MHMarkets：December 21, 2023,--Fundamental Reminder

21:30 USD GDP Growth Rate QoQ Final (Q3) & USD Initial Jobless Claims (DEC/16) & USD Core PCE Prices QoQ Final (Q3) & USD Consumer Spending QoQ Final (Q3)

23:00 USD CB Leading Index MoM (NOV)

23:30 USD EIA Natural Gas Stocks Change (DEC/15)

Market Overview

Review of Global Market Trend

On Wednesday, the U.S. dollar index firm to maintain above the 102 mark, the plate once rose to 102.54 intraday highs, and finally closed up 0.3% at 102.44. U.S. bond yields have been down, the 10-year U.S. bond yields lost 3.9% mark, and ultimately closed at 3.853%; on the Fed's policy rate is more sensitive to the yield of two-year U.S. bonds closed at 4.340%.

Spot gold failed to stand firm above the 2040 mark, and in the U.S. trading session once lost 2030 mark, and eventually closed down 0.44% at $2031.24 per ounce; spot silver was a rollercoaster trend, which in the U.S. trading session sharply rose, and then spit out most of the gains, and ultimately closed up 0.4% at $24.15 per ounce.

International crude oil pulled back due to an unexpected increase in U.S. crude inventories last week, a larger-than-expected increase in fuel stocks and record oil production. WTI crude oil gave back all of its intraday gains in the U.S. trading session and turned lower, closing down 0.53% at $73.74 per barrel; Brent crude oil surged to the $80 mark during the session but failed to stabilize here, closing down 0.24% at $79.11 per barrel.

The three major U.S. stock indexes continued to decline at the end of the day, the Dow closed down 1.27%, the Nasdaq closed down 1.5%, nine consecutive days of gains were ended, the S&P 500 index closed down 1.47%, the largest single-day decline in nearly three months. GOOGL.O bucked the trend and closed up more than 1%, while FDX.N closed down 12%. The Nasdaq China Golden Dragon Index fell 3%, GOTU.N dropped 12%, NIO.N fell 10%, retracing the week's gains, and BABA.N fell 1.4%.

Major European stock indexes were mixed. Europe's Stoxx 50 index closed down 0.03%, Germany's DAX 30 index closed down 0.07%, and Britain's FTSE 100 index closed up 1.02%.

Market Focus

1. Fed's Harker: job of controlling inflation not yet done, no need to raise rates again, next step is to cut rates but not immediately.

2. Yemen's Houthi leader: if the U.S. intervenes further or if they target our country, we will not stand idly by and we will target their warships and interests with our missiles; British media: the U.S.-led coalition will create a safe passage in the Red Sea.

3. Israel said it is ready to cease fire in the Gaza Strip for at least a week, the Israeli army said it has “full control” of the Hamas command center in Gaza City, and the military operation in northern Gaza is nearing its end.

4. The U.S. announced revisions to the Russian oil price cap compliance regime that are designed to make it more complicated for Russian exporters to circumvent the price cap.

5. The EIA report showed that last week, the U.S. crude oil inventories increased by nearly 3 million barrels to 2.909 million barrels, stocks of crude oil rose again to the highest level since August last year, and last week, U.S. crude oil production reached a record high of 13.3 million barrels per day. In addition, the strategic petroleum reserve increased by 629,000 barrels, the largest increase since the week of September 1, 2023, inventories for the week of June 2, 2023, which was the highest since the week.

6. ECB Governing Council member Kazaks said the first rate cut could happen around mid-2024; Governing Council member Nauert thinks a rate cut is unlikely in the first half of next year.

7. EU finance ministers agree on new fiscal rules to gradually cut debt.

8. U.K. CPI for November recorded a monthly rate of -0.2%, the first negative reading since July this year. UK interest rate swaps fully priced in the Bank of England to cut rates for the first time in May 2024.

Institutional Perspective

01

Bank of America

【Bank of America: Will allocate more capital to trading business】

Bank of America CEO Brian Moynihan said the bank will continue to invest in its markets division in a bid to increase its market share. He also said the bank plans to allocate more capital to the trading business.

02

Morgan Stanley

【Morgan Stanley: U.S. stocks will rise again next year, and the “tech seven” are expected to continue to lead!】

The U.S. stock market could continue to rise next year as investors increasingly shell out cash to buy stocks to chase a big rally, with the S&P 500 Index now almost back to early 2022 levels, said Andrew Slimmon, senior portfolio manager for U.S. equities at Morgan Stanley. “We haven't progressed in two years. I think you're going to see people more optimistic. Because they think they might miss out on making money.” Slimmon emphasized that the U.S. economy won't collapse under the weight of aggressive Fed rate hikes, and he's bullish on stocks in 2024, he added. Nonetheless, he expects U.S. stocks could pull back by the end of next year.

03

JP Morgan

【JP Morgan: Firmly bearish on US stocks, and the market is overly optimistic about the prospect of Fed rate cuts】

Investors should favor cash over stocks in 2024 because the Fed seems unlikely to cut interest rates quickly, Marko Kolanovic, chief strategist at JP Morgan, said in a report released Wednesday EST. Kolanovic said investors are too confident that the U.S. can avoid a recession next year and achieve a soft economic landing. In addition, the combination of already high valuations for U.S. stocks, tightening credit spreads, and abnormally low volatility have led Kolanovic to argue that now is not the time to buy stocks in a big way.“ We remain cautious on risk assets and the overall macro outlook, as interest rate volatility (over the past 18 months) should negatively impact economic activity, and with weakening consumer power, rising geopolitical risks, and expensive valuations of risk assets,” he said, adding, “Even under an optimistic scenario, we see limited upside for risk assets.”