FX.co ★ Dow May Regain Ground Amid Surge By Salesforce

The major U.S. index futures are indicating a promising start for stocks this Wednesday, poised to advance following Tuesday's sluggish performance. The Dow Jones Industrial Average appears set to rebound after two consecutive days of declines, largely thanks to a surge in Salesforce (CRM) shares. This pre-market hike of 11.9% follows Salesforce’s announcement of better-than-expected fiscal third-quarter revenues.

Even with a report from payroll processor ADP showing slightly lower-than-anticipated growth in U.S. private sector employment for November, futures remain optimistic. ADP reported an increase of 146,000 jobs, adjusting down from October's revised figure of 184,000 jobs—against economists' forecasts of 165,000 for November.

Attention now turns to Friday, when the Labor Department will reveal its comprehensive monthly jobs report, covering public and private sector employment. Expectations are for employment figures to rise by 200,000 in November, following a 12,000-job increase in October, with unemployment anticipated to edge up to 4.2% from 4.1%.

Market activity today might be somewhat muted as investors await Federal Reserve Chair Jerome Powell’s comments this afternoon. Following a mixed session on Monday, stocks showed uncertainty Tuesday, though the Nasdaq and S&P 500 continued to hit new record highs.

Ultimately, the day's trading ended with mixed results: the Dow dipped 76.47 points, or 0.2%, to close at 44,705.53, while the Nasdaq climbed 76.96 points, or 0.4%, to 19,480.91, and the S&P 500 inched up 2.73 points, or 0.1%, to 6,049.88. Limited economic developments in the U.S. arguably kept traders on the sidelines, even as the Labor Department reported an unexpected uptick in job openings in October, climbing to 7.744 million from September's revised 7.372 million.

In the days ahead, the economic calendar becomes busier. Friday's jobs report and Federal Reserve officials' statements could weigh heavily on interest rate forecasts before the Fed’s upcoming policy meeting. According to CME Group's FedWatch Tool, there’s a 72.1% chance of a 25 basis point rate cut by the Fed, while a 27.9% probability remains for rates holding steady.

Jeffrey Roach, Chief Economist at LPL Financial, remarked, "The Fed's December 18th decision will be closely contested, but if employment takes precedence, markets should brace for a rate cut, which would likely boost risk appetite."

Reflecting the broader market's tepid performance, significant market sectors showed only mild movements. Gold stocks, however, experienced a significant rally—propelling the NYSE Arca Gold Bugs Index up by 3.5%—amid a modest rise in gold prices. Conversely, transportation stocks saw a sharp decline, dragging the Dow Jones Transportation Average down by 2.0%. The computer hardware and biotechnology sectors also faced notable declines, with their respective indices both falling by 1.2%.

**Commodity and Currency Markets**

Crude oil futures are slightly up by $0.13 to $70.07 a barrel following a $1.84 increase to $69.94 a barrel on Tuesday. Gold is trading marginally lower at $2,667.40 an ounce, down $0.50 from the previous session's close of $2,667.90, despite a $9.40 gain on Tuesday.

In currency markets, the U.S. dollar is trading at 150.83 yen compared to 149.51 yen at Tuesday's New York close. Against the euro, the dollar stands at $1.0492 versus the previous day's $1.0509.

**Asia**

Asian stocks predominantly declined on Wednesday amidst political instability in South Korea and data indicating a slowdown in China's service sector growth for November. The dollar maintained its strength as investors awaited U.S. employment data and comments from Federal Reserve Chair Jerome Powell for further insight into U.S. interest rate prospects.

Gold inched higher following indications from two Federal Reserve officials supporting a rate cut later this month.Oil prices continued their upward momentum from the previous session as markets anticipated OPEC+ to announce an extension of production cuts this week. Geopolitical uncertainties lingered in the financial markets following Israel's warning of potential actions against Lebanon should its truce with Hezbollah collapse.

