MARKET WRAPS
Stocks:
Stocks in Europe were mixed, with defense companies falling after Trump called for an immediate ceasefire between Ukraine and Russia.
Traders were digesting the latest Chinese government announcement promising action to boost China's economy.
Shares in Hong Kong surged after the 24-member Politburo, China's top decision-making body, pledged Monday to implement more proactive fiscal policy and moderately loose monetary policy for next year.
According to Pinpoint Asset Management, another positive signal is the government's plan to boost consumption significantly, as investors had worried that potential stimulus would focus on investment, which would worsen the overcapacity problem.
Stocks to Watch
RBC Capital Markets said luxury companies are set to reach a point of significant change after a period of sharp declines in sales, and that the industry could face a stabilization or inflection phase in revenue growth trends, perhaps as early as the fourth quarter of the current year driven by improving trends in the U.S. after the presidential election and a no-worse environment in China.
RBC Capital Markets' top picks are LVMH, mainly due to its scale and diversification, Burberry, thanks to its turnaround and Watches of Switzerland, on account of its exposure to the U.S. market.
U.S. Markets:
Stock futures were flat.
November inflation data and a handful of earnings reports from retailers and software firms will be this week's highlights. Macy's is scheduled to report its third-quarter earnings and outlook, which was postponed last month.
Wednesday's release of the Consumer Price Index for November will be the last major economic report before next week's Federal Reserve policy meeting, its last of the year.
Forex:
The euro could fall to $1.0500 in the short-term or even lower after U.S. inflation data and the ECB policy decision later this week, according to ING.
U.S. core inflation might have accelerated in November, bringing into question if the Fed would be right to be cutting interest rates and the ECB is likely to cut rates by 25 basis points on Thursday which might open the door to taking rates below the so-called neutral rate that neither spurs nor slows growth, ING said.
The dollar edged lower as investors bet on the Fed cutting interest rates further this month, Swissquote Bank said.
Friday's nonfarm payrolls data boosted market expectations for the Fed to cut rates by 25 basis points at the December 18 meeting, supporting the case for a softer dollar even as investors seek safe haven assets amid global political turmoil.
Sterling rose after China's pledge for more proactive fiscal stimulus Monex Europe said.
The announcement was supporting risk appetite and offering tailwinds to sterling, it said.
Bonds:
Rate-cut sentiment should provide support to bond markets, Commerzbank said.
Bunds are likely to remain range bound, with the 2.12% level for the 10-year Bund yield possibly marking the upper end of the range.
Meanwhile, the room for a fall below 2.05% looks limited for now and the ECB is poised to cut interest rates on Thursday and should also leave the door open to further easing, it added.
Morgan Stanley said Bunds should consolidate after the recent rally.
The monetary policy decoupling enforced by market pricing has continued to de-correlate U.S. and eurozone rates, and a sufficient amount of pessimism about Europe's outlook is already embedded, so risks could be asymmetric going into the European Central Bank's meeting on Thursday.
Energy:
Oil rose on greater uncertainty in the Middle East after Syrian President Bashar al-Assad's regime fell.
"The geopolitical situation in the Middle East is likely to remain tense in the coming days following the collapse of Syria's government," ANZ Research said.
Still, gains are capped by persistent concerns over global demand and an impending glut despite OPEC+'s decision to extend a series of production cuts.
The weak demand outlook was also underscored by Saudi Arabia's decision to lower its January prices for crude grades it sells to Asia, its main market.
Focus this week will be on China's Central Economic Work Conference, as well as monthly reports from OPEC, the IEA and the EIA.
Metals:
Gold futures rose on geopolitical risk and central bank purchases.
The precious metal has gained on safe-haven demand after the Syrian rebels seized Damascus.
Israel seized the demilitarized buffer zone between Israel and Syria over the weekend.
A softer dollar has further enhanced gold's appeal as a safe-haven.
China's central bank also resumed purchases of bullions in November after a six-month pause, which should shore up Chinese investor demand.
Gold Chart
Comex gold futures' bullish setup is still valid, based on the daily chart , RHB Retail Research said.
