MARKET WRAPS

Stocks:

European shares were weaker on Monday, tracking losses in Asia, with trading expected to remain quiet ahead of the New Year's holidays.

U.S. Markets:

Stock futures slipped, suggesting major indexes could come under fresh pressure after ending last week on a downbeat note.

Benchmark 10-year Treasury yields stood at a little under 4.6%, while the WSJ Dollar Index was close to flat.

There will be several data releases relating to the U.S. housing market this week, including Monday's Pending Home Sales Index for November.

There will be no major companies reporting quarterly earnings during the New Year's week. Fourth-quarter earnings season kicks off on January 15.

Forex:

After strong gains throughout the latter half of the year, the dollar looks set to end 2024 close to a two-year high against a basket of currencies.

The currency has risen sharply due to a strong U.S. economy and expectations that further interest-rate cuts by the Federal Reserve will be limited and in recent days, it has performed well despite weak U.S. durable goods and housing data last week, Forex Analytix said.

Pepperstone said for now, the postelection boost has faded and bitcoin has settled into a trading range of $92,000-$100,000, but a close below $92,000 would open up scope for deeper falls toward $81,000.

Energy:

Oil prices slipped in thin trading but remain up around 1.5% on week, after a larger-than-expected drop in U.S. oil inventories.

Friday's EIA report showed crude oil stocks dropped 4.2 million barrels, against estimates of 700,000 barrels. The report fueled optimism in the market and strengthened prices, keeping WTI over the key $70 a barrel mark, XS.com said.

Profit-taking and portfolio rebalancing have capped oil's gains but not prevented it from holding at higher levels.

Metals:

Gold has traded in a narrow range over the week to date, as investors await fresh catalysts in 2025.

In focus is the Fed's approach to loosening monetary policy, as well as Donald Trump's proposed policies. The market is pricing in fewer U.S. interest-rate cuts in 2025 on hawkish Fed comments and Trump's expected policies, which are inflationary in nature.

Simmering geopolitical tensions are keeping a floor under gold prices, and the dollar is broadly flat, limiting bullion's potential losses, market watchers said.

DBS said volatility will reign for commodities in the short term amid China's lackluster stimulus and tariff woes from Donald Trump's re-election, but keeps its 12-month gold target price at $2,835/oz.

Lithium-battery prices have likely hit a trough and could rise modestly in 2025, Citi said.

An increasing number of industry participants "have turned less bearish compared with three months ago," Citi said after attending an industry event.


EMEA HEADLINES

LVMH Sales Have Been Hurt By Weakness in China. A Turnaround Could Boost U.S. Shares.

This article is an excerpt from "Alphabet and 9 More Stocks to Buy for 2025," published on Dec. 13, 2024. To see the full list, click here.

The world's rich have never been wealthier, but LVMH Moët Hennessy Louis Vuitton, the top luxury-goods company, hasn't been able to capitalize. Its sales were flat in the first nine months of the year, hurt by weakness in China, its most important market.


Spanish Inflation Ticks Higher Than Expected as ECB Mulls Rate Cuts

Inflation in Spain rose for a fourth straight month, a signal to European Central Bank policymakers that price pressures remain ahead of its first meeting of 2025 next month.

Consumer prices rose 2.8% in December compared with the same month of 2023, up from 2.4% in November, according to European Union harmonized data published Monday by Spanish statistics agency INE. Economists polled by The Wall Street Journal expected 2.6%.


GLOBAL NEWS

The Fed's 5-Year Policy Review Takes Place Next Year. What to Expect.

Federal Reserve policymakers will have more to consider in 2025 than whether to move interest rates in response to their inflation and employment goals. The central bank will also conduct a review of its monetary policy strategy and tools, as it does every five years.

The previous framework update came in 2020, in the midst of the Covid-19 pandemic and after more than a decade of consistently low inflation and interest rates set just above zero. Today, the U.S. economy is coming out of its most inflationary period since the 1970s and interest rates are well above the so-called zero lower bound.


Trump's Return Sparks Hope for 2025 Deals Revival

Wall Street is optimistic that a buoyant stock market, declining interest rates and Donald Trump's lighter-regulation agenda will prompt a dealmaking rebound in 2025. But jitters remain thanks to the president-elect's unpredictability.

Deal volume has been muted for the past few years following record volumes coming out of the pandemic. While total global deal volume is up roughly 12% in 2024 through Dec. 26 compared with the same period in 2023, the number of transactions is lower and volume remains well below the 2021 high, according to Dealogic data.


China Has Limited Firepower to Counter U.S. Tariffs

SINGAPORE-In the weeks since the election, China has flaunted the ways in which it could hit back at the U.S. in the event of a new trade war with the U.S., including everything from choking off the metals needed for everyday products to punishing American companies that do business in China.

But using such tools too aggressively risks backfiring on Beijing.


Azerbaijan Accuses Russia of Coverup in Kazakhstan Plane Crash

Azerbaijan's president accused Russia of trying to cover up its role in a plane crash that killed 38 people, delivering a harsh condemnation that signaled a reversal of the power dynamics that long saw Moscow hold sway over its former Soviet republics.

President Ilham Aliyev said Sunday that Azerbaijan had laid out for the Kremlin the necessary conditions to satisfy the country, demanding that Russia take responsibility for causing the crash, provide compensation for the country and victims' families, and bring those guilty of downing the plane to justice.


Fear That China Rules the Waves Jolts U.S. to Pursue Maritime Revival

Rising tensions with China are prompting Washington to revisit America's roots as a trading nation of the seas.

Protecting merchant sailors and their cargo was what compelled Congress to commission the U.S. Navy's first new warships. That was in 1794, targeting North African Barbary pirates. The young republic's seaborne traders, a linchpin of economic growth, were vital to national security.


Write to paul.larkins@wsj.com

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This article is a text version of a Wall Street Journal newsletter published earlier today.


(END) Dow Jones Newswires

12-30-24 0519ET