In a session marked by light holiday trading, the Dow Jones Industrial Average extended its winning streak to five consecutive days, closing slightly higher on Thursday. The blue-chip index reversed early losses to make a modest gain, pushed by optimism surrounding the so-called Santa Claus rally. However, broader markets displayed mixed performance, with the S&P 500 dipping marginally and the Nasdaq Composite edging lower. Investors remained cautious as jobless claims data signalled potential cracks in the labour market, while continuing claims reached a three-year high. Thin trading volumes and a subdued market mood underscored the uncertainty as the year winds down, with global markets offering a similarly varied picture. European Markets remained closed on Thursday for the Boxing Day holiday.

Key Takeaways:

  • Dow Extends Five-Day Winning Streak: The Dow Jones Industrial Average rose for the fifth consecutive session, closing 28.77 points higher, or 0.07%, at 43,325.80. Earlier in the session, the index had been down by as much as 182 points before rebounding in the final hours of thin holiday trading. This modest gain followed back-to-back strong performances earlier in the week, pushing the Dow’s weekly gain to 1.1%, despite being down 3.5% month-to-date, on track for its worst performance since April.
  • S&P 500 Holds Steady After Strong Week: The S&P 500 dipped slightly, shedding 2.45 points, or 0.04%, to close at 6,037.59. Despite this minor pullback, the index remains up 1.8% for the week and posted a 1.1% rally on Christmas Eve—its best performance for that day since 1974. Year-to-date, the benchmark has remained resilient, fuelled by robust gains in the tech sector.
  • Nasdaq Edges Lower Despite Strong Tech Momentum: The Nasdaq Composite declined by less than 0.1%, ending the session at 20,020.36. Earlier in the week, the index saw a sharp rally, boosted by gains in megacap tech stocks, including Tesla, Apple, and Alphabet. As a result, the Nasdaq has gained 2.3% week-to-date and an impressive 4.2% month-to-date, significantly outperforming other indices.
  • Jobless Claims Little Changed; Continuing Claims Rise: Initial jobless claims for the week ending December 21 totalled 219,000, slightly below the forecast of 225,000 and just 1,000 fewer than the previous week. However, continuing claims, which measure recurring applications for unemployment benefits, rose to 1.91 million—the highest level since November 13, 2021. This marked an increase of 46,000 claims from the prior week, highlighting a potential shift in labour market dynamics as extended unemployment duration remains on the rise.
  • Asia-Pacific Markets Show Mixed Performance: Japan’s Nikkei 225 gained 1.12% to close at 8,220.9, supported by reports of a record $735 billion government budget for the upcoming fiscal year and optimism over wage growth forecasts for 2025. The Topix index rose 1.20% to 2,766.78, with automakers Nissan and Honda leading gains, surging 6.58% and 3.84%, respectively, on news of potential merger talks. Conversely, South Korea’s Kospi fell 0.44% to 2,429.67, and the Kosdaq slid 0.66% to 675.64 amid political uncertainty and mixed corporate developments. Meanwhile, China’s CSI 300 rose slightly to 3,987.48 following an upgraded GDP forecast from the World Bank, which now predicts 4.9% growth for 2024, up from the previous 4.8% estimate.
  • Oil Prices Ease Amid China Stimulus Hopes: Brent crude futures slipped by 32 cents, or 0.43%, to settle at $73.26 per barrel, while US West Texas Intermediate crude dropped 48 cents, or 0.68%, to $69.62. The declines came despite optimism surrounding China’s planned issuance of $411 billion in special treasury bonds to boost fiscal stimulus. However, the strong US dollar, which continues to hover near milestone levels, weighed on oil prices by making the commodity more expensive for holders of other currencies.
  • Treasury Yields Near Flatline as Investors Digest Jobless Claims Data: US Treasury yields traded near the flatline on Thursday, with the 10-year yield ending the session unchanged at 4.581% after briefly surpassing the 4.6% mark. The 2-year yield dipped by 1 basis point to 4.329%. 

