USA
During the week of December 16–22, 2024, U.S. equity markets experienced volatility driven by economic data and Federal Reserve policy actions. The GDP growth rate for Q3 was reported at 2.8%, reflecting robust consumer spending and government expenditures. Inflation showed signs of easing, with the Core PCE Price Index rising 0.2% month-over-month in November. The labor market remained resilient, as nonfarm payrolls grew by 227,000, though the unemployment rate ticked up slightly to 4.2%. The Federal Reserve reduced its federal funds rate by 25 basis points to 4.5%, signaling a cautious approach amid moderating inflation. Geopolitical uncertainty, including risks of a government shutdown, contributed to market fluctuations, with the S&P 500 posting minor declines by the end of the week.
Europe
European equity markets displayed modest gains despite a backdrop of political and economic challenges. The Euro Area’s annual inflation rate fell to 2% in November, suggesting some relief from price pressures. However, economic activity contracted, as indicated by the HCOB Composite PMI of 48.2. Political instability in Germany, including a vote of no confidence against Chancellor Olaf Scholz, added to market uncertainty. The European Central Bank maintained its monetary policy stance, emphasizing the need to remain vigilant amidst ongoing geopolitical tensions. The STOXX 600 index rose 0.2%, buoyed by strength in travel, leisure, and energy stocks, although gains were tempered by broader economic concerns.
Japan
Japan’s equity markets faced headwinds, with the Nikkei index declining 0.24% over the week. Economic data showed mixed signals, with annual inflation accelerating to 2.5% in November due to rising energy and food prices, while the Jibun Bank Manufacturing PMI fell to 49.2, pointing to a contraction in manufacturing activity. The Bank of Japan kept its interest rate steady at 0.25%, adopting a cautious approach given global economic uncertainties. Currency dynamics played a role in investor sentiment, as the yen weakened to a five-month low against the dollar, driven by the Bank of Japan’s dovish policy stance compared to the Federal Reserve’s hawkishness.
China
Chinese equity markets registered modest gains, with the CSI300 and Shanghai Composite Index rising by 0.9% during the week. Economic data revealed steady momentum, with industrial production growing 5.3% year-over-year in November and retail sales increasing 4.8%, indicating solid consumer demand. The Chinese government announced plans to issue 3 trillion yuan in special treasury bonds for 2025, aiming to bolster fiscal support and stimulate the economy. Geopolitical concerns, particularly regarding U.S.-China trade relations, remained a factor, but optimism around fiscal measures supported market sentiment. Investors responded positively to the announcements, driving gains in key sectors.