On Tuesday (November 19, Beijing time), spot gold trading was near 2611.29. Benefiting from the increased geopolitical tensions caused by the conflict between Russia-Ukraine conflict, risk aversion recovered, and the large rise of the US dollar stalled. US crude oil trading was at $68.93 per barrel. The crude oil production of Norway's Johan Sverdrup oilfield has stopped, and the escalation of the war between Russia and Ukraine has helped oil prices rise; Further geopolitical news needs to be left in the future.
The Dow Jones Industrial Average fell 0.13% to 43389.60 points; The S&P 500 index rose 0.39% to 5893.62 points; The Nasdaq index rose 0.60% to 18791.81 points.
Key focus for the day: Construction permit data for October in the United States, CPI data for Canada, and minutes of the November monetary policy meeting released by the Reserve Bank of Australia.
equity market
The NASDAQ and S&P 500 indexes of the US stock market closed higher on Monday, recovering some lost ground as investors awaited the upcoming quarterly financial report of AI leader Nvidia. Tesla jumped as the incoming Trump administration may make favorable policy adjustments.
Nvidia will release its third quarter financial report on Wednesday, during which investors will evaluate the sustainability of chip demand and the AI boom that has driven much of this year's market rally. According to data from Bank of America Global Research, this chip design company, which has contributed 20% to the S&P 500 index return over the past year, is expected to drive nearly 25% growth in earnings per share in the third quarter. Nvidia fell 1.3% on Monday after reports that its new AI chip was overheating in servers.
Carol Schleif, Chief Investment Officer of BMO Family Office, said, "Although Nvidia is the last company among the 'Big Seven' to announce its financial report, you have already seen a good expansion in profitability and attention, which will be worth paying attention to, but it doesn't feel as motivated as it did a quarter or two ago
The energy sector led the gains, with an increase of 1.05%. The non essential consumer goods sector rose 1.04%. After Bloomberg reported that members of President elect Trump's transition team were seeking to relax the US regulations on autonomous vehicle, Tesla surged 5.6%. The industrial sector experienced the highest decline.
Schleif said, "I think many specific sectors may be quite volatile before there is more discussion on Trump's cabinet candidates later this month
The major stock indices have already given up some of their gains after Trump's decisive victory, but as 2024 draws to a close, Wall Street remains in a fairly favorable position. The expectation that the Federal Reserve will slow down its easing policy and the uncertainty surrounding the impact of Trump's cabinet appointments have led to the S&P 500 index and Nasdaq index experiencing their largest weekly declines in over two months last week.
As the key holiday shopping season is about to begin, the performance of major retailers including Wal Mart, Lloyd's and Target will be closely watched this week, and investors want to assess the strength of American consumers.
gold market
The gold price rose sharply on Monday after falling for six consecutive days, due to the stagnation of the big rise of the US dollar, and the increased uncertainty of the Russia-Ukraine conflict, which triggered a new demand for risk aversion. Spot gold jumped 1.8% to $2608.19 per ounce, breaking away from the two month low hit last Thursday. The settlement price of US futures was $2614.60, up 1.7%.
Daniel Pavilonis, Senior Market Strategist at RJO Futures, said, "Part of the reason is Biden's announcement that Ukraine can use long-range missiles to strike deep into Russian territory. I believe this has to some extent driven safe haven demand for gold“
Gold is seen as a safe investment during periods of economic and geopolitical turmoil, with prices hitting their biggest weekly decline in over three years last week as tariffs proposed by President elect Trump are seen as a potential inflation driver that could prompt the Federal Reserve to slow down its rate cuts. This in turn pushed the US dollar index to a new one-year high last Thursday.
Pavilonis said, "Regardless of whether the Federal Reserve cuts interest rates or not, I believe technically, gold prices hope to return to around $2700." Despite recent data showing stagnant progress towards the 2% target for inflation, the market generally expects the Federal Reserve to cut interest rates for the third time in December. At least seven Federal Reserve officials will give speeches this week.
Spot silver rose 2.8% to $31.05 per ounce; Platinum rose 2.8% to $964.87; Palladium rose 5.3% to $1001.29.
Oil market
Oil prices rose more than 3% on Monday after news that crude oil production at the Johan Sverdrup oil field in Norway had stopped, expanding the gains brought about by the escalation of the Russia Ukraine war earlier.
