Global markets ended the week with a blend of gains and losses as investor sentiment remained tethered to a mix of economic data, corporate earnings, and central bank actions. The Dow Jones Industrial Average extended its losing streak to seven sessions, marking its longest slide since 2020, while the Nasdaq Composite eked out a modest gain, driven by optimism in technology stocks like Broadcom. In Europe, disappointing economic data from the UK and Germany weighed heavily on indices, snapping their three-week winning streak. Meanwhile, commodities saw volatile trading, with oil prices climbing to three-week highs on tightening supply expectations, and gold retreating slightly despite a strong weekly performance. As central banks signal the possibility of future rate cuts and the Federal Reserve’s final 2024 meeting looms, markets remain on edge, searching for catalysts to break the current holding pattern.

Key Takeaways:

  • Dow Extends Losses to Longest Streak Since 2020: The Dow Jones Industrial Average fell 86.06 points, or 0.2%, to close at 43,828.06 on Friday, marking its seventh consecutive session of losses and its longest losing streak since 2020. For the week, the Dow declined 1.8%, reflecting broad underperformance and a lack of market catalysts. 
  • Nasdaq Climbs Modestly Despite Broader Weakness: The Nasdaq Composite gained 0.12% on Friday to close at 19,926.72, ending the week with a 0.3% increase. A standout performer was Broadcom, which surged 24% after reporting a 220% year-over-year increase in artificial intelligence revenue, pushing its market cap above $1 trillion. 
  • S&P 500 Ends Flat, Breaking Three-Week Winning Streak: The S&P 500 closed at 6,051.09, showing little change on Friday but posting a weekly loss of 0.6%, breaking a three-week winning streak. The index struggled to maintain momentum amid mixed market signals, with tech gains offset by cautious trading and subdued sentiment in other sectors.
  • European Markets Snap Three-Week Winning Streak: The pan-European Stoxx 600 declined 0.62% on Friday, ending the week lower after three weeks of gains. The FTSE 100 slipped 0.10% to close at 8,300.33, while Germany’s DAX dropped 0.10%, pressured by a 2.8% monthly decline in exports for October, exceeding the expected 2% drop. The UK economy shrank for a second consecutive month, with GDP contracting by 0.1% in October, falling short of expectations for 0.1% growth. France’s CAC 40 also lost 0.23%, reversing early gains following Francois Bayrou’s appointment as prime minister.
  • Asian Markets Struggle Amid Weak Sentiment in China: China’s CSI 300 tumbled 2.37% to 3,933.18, and Hong Kong’s Hang Seng dropped 1.83%, as Beijing’s economic stimulus measures failed to meet investor expectations. Japan’s Nikkei 225 declined 0.95% to 39,470.44, despite a rise in the Bank of Japan’s Tankan survey to 14, signalling improved sentiment among large manufacturers. South Korea’s Kospi outperformed, rising 0.5% to 2,494.46, marking its fourth consecutive day of gains.
  • Oil Prices Climb to Three-Week Highs: Oil prices surged on Friday, with Brent crude rising 1.5% to $74.49 per barrel and West Texas Intermediate gaining 1.8% to close at $71.29. Brent posted a weekly gain of 5%, while WTI rose 6%, marking their highest levels in weeks. Analysts attributed the rally to expectations of tighter sanctions on Russia and Iran, coupled with signs of increased Chinese crude imports.
  • 10-Year Treasury Yield Climbs Above 4.4%: The 10-year Treasury yield increased by more than 7 basis points to 4.401% on Friday, following a hotter-than-expected 0.4% rise in November wholesale prices. Meanwhile, the 2-year yield rose 6 basis points to 4.247%. 
  • Coffee Prices Near 50-Year Highs Amid Supply Concerns: Arabica coffee futures soared to an intraday high of 348.35 cents per pound this week, marking their highest level since 1977. Although prices trimmed some gains, they remain up 70% year-to-date. Analysts warn that it could take years for prices to normalize as global supply struggles to keep pace with demand. 

FX Today:

  • EUR/USD Holds in a Tight Range: EUR/USD rose 0.31% on Wednesday, closing at 1.0498, as the Euro benefitted from optimism surrounding potential hawkish European Central Bank policy. The pair managed to regain ground after finding support near 1.0450, with the 50-day SMA at 1.0526 now acting as a pivot point. Upside resistance is seen at 1.0550, and a breakout above this level could target 1.0600, with further gains extending toward 1.0650. On the downside, key support lies at 1.0450, followed by 1.0400. The RSI indicates neutral conditions, suggesting room for further upside if supported by fundamentals. 
  • GBP/USD Struggles Below Key Resistance: The GBP/USD pair fell by 0.41% on Wednesday, closing at 1.2622, as the Pound weakened against a stronger US Dollar. The decline was driven by persistent concerns over the UK’s slowing economy, coupled with hawkish Federal Reserve expectations, which boosted the Dollar. On the charts, the pair has decisively moved below the 50-day SMA at 1.2675, indicating bearish momentum. Immediate support lies at 1.2600, a psychologically significant level, followed by 1.2550. A sustained break below these levels could push the pair toward the 1.2500 handle. On the upside, resistance is at 1.2675, with further hurdles at 1.2720 and 1.2750 if the pair manages to reverse its losses. 
  • USD/CAD Edges Higher Amid Oil Weakness: USD/CAD climbed 0.06% on Wednesday, closing at 1.4227 as the pair extended its bullish trend. The rise was supported by lower crude oil prices, which weighed on the oil-sensitive Canadian Dollar. The US Dollar also maintained its upward trajectory amid positive economic data and expectations of further Federal Reserve tightening. The pair is trading comfortably above the 50-day SMA at 1.4132, with immediate resistance at 1.4250 and 1.4300. A break above these levels could see USD/CAD testing 1.4350. On the downside, support is at 1.4150, with additional levels at 1.4100 and 1.4050. 
  • USD/JPY Surges on Diverging Policy Expectations: USD/JPY rose sharply by 0.63% on Wednesday, closing at 153.58, driven by rising US Treasury yields and the Bank of Japan’s ultra-loose monetary stance. The pair broke above key resistance at 153.00, signalling strong bullish momentum as it approaches the 154.00 level. On the technical side, the pair is trading well above its 50-day SMA at 151.26, with further resistance at 154.50 and 155.00. Support lies at 152.50, followed by 151.50. The RSI is approaching overbought territory, suggesting the possibility of consolidation or a pullback. 
  • Gold Dips But Remains Poised for Weekly Gains: Gold tumbled by 1.24% on Wednesday, closing at $2,647 as the US Dollar strengthened and US Treasury yields climbed. The decline marks a continuation of profit-taking after recent highs above $2,700, with bearish momentum taking hold. The metal is now testing key support at $2,640, with further downside potential toward $2,620 and $2,600. The 50-day SMA near $2,665 has flipped to resistance, and a failure to reclaim this level could deepen losses. On the upside, a recovery above $2,665 would target $2,680 and $2,700. Fundamentally, gold remains supported by long-term concerns over inflation and geopolitical risks. 

Market Movers:

  • Broadcom Surges on AI Revenue Growth: Shares of Broadcom soared 24.4% on Friday, pushing the company’s market capitalization above $1 trillion for the first time. The rally followed fiscal fourth-quarter results that beat expectations and highlighted a 220% annual increase in artificial intelligence-related revenue. 
  • Tesla Rallies on Regulatory Easing: Tesla shares jumped 4.3% after reports emerged that President-elect Donald Trump’s team recommended ending a car-crash reporting requirement disliked by CEO Elon Musk. The program had previously led Tesla to report the most crashes among automakers.
  • RH Rockets on Strong Guidance: RH shares surged nearly 17%, reaching levels not seen since January 2022, after the luxury furniture retailer projected fourth-quarter revenue growth of 18% to 20% year-over-year. The company also swung to a profit in the third quarter, further fueling investor optimism.
  • TaskUs Soars on AI Optimism: TaskUs shares jumped 15.6% following an upgrade from Morgan Stanley to “overweight” from “equal weight.” Analysts highlighted the company’s industry-leading margins and strong positioning in artificial intelligence as factors that could drive long-term growth.
  • Upstart Holdings Rises on Improved Funding Balance: Upstart Holdings climbed 9.6% after Needham upgraded the stock to “buy” from “hold.” The investment firm praised the company’s strengthened balance sheet, citing the refinancing of some debt as a key milestone.
  • Ciena Gains on Upbeat Outlook: Ciena shares rose 6.2% after Bank of America upgraded the stock to “buy” from “neutral.” The upgrade followed stabilizing demand in networking equipment and the company’s accelerated momentum in cloud and AI markets, which offset recent earnings misses.

As the week draws to a close, the Nasdaq’s modest gains and Broadcom’s historic AI-driven surge highlighted the potential for growth, the Dow extended its longest losing streak since 2020, reflecting broader economic concerns. European and Asian markets struggled under the weight of weak economic data, with disappointing figures from the UK, Germany, and China adding to the cautious tone. Meanwhile, oil prices surged to three-week highs, and gold remained resilient despite a midweek dip, as investors faced with inflation concerns and central bank signals. With the Federal Reserve’s year-end meeting on the horizon and key economic data releases expected, markets are poised for heightened volatility as investors seek clarity on the global economic trajectory heading into 2024.