Friday's price movements have reaffirmed that bears are respecting the immediate support pegged at $2,640.
"This is in line with our expectation that the support level is typically strong during a bullish technical setup."
As long as the commodity remains above this support, the "bulls have the technical upper hand."
EMEA HEADLINES
Credit Agricole Moves to Raise Banco BPM Stake as UniCredit Circles
Credit Agricole said it bought financial contracts that could raise its stake in Banco BPM to 15.1% at a time when the Italian bank is being targeted by larger rival UniCredit in a $10 billion-plus bid.
France's Credit Agricole, which currently owns a 9.9% stake in BPM, said late Friday that it entered into financial instruments related to 5.2% of the lender's share capital stake, but ruled out the launch of a tender offer.
Boliden to Buy Swedish and Portuguese Mines From Lundin Mining for Up to $1.45 Billion
Boliden will pay up to $1.45 billion for two mines from Lundin Mining in a deal to boost its copper and zinc production.
The Swedish miner said Monday that it has agreed to buy the Neves-Corvo mine in Portugal and the Zinkgruvan mine in Sweden for an upfront cash consideration of $1.3 billion plus contingent payments that could reach up to $150 million, it said.
Rheinmetall, Auterion to Develop Standardized Software for Military Drones
Rheinmetall and Auterion said they will jointly develop standardized software for a range of military drones, which is expected to benefit Ukraine in its war against Russia.
The German arms producer and the Swiss drone software company said Monday that they reached a deal to establish long-term cooperation to create an industry standard for controlling and operating unmanned aerial, land and naval drones.
GLOBAL NEWS
China Inflation Data Signals Continued Demand Weakness
China's consumer price growth slowed in November, while factory-gate prices improved but stayed in decline, suggesting persistent weak domestic demand despite Beijing's push to revive spending.
China's consumer-price index rose 0.2% from a year last month, compared with the 0.3% gain seen in October, according to data released Monday by the National Bureau of Statistics. Economists polled by The Wall Street Journal had expected a 0.5% increase.
Japan's Faster-Than-Expected Growth Builds Case for Rate Hike
TOKYO-The Japanese economy grew more quickly than initially estimated in the July-September quarter, fueling expectations that the Bank of Japan will raise interest rates soon and lending further strength to the yen.
Real gross domestic product expanded 1.2% on an annualized basis in the quarter, compared with 0.9% growth in the preliminary estimates released in mid-November. The Japanese economy grew 0.3% from the previous quarter, revised government data showed on Monday.
U.S. Scrambles to Shape Post-Assad Syria but Has to Overcome Years of Disengagement
WASHINGTON-The unexpectedly rapid downfall of President Bashar al-Assad in Syria has turned the country's future from a back-burner issue to a suddenly high-stakes concern for the departing Biden administration-and almost certainly for Donald Trump.
U.S. officials are scrambling to assess the intentions of the rebel groups that drove Assad into exile, especially Hayat Tahrir al-Sham, which is expected to play a pivotal role in whatever government emerges in Damascus but which is on the U.S. list of foreign terrorist organizations.
Inside Ukraine's Battle for the Skies as Russian Bombardments Hit Records
POLTAVA, Ukraine-A team of soldiers sat inside a nondescript red bus with their eyes glued to a bank of screens blinking with yellow dots.
The shapes represented Russian drones, missiles and planes cutting into Ukrainian skies. Soldiers from Ukraine's 164th Radiotechnical Brigade were trying to quickly identify targets and intercept them before they could sow destruction in towns and cities.
Manhunt for UnitedHealthcare CEO Killer Meets Unexpected Obstacle: Sympathy for the Gunman
As they search for the man who assassinated a top health-insurance executive in Midtown Manhattan last week, authorities are contending with an unanticipated challenge: an outpouring of popular sympathy for the killer.
From online forums and social media to the streets of Manhattan, people have been celebrating the suspect as a quasi-folk hero who struck a blow against a detested institution-the nation's for-profit healthcare system.
Write to clare.kinloch@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
12-09-24 0534ET
