FX.co ★ Slump By Nvidia May Lead To Pullback By Nasdaq

The U.S. index futures indicate a mixed market open on Monday. Dow futures are up 0.1%, while Nasdaq futures are down 0.2%. A decline in Nvidia (NVDA) shares, which have fallen 2.1% in pre-market trading, could negatively impact the Nasdaq. This drop follows news of a Chinese investigation into potential antitrust violations by the chipmaker.

Overall, trading activity may remain muted as investors anticipate key inflation data releases later in the week. Consumer and producer price reports are scheduled for Wednesday and Thursday, respectively, and these will be critical in shaping interest rate expectations.

While the Federal Reserve is widely predicted to cut rates by another 25 basis points next week, uncertainty persists regarding continued rate cuts into the new year. On Friday, U.S. stock indexes initially made gains, but as the day progressed, results were mixed. The Nasdaq and S&P 500 finished in positive territory, achieving new record closing highs, while the Dow retreated into the red.

The Nasdaq closed near its session highs at 19,859.77, up 159.05 points or 0.8%, and the S&P 500 increased by 15.16 points or 0.3% to 6,090.27. In contrast, the Dow dropped 123.19 points or 0.3% to 44,642.52.

The first week of December saw the major averages display mixed performances. The Dow decreased by 0.6%, whereas the S&P 500 rose by 1.0%, and the Nasdaq experienced a 3.3% surge. The Dow's decline followed a further drop from its record high on Wednesday, largely due to continued weakness in UnitedHealth (UNH) shares, which fell 5.1% after a prior 5.2% decline, linked to the tragic shooting of UnitedHealthcare CEO Brian Thompson.

Conversely, the Nasdaq and S&P 500 gained from a favorable response to a Labor Department report showing a significant rise in U.S. employment for November. The report noted an increase of 227,000 non-farm jobs, following an upwardly revised gain of 36,000 in October. Economists had predicted a 200,000 job rise against the initially reported 12,000 for the prior month. The unemployment rate inched up to 4.2% from 4.1% in October, aligning with forecasts.

The slight rise in the unemployment rate supports the expectation for the Federal Reserve to cut interest rates by 25 basis points later this month. Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management, remarked that despite strong job figures, the Fed is likely to reduce rates, particularly unless forthcoming inflation data is exceptionally high.

In related U.S. economic developments, the University of Michigan's report indicates a stronger-than-expected increase in consumer sentiment for December, with the index rising to 74.0 from 71.8 in November, surpassing the anticipated 73.0. However, the report also noted an increase in year-ahead inflation expectations to 2.9% from 2.6% in November, marking a six-month peak.

The day saw significant gains in computer hardware stocks, with the NYSE Arca Computer Hardware Index climbing 2.1% to its highest close in over four months. Hewlett Packard Enterprise (HPE) led the advance, surging 10.6% following an upgrade by Citigroup from Neutral to Buy. Strong performance was evident in retail stocks as well, with the Dow Jones U.S. Retail Index up 1.8%.

In contrast, oil service stocks faced substantial losses, leading to a 3.5% drop in the Philadelphia Oil Service Index. Pressures also hit oil producer stocks as crude oil prices fell, accompanied by notable declines in natural gas, steel, and gold stocks.

**Commodity, Currency Markets**Crude oil futures are experiencing an uptick of $0.93, reaching $68.13 per barrel, recovering from a previous decline of $1.10 that saw them fall to $67.20 per barrel last Friday. Concurrently, gold futures have climbed $20.40 to $2,680 per ounce, following a previous session increase of $11.20, which brought them to $2,659.60 per ounce.

In the currency market, the U.S. dollar has strengthened, trading at 150.78 yen compared to 150.03 yen at the close of the New York session on Friday. The dollar is also slightly up against the euro, now at $1.0571 from $1.0568 last Friday.

**Asia**

Asian equity markets witnessed a decline on Monday, influenced by Chinese inflation data which pointed to persistent demand weaknesses, and ongoing political instability in South Korea following President Yoon's survival of an impeachment vote.

