the end of Tuesday, the Dow Jones Index (US30) fell by 0.29%. The S&P 500 Index (US500) was down 0.29%. The NASDAQ Technology Index (US100) closed negative 0.17%. Higher bond yields on Tuesday contributed to some profit-taking in equities after five consecutive sessions of gains. In addition, the liquidation of long positions in equities ahead of Wednesday’s release of the US consumer price report had a negative impact on the overall market.

Shares of Nvidia (NVDA) closed higher by more than 2% after Redburn initiated a “buy” recommendation with a $178 price target. Airbnb (ABNB) shares closed down more than 2% after Phillip Securities downgraded the stock to a downgrade from neutral with a $120 price target.

Today, the US will release its monthly consumer inflation report. Economists expect annualized core inflation, which excludes food and fuel costs, to remain at 3.3%. Overall inflation is estimated at 2.5% y/y, up from 2.4% y/y last month. The October CPI may not have a strong impact on the market, as the US Fed will have both October and November inflation reports in hand before the December meeting, and the decision will be based more on the latest report. Also, the Trump factor should not be ruled out, as many believe that his proposals, in particular tariff hikes, may lead to higher consumer prices. Therefore, if the inflation data remains stable or shows a slight increase, it will be more positive for the US dollar as it will increase the probability that the US Fed may pause in December. If, however, the inflation data is better than expected and shows a reduction in inflationary pressures, this will hurt the US dollar but will be positive for indices and precious metals.

Equity markets in Europe decreased yesterday. Germany’s DAX (DE40) fell by 2.13%, France’s CAC 40 (FR40) closed down 2.69%, Spain’s IBEX 35 (ES35) lost 1.85%, and the UK’s FTSE 100 (UK100) closed down 1.22%. Expectations for German economic growth in the November ZEW survey unexpectedly fell by 3.7 to 7.4 versus expectations of an increase to 13.2. ECB Governing Council spokesman Rehn said yesterday that disinflation in the Eurozone is “well underway” and “this strengthens the case for an ECB rate cut in December.” Swaps discount the odds of a 25bp ECB rate cut at the December 12 meeting at 100% and a 50bp rate cut at the same meeting at 23%.

WTI crude oil prices rose above $68 a barrel on Wednesday, rebounding slightly from two-week lows, helped by a short-term supply shortage in the physical market. Investors also continued to assess OPEC’s latest downwardly revised demand growth estimates for 2024 and 2025, driven in part by China’s slowing economy. While OPEC’s estimates remain higher than those of other agencies, the lower demand outlook and China’s weakness continue to weigh on market sentiment.

Asian markets were predominantly down yesterday. Japan’s Nikkei 225 (JP225) fell by 0.40%, China’s FTSE China A50 (CHA50) lost 1.06%, Hong Kong’s Hang Seng (HK50) decreased by 2.84% and Australia’s ASX 200 (AU200) was negative 0.13%.

Australian wage growth slowed to a near two-year low of 3.5% in the third quarter, missing estimates of 3.6%. On a more positive note, consumer confidence rose to a two-and-a-half-year high in November, driven by easing fears of interest rate hikes. Currently, markets do not expect a rate cut by the Reserve Bank of Australia (RBA) shortly, with the first possible rate cut expected in mid-2025.

The New Zealand dollar traded near its lowest level since early August as the US dollar strengthened further on speculation that Treasury yields will rise due to President-elect Trump’s pro-tariff policies, which could lead to higher inflation. Additional pressure on the kiwi came from China’s recent stimulus measures, which failed to meet investor expectations and dampened demand prospects from New Zealand’s largest trading partner. Domestically, markets are expecting another 50 basis point rate cut by the Reserve Bank of New Zealand (RBNZ) later this month, with the possibility of a further 75 basis point cut being considered.