Brent crude oil futures rose 3.2% to close at $73.30 per barrel, while US crude oil futures rose 3.2% to close at $69.16 per barrel.
Equinor said that production at the largest Johan Sverdrup oil field in Western Europe has been halted due to onshore power outages. An Equinor spokesperson said that the work of restarting production is underway, but it is currently unclear when production will resume.
UBS analyst Giovanni Staunovo told Reuters that the power outage news indicates that the North Sea crude oil market may tighten, leading to an increase in oil prices. The actual supply of North Sea crude oil supports the Brent futures contract. The rise in oil prices is also due to the escalation of Russia's war in Ukraine over the weekend.
Two US officials and a source familiar with the decision said on Sunday that the Biden administration's allowing Ukraine to use US made weapons to strike deep into Russian territory is a major reversal of Washington's policy.
The Kremlin stated on Monday that Russia will respond to the Biden administration's reckless decision, which it had previously warned would increase the risk of conflict with the US led NATO.
Brent and US crude oil fell more than 3% last week due to weak refinery operating rate data in China, and the International Energy Agency's prediction that even if OPEC+continues to cut production, global oil supply will still exceed demand by 1 million barrels per day in 2025.
Traders began shifting US crude oil trading towards January contracts before the December contract expired on Wednesday. The price difference between two contracts has turned into a positive spread structure for the first time since February, meaning that the trading volume of far month contracts is higher than that of near month contracts, which means that traders expect prices to rise.
foreign exchange market
The USD/JPY rose on Monday, regaining its recent upward trend. Previously, the Governor of the Bank of Japan hinted at further tightening of monetary policy, but was vague about the timing of interest rate hikes.
Bank of Japan Governor Kazuo Ueda reiterated that the economy is moving towards sustained wage driven inflation and warned against keeping borrowing costs too low, leaving room for another rate hike as early as next month. This is the first time since Trump won the US presidential election two weeks ago that Kazuo Ueda has commented on monetary policy.
However, Ueda did not give any indication on whether there will be a rate hike in December, stating that various "uncertainties" need to be studied. Marc Chandler, Chief Market Strategist at Bannockburn Global Forex, said, "The Governor of the Bank of Japan has not given any new signals, and due to the chaos caused in July, the market expects the Bank of Japan to better prepare the market for the next steps. However, the Governor of the Bank of Japan did not do so today, so I believe the yen is weakening“
The
USD/JPY rose 0.17% to 154.6 on Monday, ending a four-day uptrend against the Japanese yen last Friday after Japanese Finance Minister Katsuyuki Kato warned authorities to take action to combat excessive exchange rate volatility.
The market believes that the possibility of the Bank of Japan raising interest rates by 25 basis points at its next policy meeting on December 19th is about 54%, which is not much different from before Ueda's speech. The
US dollar index fell 0.5% to 106.20; The euro rose 0.54% against the US dollar to $1.0598. The
US dollar index hit a new high of 107.07 in over a year last week and has been rising as people expect Trump's victory to lead to increased tariffs and potentially stimulate inflation, thereby slowing down the pace of the
Federal Reserve's interest rate cuts.
European Central Bank decision-makers stated on Monday that they are more concerned about the expected damage to the Eurozone's economic growth from the new US trade tariffs, rather than the impact on inflation. Recent statements from
Federal Reserve officials, including Chairman Powell, suggest that the Fed will carefully consider the path of interest rate cuts.
There are not many US economic data to be released this week. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index rose from 43 in October to 46 in November, the highest since April, as people optimistically believe that the recent election will drive regulatory adjustments and stimulate housing construction.
The market is waiting for Trump to announce who he has chosen as Treasury Secretary. According to numerous media reports, the list of potential candidates has been expanded to include former
Federal Reserve Governor Kevin Warsh and billionaire Marc Rowan.