Japanese markets, however, bucked the trend, posting slight gains after an upward revision of Q3 GDP bolstered expectations of a potential Bank of Japan rate hike in December.

The U.S. dollar showed strength as Syrian rebels took control of Damascus, marking a historic shift that concluded President Bashar al-Assad's 13-year rule and ended the Assad family's decades-long dominance.

In Asian trade, oil and gold prices edged higher, supported by escalating tensions in the Middle East.

China’s Shanghai Composite Index closed slightly lower at 3,402.53, as disappointing inflation figures highlighted the need for broader stimulus interventions. Meanwhile, Hong Kong's Hang Seng Index surged by 2.8% to 20,414.09, following a late-day rally.

Consumer price inflation in China unexpectedly dipped to a five-month minimum in November, with producer prices falling for the 26th straight month, indicating limited effects from the stimulus measures initiated by Beijing on domestic demand.

Japan's markets finished slightly up after data revisions indicated faster-than-expected GDP growth due to increases in capital investment and exports. The Nikkei 225 Index concluded the day up 0.2% at 39,160.50 after volatile trading, while the Topix Index rose 0.3% to 2,734.56.

SoftBank Group, a key AI-focused startup investor, and Fast Retailing, the parent company of Uniqlo, both saw gains of around 2%. Rakuten Group surged 6.7% after announcing a shareholder benefits program, although chip-related stocks such as Advantest dropped by 4.7%.

Seoul’s stock market led regional declines as President Yoon's situation deepened a leadership crisis, despite surviving an impeachment vote. The Kospi plunged 2.8% to 2,360.58, despite assurances from financial authorities to support the won and local markets. Automotive giants Hyundai Motor and Kia Corp. saw declines of 1.2% and 3%, respectively.

Australian markets ended flat ahead of the Reserve Bank of Australia's rate decision, with sectors like miners and banks leading the losses. Fortescue Metals Group fell 1.2% and ANZ dropped 3.6%. However, Woolworths rose 1.1% following its agreement to raise wages to resolve a union strike. Across the Tasman, New Zealand's S&P/NZX-50 Index closed marginally lower at 12,801.80.

**Europe**

European stocks registered their eighth consecutive day of gains on Monday, led by sectors such as China-linked mining, luxury goods, and automotive industries.

In China, consumer inflation unexpectedly slowed in November with a decrease in factory deflation, sparking hopes for more aggressive fiscal and monetary interventions next year to stimulate domestic consumption.

China’s Politburo, under President Xi Jinping, committed to stabilizing property and stock markets and enhancing "unconventional counter-cyclical" adjustments.

Investors closely monitored the escalation of tensions in Syria, while also eyeing the upcoming European Central Bank policy meeting and U.S. inflation data later in the week for guidance.

The ECB is anticipated to lower interest rates this week amidst concerns regarding fiscal developments in Germany and France.

Economic data from the Eurozone showed the Sentix Investor Confidence Index dropped to -17.5 in December from -12.8 in November. Additionally, a new report highlighted a decline in U.K. business confidence, now at its lowest since January 2023.

The U.K.'s FTSE 100 Index is up 0.6%, and France's CAC 40 Index is up 0.5%, although Germany’s DAX Index is slightly below the unchanged line.

CompuGroup Medical's shares saw a substantial rise, following news of advanced acquisition talks with CVC Capital Partners. Banco BPM rose 1.5%, while potential buyer UniCredit fell 0.8% after Credit Agricole SA increased its stake in Banco BPM. Shares of Credit Agricole advanced by 1%.In London, Domino's Pizza Group experienced a decline of almost 3 percent following its announcement of a new five-year agreement with franchise partners. Reckitt Benckiser, a manufacturer of nutrition products, saw a slight decrease in its stock after providing an update on its share buyback program. German meal-kit provider HelloFresh dropped by 6.2 percent amid reports of a U.S. investigation concerning allegations of child labor.

**U.S. Economic Update**

The Commerce Department is set to release its report on October's wholesale inventories at 10 a.m. ET. Projections indicate a 0.2 percent increase in wholesale inventories.