FX Today:

  • EUR/USD Faces Consolidation Amid Bearish Trend: The EUR/USD pair traded at 1.0419 on Thursday, consolidating after a prolonged bearish trend. The pair remains below key moving averages, with the 50-day SMA at 1.0614 providing immediate resistance. Despite several recovery attempts, the broader bias continues to favour sellers, driven by the ongoing strength of the US dollar. Key psychological resistance remains at 1.0450, with a failure to breach this level further highlighting the lack of bullish momentum. Immediate support is at 1.0380, and a decisive break below this could open the door to deeper declines toward 1.0300 or 1.0250. For a meaningful recovery, EUR/USD needs to clear the 50-day SMA and build momentum toward additional resistance levels at 1.0700, although the outlook remains bearish in the near term.
  • GBP/USD Struggles Near Lows Amid Persistent Dollar Strength: GBP/USD traded at 1.2528, attempting to stabilise near its multi-month lows as downward pressure persisted. The pair continues to trade below its key moving averages, with the 50-day SMA at 1.2762 and the 100-day SMA at 1.2941 acting as overhead resistance. Immediate support lies at 1.2500, a critical level for buyers to defend; failure to hold above it could lead to further downside toward 1.2400 and potentially 1.2350. On the upside, a break above 1.2600 could ease some of the bearish momentum, but significant resistance awaits at the 50-day SMA. 
  • USD/CAD Maintains Strong Bullish Momentum: USD/CAD closed at 1.4413, holding firmly near multi-year highs. Strong demand for the US dollar, coupled with weaker sentiment for the Canadian dollar due to softening oil prices, has kept the pair in a robust uptrend. With prices well above the 50-day SMA at 1.4040, buyers remain in control, targeting the key psychological level of 1.4500. Immediate resistance stands at 1.4450, with a breakout above this level potentially opening the door for further gains. On the downside, support is located at 1.4300, while the 50-day SMA offers a significant cushion against deeper corrections. 
  • USD/JPY Extends Rally Toward Key Resistance Levels: USD/JPY traded at 157.93, continuing its upward momentum as the pair approached the critical 158.00 resistance level. Immediate resistance lies at 158.00, and a decisive break above this could pave the way toward the psychological milestone of 160.00. On the downside, support levels are observed at 155.00, with the 50-day SMA at 153.10 providing additional support in case of a pullback. 
  • Gold Gains as Bulls Defend Key Levels: Gold prices rose to $2,634 on Thursday, posting a 0.69% gain as buyers defended the critical $2,600 level. The metal remains supported by its 200-day SMA at $2,479, signalling that the broader uptrend is intact despite recent volatility. Immediate resistance lies at $2,666, and a break above this level could set the stage for further gains toward $2,700. However, the strength of the US dollar continues to cap upside momentum. Failure to maintain support above $2,600 could lead to a test of lower levels at $2,550 or potentially $2,500. 

Market Movers:

  • KULR Technology Group Skyrockets on Bitcoin Investment: Shares of KULR Technology Group soared over 40% after the company announced its acquisition of 217.18 bitcoin worth approximately $21 million. The move comes after bitcoin recently surpassed the $100,000 milestone, further bolstering KULR’s market position.
  • Toyota Motors Rallies on Improved ROE Target: Toyota Motors gained over 8% following reports from Nikkei that the company plans to double its return on equity (ROE) target to 20%. This significant revision underscores the automaker’s commitment to enhancing shareholder value, sparking a rally in its stock.
  • GameStop Extends Gains Amid Renewed Optimism: Shares of GameStop advanced nearly 6%, marking their fourth consecutive day of gains. The video game retailer has climbed almost 85% year-to-date, supported by strong retail interest and strategic shifts in its business model.
  • Crypto Stocks Retreat as Bitcoin Hovers Near $96,000: Bitcoin-related stocks experienced a mixed session as the cryptocurrency traded around $96,000, approximately 11% below its record high. Coinbase shares slipped nearly 2%, while MicroStrategy dropped over 4%. Mining companies Mara Holdings and Iren fell by 4% and 3%, respectively, reflecting the broader uncertainty in crypto markets.
  • Broadcom Builds on Strong Performance: Broadcom shares rose more than 2%, continuing their impressive year-to-date rally. The stock is up 51% for December alone and has climbed 119% in 2024, making it one of the standout performers in the tech sector.
  • Assembly Biosciences Rises on Positive Trial Results: Shares of Assembly Biosciences jumped 4.5% after the company reported encouraging results from its clinical trial for a chronic hepatitis B treatment. Enrolment for the second cohort of the trial is now underway, driving optimism among investors.

As the year nears its end, markets showcased a mix of resilience and caution in Thursday’s thin holiday trading. The Dow extended its winning streak to five days, inching higher despite earlier losses, while the S&P 500 and Nasdaq displayed slight declines after their strong performances earlier in the week. Investors remained attentive to labour market data, with steady jobless claims offset by a rise in continuing claims to a three-year high. Global markets painted a varied picture, with Japan rallying on optimism surrounding record budget proposals and merger talks, while oil prices eased amid China stimulus hopes and a stronger dollar. As market participants look ahead to the remaining trading days of the year, the Santa Claus rally continues to provide a glimmer of optimism, tempered by ongoing concerns about the broader economic outlook.