In Asia, China's Shanghai Composite Index fell by 0.4% to close at 3,364.65, reflecting the latest data showing a slower expansion in China's services sector for November, attributed to declining new business growth. However, the reduction was mitigated by the People's Bank of China's bolstered support for the yuan by fixing the daily reference rate stronger than anticipated.

In Hong Kong, the Hang Seng Index concluded slightly down at 19,742.46, as investors awaited potential new economic stimulus measures from Beijing at an upcoming key policy meeting. Meanwhile, Japanese markets were volatile, ultimately ending flat. The dollar rebounded from a three-week low against the yen, and Japan’s service sector showed growth in November. Consequently, the Nikkei 225 Index edged up to 39,276.39, although the broader Topix Index dipped 0.5% to 2,740.60.

In South Korea, markets took a sharp downturn after President Yoon Suk Yeol's brief declaration and subsequent lifting of martial law, triggering political turmoil. The Kospi Index dropped by 1.4% to 2,464. Shares in major player Samsung Electronics initially fell by 3% before closing 0.9% lower at 53,100 won, amid assurances of "unlimited" market support by officials.

Australian markets experienced a moderate decline following third-quarter GDP growth figures that fell short of expectations, increasing speculation that the Reserve Bank of Australia may lower interest rates in early 2025. The benchmark S&P/ASX 200 Index fell by 0.4% to 8,462.60, having hit a record high the previous day, with banking stocks under pressure while mining stocks rose on hopes of Chinese economic stimulus. Across the Tasman Sea, New Zealand’s S&P/NZX-50 Index decreased by 1.5% to 12,896.67.

In Europe, equities mostly advanced on Wednesday after the Eurozone's final services PMI for November was confirmed at 49.5, up from the preliminary reading of 49.2. Despite global challenges, the OECD's latest economic report forecasts resilient global growth, projecting an increase in global GDP of 3.3% in 2025, following 3.2% in 2024 and matching 3.3% in 2026.

The euro remained stable, trading near the 1.05 level as investors awaited a crucial no-confidence vote in the French parliament against Prime Minister Michel Barnier's government over a budget dispute. Barnier kept negotiations alive, showing openness to dialogue with Marine Le Pen's National Rally and other factions.

The pan-European STOXX 600 rose 0.3% to 517.21 after a 0.4% gain on Tuesday. Germany's DAX Index increased by 0.8%, and France's CAC 40 Index was up 0.4%, while the U.K.'s FTSE 100 Index bucked the trend, dropping by 0.3%. Stellantis NV saw an uptick after denying rumors of appointing Apple's Maestri as CEO. Monks Investment Trust's shares also climbed in London, boosted by a reported net asset value return of 6.3% for the first half of its financial year. In contrast, Zigup's shares fell sharply after reporting mixed half-year financial results. Rio Tinto shares declined as the mining company entered a collaborative agreement with Swedish firm Vargas and Mitsubishi Corporation, among others, to explore a low-carbon aluminum project in Finland.

In the United States, ADP’s report highlighted that private sector employment rose by 146,000 jobs in November, falling short of the anticipated 165,000 jobs. The previous month's figure was subsequently revised downwards to 184,000 from the initially reported 233,000. Later in the day, the Institute for Supply Management is set to release its November service sector activity report, with expectations of a slight decrease in the services PMI to 55.5 from October’s 56.0, where a reading above 50 still signifies growth.The Commerce Department is set to publish its report on new orders for manufactured goods for October at 10 a.m. ET. Projections indicate a 0.2 percent increase in factory orders for October, following a 0.5 percent decline in September.

At 10:30 a.m. ET, the Energy Information Administration will release its weekly report on oil inventories, covering the period ending November 29th. Analysts expect crude oil inventories to decrease by 1.0 million barrels, following a previous week’s decline of 1.8 million barrels.

Federal Reserve Chair Jerome Powell is slated to engage in a moderated discussion at the New York Times DealBook Summit at 1:40 p.m. ET.

At 2 p.m. ET, the Federal Reserve will release its Beige Book, which compiles anecdotal evidence regarding economic conditions across each of the twelve Federal Reserve districts.