Commentary
US stocks rose moderately during the shortened holiday week, led by large tech stocks early on. However, markets lost steam after Christmas, with most indexes dipping in the final days. Consumer confidence fell in December from 112.8 to 104.7, showing increased concerns about jobs and income. Durable goods orders also dropped by 1.1% in November, mainly due to fewer aircraft and defense orders. New home sales were slightly below expectations but still improved from October. Jobless claims fell to 219,000, but the number of people continuing to receive unemployment benefits rose to the highest level since 2021. US Treasury yields increased, with the 10-year yield reaching 4.64%, while high-yield bonds saw modest gains in calm trading conditions.
European stocks rose during the holiday-shortened week, with the STOXX 600 up 0.99%, France’s CAC 40 gaining 1.1%, and Germany’s DAX rising 0.5%. In the UK, 3Q economic growth was revised down to 0.0% from 0.1%, raising concerns about economic stagnation ahead of planned tax increases. In France, President Emmanuel Macron appointed François Bayrou as Prime Minister, marking the 4th leadership change in a year amid ongoing fiscal challenges. US President-elect Donald Trump urged the EU to increase US energy imports to reduce the trade deficit, threatening tariffs if they fail to comply. Analysts expect the EU to continue shifting away from Russian energy supplies. ECB President Christine Lagarde indicated inflation is nearing sustainable control but highlighted ongoing risks, particularly in the services sector, urging continued caution.
