Stock markets in Santa Rally as soft landing hopes lift shares – business live
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Global stock markets are embarking on an end-of-year ‘Santa rally’, as City traders and investors return to their desks after the Christmas break for the final push into 2024.
Optimism that central banks will start to lower interest rates in 2024, and cut several times next year, continues to push shares higher.
Yesterday the US stock market rallied again, with shares higher in light trading – lifting the S&P 500 index to its highest intraday level in almost two years.
That leaves the S&P 500 less than 1% below its closing all-time high of 4,796.56 set in January 2022.
S&P 500 is within a careless whisper of setting a new all-time high. On a total return basis, it's already there. pic.twitter.com/6zKgQx1RPM
— David Ingles (@DavidInglesTV) December 26, 2023
The rally indicates investors are more confident that US policymakers can achieve a ‘soft landing’ – pushing down inflation without causing a recession. Last Friday, the US PCE index showed inflation decelerated last month.
Stephen Innes, managing partner at SPI Asset Management, says:
The prevailing sentiment suggests a “risk-on” environment in U.S. markets, with renewed optimism focused on anticipating swifter and earlier rate cuts.
The US stock market has been pushing higher since early November, on rising hopes that America’s economy can avoid a recession.
Jan Szilagyi, CEO and co-founder of Toggle AI, told CNBC:
“I don’t love the term, but if you were to describe what is happening it’s definitely Goldilocks for the market.
Inflation’s coming down, the economy is still chugging along, and the hiking cycle’s over. On all of these macro trends, the rally has been justified.”
Asia-Pacific have picked up the baton, with China’s CSI 300 index up 0.4% and Japan’s Nikkei gaining over 1%
Hong Kong’s Hang Seng index has jumped 1.8%, as Chinese regulators appeared to soften a new crackdown on online gaming by approving a batch of new games.
⚡Hang Seng Index extends rebound by 2%, and Tech Index is now rising 2.7%.
— CN Wire (@Sino_Market) December 27, 2023
Netease rose more than 10%, Bilibili rose more than 6%, and Tencent rose more than 4%.#Tencent $TCEHY #NetEase $NTES #China #games $KWEB $FXI $HXC https://t.co/DTct6G7qea pic.twitter.com/g6z0wPwtKo
Recession worries are also looming over the City of London, though, after UK GDP data was revised down last Friday.
That showed the UK economy shrank slightly in the July-September quarter, adding to pressure on the Bank of England to cut interest rates in 2024.
European stock markets are set to open higher, with FTSE futures up 0.5%, Germany’s DAX up 0.45% in premarket trading, and the Eurostoxx 50 index of Europe’s largest companies up 0.55%.
The agenda
Noon GMT: MBA weekly US mortgage applications
3pm GMT: The Richmond Federal Reserve Manufacturing Index