US markets started the week on a cautious note as major indices retreated from record highs, with technology stocks leading the decline. The Dow Jones Industrial Average fell sharply, while the S&P 500 and Nasdaq Composite both pulled back amid growing concerns over key inflation data set to be released this week. Nvidia, a prominent player in the artificial intelligence trade, faced significant pressure following news of a Chinese regulatory investigation, adding to investor unease. Meanwhile, broader market sentiment remains subdued, with attention shifting to upcoming economic reports that could shape the Federal Reserve’s next policy moves.

Key Takeaways:

  • Dow Falls Over 200 Points Amid Tech Weakness: The Dow Jones Industrial Average dropped 240.59 points, or 0.54%, to close at 44,401.93. The sharp decline was led by losses in key technology stocks, with Nvidia and Advanced Micro Devices (AMD) both facing significant sell-offs. 
  • S&P 500 and Nasdaq Retreat From Record Highs: The S&P 500 slid 0.61% to 6,052.97, pulling back from its record close on Friday. The Nasdaq Composite also declined, falling 0.62% to end at 19,736.69. Both indices were dragged lower by weakness in major tech names, including Meta Platforms and Netflix. 
  • European Markets Extend Winning Streak: The pan-European Stoxx 600 index gained 0.14%, marking its eighth consecutive session in the green and its longest winning streak since May. The FTSE 100 rose 43.47 points, or 0.52%, to 8,352.08, while France’s CAC 40 climbed 60 points, or 0.80%, boosted by gains in luxury stocks such as Kering, which rose 4% on optimism surrounding China’s fiscal and monetary stimulus measures. However, Germany’s DAX dipped slightly, losing 0.19%, while Italy’s FTSE MIB fell 190 points, or 0.55%.
  • Asian Markets Mixed as China Stimulus Boosts Hong Kong Stocks: Hong Kong’s Hang Seng Index surged nearly 3% in late trading, lifted by China’s announcement of “more proactive” fiscal measures and “moderately” looser monetary policy for 2025. This marked a sharp reversal from earlier losses, as investors welcomed measures to stimulate domestic consumption. Mainland China’s CSI 300, however, slipped 0.17% to close at 3,966.57, weighed down by weaker-than-expected consumer price growth of 0.2% year-on-year in November. Japan’s Nikkei 225 edged up 0.18% to 39,160.5, while South Korea’s Kospi tumbled 2.78%, reflecting political uncertainty surrounding President Yoon Suk Yeol.
  • Oil Prices Rebound on China’s Easing Measures: Brent crude futures climbed $1.02, or 1.43%, to settle at $72.14 per barrel, while West Texas Intermediate (WTI) gained $1.17, or 1.74%, to close at $68.37. The rebound followed China’s announcement of monetary easing measures, which raised hopes for increased energy demand in the world’s largest oil importer. Oil markets were also supported by uncertainty in the Middle East after the Syrian government was overthrown, a development that could disrupt regional supply dynamics.
  • Treasury Yields Rise Ahead of Inflation Data: US Treasury yields ticked higher as investors awaited key economic data this week. The 10-year yield climbed more than 4 basis points to 4.195%, while the 2-year yield rose over 2 basis points to 4.122%. Markets are closely watching the upcoming November consumer price index and producer price index reports for clues on the Federal Reserve’s monetary policy trajectory.

FX Today:

  • EUR/USD Stabilises Near Key Support Amid US Dollar Strength: The EUR/USD pair traded at 1.0549, showing signs of stabilisation after recovering from recent lows around 1.0450. The pair climbed above the 50-period Simple Moving Average (SMA) at 1.0544, while the 100-period SMA at 1.0531 now provides solid support. However, resistance near the 200-period SMA at 1.0648 highlights the persistent bearish bias as the US dollar remains resilient. If EUR/USD manages to break above 1.0560, it could target higher levels at 1.0600 and 1.0650. Failure to maintain momentum could see the pair retest the 1.0500 psychological zone, with 1.0450 acting as a key support level. 
  • GBP/USD Consolidates Below Resistance, Struggles for Momentum: GBP/USD traded cautiously at 1.2747 as it held near resistance at the 100-period SMA at 1.2780. While the pair bounced off the 200-period SMA at 1.2704, immediate resistance at 1.2780 capped upward attempts. Further gains could push GBP/USD toward 1.2850 and 1.2900, but failure to clear the 1.2780 level could lead to renewed selling pressure. On the downside, support lies at 1.2700, with further losses potentially targeting 1.2650 and 1.2600. 
  • AUD/USD Pressured by Risk-Off Sentiment, Tests Multi-Month Lows: AUD/USD remained under bearish pressure, trading at 0.6437. The pair struggled below all major moving averages, with the 50-period SMA at 0.6462 and the 200-period SMA at 0.6529 serving as resistance. Inability to break above 0.6450 keeps the downside open, with immediate targets at 0.6400 and 0.6350. A break above 0.6465 could provide some relief, but broader market conditions remain unfavourable for the Australian dollar, as weak commodity demand and a strong US dollar weigh heavily on the pair.
  • NZD/USD Weakens Further, Sellers Dominate: NZD/USD traded at 0.5863, remaining under heavy bearish pressure as the pair failed to recover above key moving averages. The 50-period SMA at 0.5877 and the 100-period SMA at 0.5887 capped any upside attempts, while the 200-period SMA at 0.5918 emphasised the extent of the bearish trend. A breakdown below 0.5850 could accelerate losses toward 0.5800 and even 0.5750. On the upside, reclaiming the 50-period SMA at 0.5877 could trigger a short-term recovery, but significant resistance near 0.5900 would limit gains.
  • USD/JPY Range-Bound Below Key Resistance Levels: USD/JPY held steady at 151.18, consolidating after a rebound from the 150.00 support zone. The pair remained capped by the 50-period SMA at 151.32 and faced strong resistance at the 200-period SMA at 152.81. A break above 151.50 could see USD/JPY retest 152.00 and potentially target 152.50, but the broader bias suggests caution. On the downside, failure to hold above 151.00 could reopen the path to 150.00, with a break below this level potentially targeting 149.00. Upcoming US inflation data and potential intervention from the Bank of Japan remain key focus areas for traders.
  • Gold Struggles to Break Resistance Amid Market Uncertainty: Gold prices remained range-bound, trading at $2,657. Strong support levels at $2,643 and $2,641 provided a floor for prices, while resistance at the 100-period SMA at $2,669 limited upward attempts. The metal’s lack of momentum reflects investor caution ahead of critical US inflation data this week. A break above $2,670 could reignite bullish sentiment, with potential upside targets at $2,700 and $2,725. However, a failure to hold above $2,640 may lead to a decline toward $2,620 and possibly $2,600. Traders remain focused on macroeconomic signals, which are likely to dictate Gold’s next major move.

Market Movers:

  • Workday, Apollo Global See Mixed Reactions to S&P 500 Additions: Shares of software firm Workday jumped 5% after S&P Dow Jones Indices announced its addition to the S&P 500 later this month. Apollo Global Management, also set to join the index, hit a new 52-week high on Monday but closed the day down about 3%.
  • China-Based Stocks Rally on Stimulus Optimism: US-listed shares of Chinese companies surged after China’s Politburo announced plans for “more proactive” fiscal measures and “moderately” looser monetary policy in 2025. PDD Holdings and JD.com jumped more than 10% each, while Alibaba and Tencent gained 7.5% and 6%, respectively. Electric vehicle maker Nio rallied 12.3%, and shares of Trip.com and Baidu also posted strong gains, reflecting optimism about a potential rebound in China’s economy.
  • Nvidia Drops Amid Chinese Antitrust Investigation: Nvidia shares fell 2.6% after China’s State Administration for Market Regulation launched an investigation into the company for alleged violations of antitrust laws, particularly related to its acquisition of Mellanox. 
  • Advanced Micro Devices Declines After Downgrade: AMD shares plummeted 5.6% after Bank of America downgraded the stock from “buy” to “neutral.” Analysts cited the growing competitive dominance of Nvidia in artificial intelligence and the increasing preference for custom chips from rival manufacturers, which could limit AMD’s market share growth.
  • BP Rises on Offshore Wind Joint Venture: BP shares climbed 5% after announcing a merger of its offshore wind business with Japan’s JERA to form a new joint-owned firm. The strategic move highlights BP’s focus on boosting profitability by prioritising its fossil fuel operations while maintaining a foothold in renewable energy.
  • SolarEdge Technologies Jumps on New Product Launch: SolarEdge Technologies gained 11.7% after announcing its new “USA Edition” home battery, designed to qualify for the domestic content bonus tax credit under the Inflation Reduction Act. 

As markets navigate a complex web of regulatory pressures, geopolitical uncertainties, and upcoming inflation data, investor sentiment remains vigilant. The Dow Jones and S&P 500 retreated from their record highs, driven by weakness in tech stocks like Nvidia and AMD, while optimism around China’s stimulus measures fuelled gains in Chinese stocks and select commodities like oil. European markets continued their winning streak, supported by luxury stocks, even as geopolitical tensions in the Middle East added a layer of uncertainty. Meanwhile, gold prices held steady as traders sought safe-haven assets ahead of key US economic data later this week. As the week progresses, the spotlight will be on inflation reports and central bank commentary, which are expected to play a critical role in shaping the next phase of market direction.