Chandler said, "My feeling is that from these appointments, and even this discussion about the Secretary of the Treasury, we hope to ensure that the Secretary of the Treasury supports tariff measures
The pound rose 0.47% against the US dollar to $1.2674, and fell 2.4% last week, marking the largest weekly decline since early February 2023.
international news
The probability of the
Federal Reserve cutting interest rates by 25 basis points in December has dropped to 54.8%, down from approximately 62% the day before
According to CME's "
Federal Reserve Watch", the probability of the Fed keeping current interest rates unchanged until December is 45.2%, and the probability of a cumulative 25 basis point rate cut is 54.8%. The probability of maintaining the current interest rate unchanged until January next year is 29.8%, the probability of reducing interest rates by 25 basis points cumulatively is 51.5%, and the probability of reducing interest rates by 50 basis points cumulatively is 18.7%
The confidence index of US residential builders rises to a seven month high
Thanks to rising sales expectations and optimism that the Trump administration will ease regulatory burdens, the US residential builder confidence index rose to a seven month high in November. The National Association of Home Builders (NAHB)/Wells Fargo indicator measuring the state of the housing market rose 3 points to 43 in November, exceeding the expectations of all economists surveyed by Bloomberg. The three sub indicators of this indicator have all increased, and the indicator measuring sales expectations for the next six months has risen by 7 points to its highest level since April 2022. The indicator measuring current sales has risen to a 6-month high, and the potential buyer flow indicator has reached its highest level since April.
Rent inflation will not subside until 2026, and it is expected that the
Federal Reserve will intensify the difficulty of interest rate cuts
Federal Reserve Chairman Powell stated last week that Fed officials are closely monitoring housing price inflation. According to research by the Cleveland
Federal Reserve Bank, it may not be until mid-2026 that rental inflation in the Consumer Price Index (CPI) will fall back to normal levels before the pandemic. Researchers say that although multiple indicators indicate that new rents are decreasing, the number of people moving and signing new leases is decreasing, so the sample in CPI cannot reflect the full picture.
EU High Representative: US allows Kiev attack on Russia within 300 kilometers of depth
The EU High Representative for Foreign Affairs and Security Policy, Borrell, stated that Kiev has indeed been authorized by the United States to attack Russia within a depth of 300 kilometers. Borelli pointed out that this is "better than nothing, but it's also nothing
Russian Ministry of Foreign Affairs: If Ukraine uses Western weapons to strike Russia's hinterland remotely, the nature of the conflict will fundamentally change
According to Western media reports, the United States allows Ukraine to use US Army tactical missiles, while France and Britain allow Ukraine to use the "SCALP" and "Storm Shadow" missiles respectively to strike the Russian hinterland. On November 18th local time, Russian Foreign Ministry spokesperson Zakharova stated that it is currently unclear whether these reports are based on official sources. But obviously, the United States and the West are betting on maximizing the escalation of their mixed war against Russia, attempting to achieve the illusory goal of "strategically defeating Russia". Zakharova emphasized that Ukraine's use of long-range missiles to attack Russian territory means that the United States is directly involved in actions against Russia, and also signifies a fundamental change in the nature and nature of the conflict. In this situation, Russia will provide a corresponding and significant response.
The first congestion pricing plan in the United States has been approved and will be implemented from January next year
On November 18th local time, the board of directors of the New York Metropolitan Transportation Authority (MTA) voted to approve the revised congestion pricing plan for the Manhattan area of New York. According to the plan, entering the area south of 60th Street in Manhattan during peak hours from 9:00 to 21:00 on weekdays will require a minimum payment of $9, with trucks and vehicles without electronic payment systems paying higher fees. It is reported that this plan is the first congestion charging plan in the United States and will be implemented from January 5th next year. By 2031, the cost of $9 will gradually increase to $15. The New York Metropolitan Transportation Authority will use new toll revenue to raise $15 billion to modernize the transportation system, which has a history of over 100 years. There are reports that US President elect Trump opposes the plan and has previously stated that he will terminate it within the first week after returning to the White House.
The US Treasury Department issues final rules to strengthen the enforcement powers of the Committee on Foreign Investment in the United States
According to a statement, the US Treasury Department has issued a final rule to strengthen certain procedures of the Committee on Foreign Investment in the United States (CFIUS) and enhance its punitive and enforcement powers. According to the statement, the rules have expanded the types of information that CFIUS can request for transactions that do not require reporting to CFIUS; Expanded the circumstances under which civil fines can be imposed and raised the maximum limit of fines; Expanded CFIUS's communication authority, etc.
It is reported that Trump will choose James Braid, an ally of Vance, as his congressional liaison
Insiders have revealed that US President elect Donald Trump is expected to soon appoint James Braid, a close ally of Vice President elect Vance, as White House legal affairs director. Braid served as Deputy Chief of Staff in Vance's Senate office and also worked in the Office of Management and Budget during Trump's first term. If officially appointed as the White House's congressional liaison, he will be responsible for pushing Trump's legislative agenda in Congress.
