In the premarket session on Friday, US stock futures were on the rise, with the Dow Jones Industrial Average, S&P 500, and Nasdaq futures ticking up by 0.1%, 0.5%, and 0.8%, respectively. Investors are keen to wrap up the week on a high note, buoyed by a 0.4% increase in the US producer price index for November, which outpaced the 0.2% forecast.

Meanwhile, consumer inflation figures came in as expected, according to the Bureau of Labor Statistics. This week, macroeconomics took the spotlight with a slew of central bank rate decisions. Other hot topics included China's economic maneuvers, Donald Trump's plans, and the magnetic pull of artificial intelligence on the stock market.

Investors generally cheer interest rate cuts because they make borrowing cheaper. However, they prefer these cuts to be measured and not a response to a severely weakened economy. This is the current scenario in the West, although some countries are faring better than others. This week, two central banks surprised investors with sharper-than-expected rate cuts. The Bank of Canada slashed its rate from 3.75% to 3.25% to stave off labor market and economic woes. Similarly, the Swiss National Bank cut its rate from 1% to 0.5%, partly to curb the Swiss franc's strength, which has been a thorn in the side of local exporters. The European Central Bank, on the other hand, opted for a modest 25 basis point rate cut, reducing the deposit rate from 3.25% to 3%. While some had hoped for a 50 basis point cut, the ECB chose a more cautious approach, signaling continued monetary easing in the near term. According to Bloomberg, there's a consensus within the ECB for 25 basis point cuts at the next two meetings, scheduled for January 30 and March 6.

This initial wave of rate decisions will be followed by another next week, featuring the Bank of England, the Bank of Japan, and the US Federal Reserve. The Fed, of course, is the main event, given its outsized influence on global finance. The market is 96% convinced that the Fed will cut rates by 25 basis points next Wednesday, maintaining a favorable financial environment as the year winds down.

The real question is what happens next. While there's consensus on next week's decision, the outlook for January 29 is murkier, with a 75% chance of a pause. By then, inflation data will be out, and Donald Trump will have settled into the Oval Office, likely with some bold initiatives underway.

While the equity markets are confident about the Fed's upcoming move, they were more tentative yesterday. After a strong rally, Wall Street reversed course, dipping just over 0.5%. However, the buzz around artificial intelligence remains ever-present. Chip giant Broadcom announced results that sent its stock soaring by 14% in after-hours trading. With a market cap of $844 billion. Its results have reignited the AI excitement, which plays a significant role in stock market dynamics.

Meanwhile, the WSJ reports that Trump's advisors are looking to diminish the influence of banking regulators, potentially boosting a financial sector that has already climbed 38% this year in the US.

No stock market week in 2024 would be complete without some disappointment from China. The much-anticipated CEWC, a conference on China's economic strategy, delivered little more than repetition, with no new figures. Rumors persist that China's economy may be growing more slowly than official data suggests, as noted by Chinese economists. Nonetheless, China appears to be embarking on its most significant easing process in years.

In the Asia-Pacific region, disappointment in China is palpable, with the CSI300 and Hang Seng both down around 2% this morning. South Korea is the exception, with the KOSPI gaining 0.5%, offsetting losses from the President's martial law debacle. Australia and India saw slight declines, while Japan closed 1.1% lower. European indices are mixed, with the Stoxx Europe 600 down 0.2%.

Economic highlights:

British monthly GDP, final French inflation reading for November and US import prices round off the week. The full calendar is here.

  • Dollar: USD 0.9514 GBP 0.7903
  • Ounce of gold: USD 2665
  • Brent crude: USD 73.74
  • 10-year US bond: 4.35
  • Bitcoin: USD 100,500

In corporate news:

  • VCI Global surged 40% in premarket trading, recovering from a nearly 5% loss the previous day.
  • Loop Industries saw a 43% increase after securing €10 million ($10.5 million) through a financing deal with Reed Societe Generale Group.
  • TruGolf shares rose 25%, building on an 18% gain from Thursday.
  • Conversely, Repare Therapeutics shares plummeted 39% following disappointing phase 1 trial results for its cancer drugs.
  • Candel Therapeutics dropped 31% after announcing a public offering priced at approximately $80 million.
  • Inovio Pharmaceuticals fell 30% due to an underwritten public offering priced at $30 million. Broadcom shares jumped 15% pre-bell after reporting better-than-expected fiscal fourth-quarter earnings.
  • RH also climbed 17% following its latest quarterly results, while
  • Costco Wholesale slipped 0.2% due to mixed fiscal first-quarter results.

Analyst recommendations:

  • Cardinal Health, Inc.: Wells Fargo upgrades to equalweight from underweight with a price target raised from USD 101 to USD 127.
  • Dr Horton: JP Morgan downgrades to underweight from neutral with a target price reduced from USD 188 to USD 156.
  • Exxon Mobil Corporation: Gerdes Energy Research LLC upgrades to buy from neutral with a target price raised from USD 131 to USD 135.
  • Gaming And Leisure Properties, Inc.: JP Morgan upgrades to overweight from neutral with a target price raised from USD 49 to USD 54.
  • Monday.com Ltd.: KeyBanc Capital Markets downgrades to sector weight from overweight.
  • Nordson Corporation: Baird downgrades to neutral from outperform with a target price reduced from USD 294 to USD 237.
  • Norwegian Cruise Line Holdings Ltd.: Barclays upgrades to overweight from equalweight with a target price raised from USD 28 to USD 32.
  • Paypal Holdings, Inc.: Wolfe Research upgrades to outperform from peerperform with a target price of USD 107.
  • Ringcentral, Inc.: Mizuho Securities downgrades to neutral from outperform with a target price of USD 42.
  • Ryman Hospitality Properties, Inc.: JP Morgan downgrades to underweight from neutral with a target price of USD 100.
  • Salesforce.com, Inc.: KeyBanc Capital Markets upgrades to overweight from sector weight with a target price of USD 440.
  • Sempra: Morgan Stanley upgrades to overweight from equal weight with a price target raised from USD 85 to USD 98.
  • Servicenow, Inc.: KeyBanc Capital Markets downgrades to sector weight from overweight.
  • Weatherford International Plc: Goldman Sachs downgrades to neutral from buy with a target price reduced from USD 132 to USD 98.
  • Zoominfo Technologies Inc.: KeyBanc Capital Markets downgrades to underweight from sector weight with a target price of USD 10.
  • Broadcom Inc.: Fubon Securities maintains its buy recommendation and raises the target price from USD 170 to USD 240.
  • Ciena Corporation: Rosenblatt Securities Inc. maintains a neutral recommendation with a price target raised from 75 to USD 94.
  • Costco Wholesale Corporation: Roth Capital maintains its neutral recommendation with a price target raised from USD 755 to USD 907.
  • Frasers Group Plc: Shore Capital downgrades to hold from buy with a target price of GBX 675.
  • St. James's Place Plc: Deutsche Bank upgrades to buy from hold with a price target raised from GBX 775 to GBX 1150.
  • Volex Plc: Peel Hunt upgrades to buy from restricted with a price target reduced from GBX 400 to GBX 365.
  • Wizz Air Holdings Plc: AlphaValue/Baader Europe downgrades to reduce from add with a price target raised from GBX 1576 to GBX 1602.