US markets experienced a turbulent session on Tuesday as the Dow Jones Industrial Average extended its historic losing streak to nine days, reflecting investor caution ahead of the Federal Reserve’s policy decision. While tech stocks like Tesla showed strength, broader losses in industrial and financial sectors weighed heavily on sentiment. In Europe, markets faced declines driven by weak German business data and rising UK pay growth, which intensified concerns for the Bank of England. Asia-Pacific markets delivered mixed results, with Chinese economic uncertainty persisting. Meanwhile, US retail sales outperformed expectations, and Canadian inflation showed signs of easing, highlighting the delicate balance of global economic signals heading into the year’s final weeks. 

Key Takeaways:

  • Dow Suffers Ninth Consecutive Loss: The Dow Jones Industrial Average extended its losing streak to nine days, falling 267.58 points, or 0.61%, to close at 43,449.90. This marks the index’s longest stretch of declines since 1978, highlighting a shift in investor sentiment amid profit-taking in industrial and financial stocks. 
  • S&P 500 and Nasdaq Edge Lower: Broader markets also faced losses, with the S&P 500 slipping 0.39% to settle at 6,050.61, while the Nasdaq Composite dipped 0.32% to close at 20,109.06. Despite the decline, the S&P 500 remains less than 1% off its all-time high reached earlier this month. 
  • US Retail Sales Show Resilience: Retail sales rose 0.7% in November, surpassing forecasts of 0.5%, with strong motor vehicle sales driving the increase. October’s figure was revised up to 0.5%, showcasing continued consumer spending strength.
  • European Markets Decline on Mixed Data and UK Pay Growth: The Stoxx 600 fell 0.41%, led by a 1.4% drop in banking stocks. Germany’s DAX slipped 0.30% as the ifo Business Climate Index fell to 84.7, its lowest level since May 2020. The FTSE 100 lost 0.81% to close at 8,195.20 amid broad weakness, while the CAC 40 managed a modest 0.1% gain. Meanwhile, UK pay growth accelerated to 5.2% in the three months to October, exceeding expectations and adding pressure on the Bank of England ahead of its Thursday meeting.
  • Asia-Pacific Markets Mixed as China Remains a Concern: Asian markets delivered a mixed performance on Tuesday, with Australia’s S&P/ASX 200 gaining 0.78% to close at 8,314. Japan’s Nikkei 225 fell 0.24% to 39,364.68, while South Korea’s Kospi dropped 1.29%. China’s CSI 300 declined 0.26% to 3,922.03, weighed down by uncertainty surrounding the government’s plan to increase its 2025 budget deficit to 4% of GDP in an effort to sustain growth around 5%. 
  • Oil Prices Fall on Demand Concerns: Oil prices declined as concerns over Chinese economic data and broader demand weighed on sentiment. Brent crude fell 0.97% to $73.19 per barrel, while West Texas Intermediate (WTI) dropped 0.89% to settle at $70.08 per barrel. Prices fell for a second straight session after Monday’s weakness, as investors await clarity from the Federal Reserve’s policy decision.
  • Treasury Yields Steady Ahead of Fed Decision: US Treasury yields showed minimal movement as markets positioned cautiously ahead of the Federal Reserve’s upcoming interest rate announcement. The 10-year Treasury yield dipped slightly to 4.397%, while the 2-year yield slipped marginally to 4.245%. 

FX Today:

  • EUR/USD Slips Further Below Key Moving Averages: The EUR/USD pair remained under pressure on Tuesday, closing lower at 1.0486, down 0.12%. Sellers continued to dominate as the pair struggled to reclaim key resistance near the 50-SMA at 1.0523 and the 100-SMA at 1.0522. Despite several attempts to break higher, rejection near 1.0550 reaffirmed the bearish tone, keeping the pair near its recent lows. Immediate support emerged at 1.0480, but any sustained weakness could see the pair test 1.0450, a critical level from late November. If breached, the next significant downside target lies at 1.0400. A decisive break above 1.0525 is needed to relieve the downward pressure, but resistance remains strong in the 1.0550–1.0600 range. 
  • GBP/USD Faces Resistance at 200-SMA: The GBP/USD pair slipped 0.11% to close at 1.2705, as it faced renewed selling pressure near the 200-SMA at 1.2735. Immediate support lies at 1.2650, with a break below this level likely to trigger a retest of 1.2600 and possibly 1.2550. Meanwhile, the convergence of the 50-SMA at 1.2720 and 100-SMA at 1.2687 has created a tight trading range that could dictate the pair’s near-term direction. A sustained close above the 200-SMA could shift sentiment in favour of the bulls and push GBP/USD toward 1.2800.
  • AUD/USD Extends Losses, Hits Multi-Month Lows: The AUD/USD pair continued its downward trajectory, settling at 0.6333, down 0.11%. Sellers remain in control after the pair failed to hold above key support at the 50-SMA (0.6387) and slipped further below the 100-SMA (0.6433) and 200-SMA (0.6488). Minor support emerged near 0.6320, aligning with mid-November lows, but a breach of this level could see the pair test 0.6300 and subsequently 0.6250, a critical area from last year. For buyers to regain control, a break above 0.6380 is required, but rallies toward this level are likely to encounter strong resistance.
  • USD/CAD Surges to Multi-Month Highs Amid Canadian Dollar Weakness: The USD/CAD pair closed at 1.4311, holding steady after testing fresh multi-month highs, as the Canadian dollar continued to weaken, falling by 2.2%. Canada’s annual inflation rate eased to 1.9% in November, down from 2% the previous month. Core inflation measures, CPI-median and CPI-trim, remained steady at 2.6% and 2.7%. The pair remains firmly bullish, driven by consistent higher highs and higher lows since October. The 50-SMA (1.4178) and 100-SMA (1.4109) provided dynamic support during pullbacks, allowing buyers to maintain control. Strong resistance emerged near 1.4350, a psychological level that could attract sellers, while a break above this barrier would set the stage for further gains toward 1.4400. On the downside, immediate support lies at 1.4250, with additional buying interest expected near the 50-SMA at 1.4178. 
  • Gold Retreats as Fed Expectations Shift: Gold prices slid on Tuesday, closing at $2,645, down 0.03%, as stronger-than-expected US retail sales data dampened expectations for aggressive Federal Reserve rate cuts. The precious metal failed to hold above key resistance at the 50-SMA ($2,666) and 100-SMA ($2,654), signalling renewed selling pressure. Gold’s price action showed a series of lower highs since its early December peak near $2,720, reinforcing the bearish momentum. Immediate support emerged near $2,640, but a break below this level could expose the next downside target at $2,600, with further declines toward $2,580 likely. On the upside, a decisive close above $2,660 is needed to attract fresh buying interest, but the 200-SMA at $2,656 adds an additional layer of resistance. 

Market Movers:

  • Teva Pharmaceuticals and Sanofi Surge on Positive Trial Results: Shares of Teva Pharmaceuticals soared 26%, while Sanofi climbed 6% after the companies announced promising Phase 2b results for their joint treatment, duvakitug, aimed at moderate to severe inflammatory bowel disease. 
  • Quantum Computing Rockets on NASA Contract: Quantum Computing shares skyrocketed over 51%, reaching a new 52-week high, after the company secured a prime contract with NASA’s Goddard Space Flight Centre. The contract involves Quantum’s Dirac-3 optimisation machine to support NASA’s advanced imaging and data processing requirements, highlighting growing demand for cutting-edge quantum technology solutions.
  • SolarEdge Technologies Jumps on Double Upgrade: Shares of SolarEdge Technologies surged more than 16% following a double upgrade by Goldman Sachs from “sell” to “buy.” Goldman analysts noted that 2025 will mark a major inflection point in the clean energy company’s turnaround.
  • Tesla Climbs on Positive Outlook and Analyst Upgrade: Tesla shares gained over 3% after Mizuho upgraded the stock to “outperform,” citing potential benefits from regulatory changes anticipated under Donald Trump’s presidency. The upgrade comes as the company continues to gain traction in the autonomous driving sector.
  • Red Cat Slumps After Wider Quarterly Loss: Shares of Red Cat, the drone technology company, fell 7% following disappointing fiscal second-quarter results. The company reported a loss of 18 cents per share, significantly wider than the 11 cents per share loss reported in the same period last year. Despite the decline, shares remain up 17% over the past week.
  • Pfizer Gains on Inline 2025 Revenue Outlook: Shares of Pfizer climbed over 4% after the pharmaceutical giant announced its 2025 revenue guidance, projecting earnings between $61 billion and $64 billion. The outlook aligned closely with Wall Street’s consensus estimate of $63.22 billion.
  • Broadcom Extends Losses Amid Volatility: Broadcom shares fell nearly 4%, extending losses despite strong gains earlier in the month. The semiconductor giant has experienced volatility following its recent rally and the stock’s surge to a $1 trillion market cap last week. 

As markets brace for the Federal Reserve’s highly anticipated interest rate decision, investor sentiment remains mixed amid shifting economic signals and heightened volatility.  The Dow Jones extended its losing streak to nine days, reflecting caution ahead of the Federal Reserve’s policy decision. The broader markets, including the S&P 500 and Nasdaq, also faced pressure from tech weakness, led by Broadcom’s 5% decline. In Europe, concerns over weak German sentiment and rising UK pay growth weighed on investor confidence, while Canada’s easing inflation provided modest relief. Oil prices fell on renewed demand worries, and gold weakened following strong US retail data. As global markets remain volatile, investor attention turns squarely to central bank decisions in the coming days.