The European Securities and Markets Authority recommends that the European Union follow the example of the United States and switch to a T+1 settlement cycle in October 2027
The EU market regulatory agency recommends that the region shorten the stock trading settlement cycle from two days to one day by the end of 2027. This move will once again synchronize the EU with the United States. According to a statement released on Monday, the European Securities and Markets Authority (ESMA) has called for the implementation of the "T+1" settlement cycle starting from October 11, 2027. The United States, Canada and other countries have implemented the new system since late May, while the United Kingdom plans to make adjustments in the last quarter of 2027. Currently, the settlement of European stocks and bonds lags behind that of the United States. This inconsistency in pace is costly for some investors. Although ESMA's recommendations still require political approval, there are signs that people are increasingly recognizing the need to shorten settlement cycles.
Russian State Duma Chairman: If Ukraine is allowed to remotely strike Russia's hinterland, Russia does not rule out the use of new weapon systems
On November 18th local time, the Chairman of the Russian State Duma (lower house of parliament), Volodyne, stated that if the United States allows Ukraine to use American long-range missiles to strike the Russian hinterland, Russia will have to respond. Volodin stated that how to respond is the responsibility of the Russian Ministry of Defense, but it is clear that Russia will respond. Russia will not rule out the possibility of using a new weapon system, which has never been used on Ukrainian territory. Volodin said that the Russian side is aware that the next step may be a response from the United States, and a subsequent response from the Russian side is inevitable, which is called an "escalation".
European Central Bank Managing Director Stournaras believes that a 25 basis point rate cut in December is a foregone conclusion
Yannis Stournaras, a member of the European Central Bank's Governing Council, believes that the
ECB is almost certain to cut interest rates by 25 basis points in December. When asked if this move was a foregone conclusion, the Greek central bank governor said it was "almost" and he believed that "25 basis points is the optimal rate cut." Stournaras also stated that "there will be a series of rate cuts" and predicted that "if inflation continues to decline, as we expect," borrowing costs "may approach 2% by the end of next year. Stournaras emphasized that tariffs may have a negative impact on Europe and could trigger an economic recession in the medium term.
Domestic news
Energy storage capacity opens up a cost war, and large battery cells become a battleground
Since the beginning of this year, against the backdrop of slowing growth in the power battery market, the energy storage sector has emerged as the second growth pole for lithium battery companies. However, behind the significant increase in the installed capacity of new energy storage, the prices of energy storage cells and systems continue to decline, intensifying industry competition. In the long run, there is no doubt about the prospects of the energy storage market, but there is still a long way to go in achieving cost reduction and gain under the premise of safety. As a key player in improving the cost-effectiveness of energy storage systems, battery manufacturers are focusing on key indicators such as large capacity and high cycle. Currently, 300Ah+energy storage cells represented by 314Ah are gradually becoming mainstream, and large cells have become a "battleground" for military forces.
Market funds are loose, and the interest rate of treasury cash fixed deposits is declining
On November 18, the People's Bank of China announced that on November 18, the Ministry of Finance and the People's Bank of China conducted the 2024 Central Treasury Cash Management Commercial Bank Fixed Deposit (Phase IX) bidding by way of interest rate bidding, with a period of one month (28 days), an operating amount of 120 billion yuan, and a winning interest rate of 2.16%. The winning bid rate has decreased by 12 basis points compared to the previous operation. Analysts believe that this move reflects the active cooperation between the Ministry of Finance and the People's Bank of China in ensuring flexible allocation and stable management of funds. The current tender for treasury cash deposits reflects the relatively loose market liquidity, which helps commercial banks reduce debt costs and stabilize returns.
Goldman Sachs predicts that the MSCI China Index and the CSI 300 Index will rise by 15% and 13% respectively by 2025
Goldman Sachs' 2025 outlook report released on November 18th predicts that the MSCI China Index and the CSI 300 Index will rise by 15% and 13% respectively in 2025, mainly due to earnings per share growth and moderate valuation growth. From an industry perspective, Goldman Sachs advocates including the consumer sector in its investment portfolio and upgrading the ratings of the healthcare and securities sectors. In addition, Goldman Sachs believes that as the debt restructuring plan takes effect, investment in public welfare and new infrastructure projects may accelerate, and attention can be paid to the performance of the consumer and infrastructure sectors.
