On Thursday (December 5th Beijing time), spot gold traded around 2650. Despite Federal Reserve Chairman Powell's cautious attitude towards further interest rate cuts, ADP employment data was disappointing, slightly lower than market expectations to support gold prices. Investors are looking forward to Friday's non farm payroll report; US crude oil traded around $68.73 per barrel, and last week the decline in US crude oil inventories was greater than expected, providing some support for oil prices. Investors are paying attention to the upcoming OPEC+meeting.

The Dow Jones Industrial Average closed up 0.69% on Wednesday at 45014.44 points; The S&P 500 index rose 0.60% to 6086.47 points; The Nasdaq index rose 1.30% to 19735.12 points.

equity market

The three major stock indexes in the United States all hit record closing highs on Wednesday, as technology stocks rebounded after Salesforce released optimistic results, and Federal Reserve Chairman Powell's remarks also boosted the market in the late trading session. Powell stated at an event in The New York Times that the economy appears stronger than when the Federal Reserve began cutting interest rates in September, which may make policymakers more cautious in further rate cuts. Peter Cardillo, Chief Market Economist at Spartan Capital Securities, said Powell's comments and the Federal Reserve's economic activity report overall added to the market's optimistic tone.

The Federal Reserve stated in a national survey and interview summary known as the "Brown Book" that economic activity has slightly expanded in most parts of the United States since early October. Cardillo said Powell is "very optimistic about the economy, he said we have made progress on inflation... this is good news for the stock market overall," and investors expect the Federal Reserve to cut interest rates for the third consecutive time at its meeting on December 17-18.

Salesforce surged 11%, setting a new historical high, as the enterprise cloud computing company's third quarter revenue exceeded analysts' expectations and raised the lower limit of its full year revenue forecast. Other cloud computing companies are also rising. The S&P 500 technology index reached a historic closing high, while the communication services and non essential consumer goods indices also reached historic closing highs.

In addition, in the technology field, Marvel Technology surged 23.2% and set a new historical high, as the chip manufacturer predicts that fourth quarter revenue will be higher than analysts' expectations. The semiconductor index rose 1.7%, while Nvidia rose 3.5%. Investors are eagerly awaiting the release of monthly US employment data on Friday and unemployment benefits data on Thursday.

Earlier on Wednesday, private employment data in the United States showed a slight increase in job opportunities in November. In addition, a survey by the Institute for Supply Management (ISM) shows that service industry activity in the United States slowed down in November after a significant increase in recent months. The final value of the S&P service industry survey has been revised down to 56.1. Sam Stovall, Chief Investment Strategist at CFRA Research, said, "Recent economic data has largely confirmed that the Federal Reserve will cut interest rates in December. Friday's employment report is like the highlight of this week's employment data

gold market

Gold rose slightly on Wednesday after data showed a moderate increase in private employment in the United States last month, while investors digested Federal Reserve Chairman Powell's speech and looked forward to Friday's non farm payroll report. Spot gold was reported at $2654.03 per ounce, up 0.4%. US futures closed up 0.3% at $2676.20. Independent metal trader Tai Wong said that ADP employment data was disappointing, slightly lower than market estimates, and gold rebounded. After a month of hurricanes and Boeing strikes, the market had hoped for a greater rebound in the job market.

The ADP report shows that private employment increased by 146000 last month. Economists interviewed by Reuters predict that there will be an increase of 150000 private employment opportunities. Powell stated that recent economic performance will make the Federal Reserve more cautious in its future path of interest rate cuts.

Investors are currently waiting for Friday's crucial US non farm payroll report and next week's inflation data to find clues about the Federal Reserve's policy trajectory. Everett Millman, Chief Market Analyst at Gainesville Coins, stated that gold's response today was lackluster, and it is expected that the upcoming US non farm payroll data will have a greater impact. If the data shows weak employment, it will provide support for gold prices.

Traders believe that a 25 basis point rate cut by the Federal Reserve at its meeting on December 17-18 is feasible

Ability is 77%.

Global geopolitical turmoil has also provided support for safe haven gold, including political turmoil in South Korea, the French government facing collapse, the Russia Ukraine war, and Israel's threat to go to war with Lebanon if the ceasefire agreement with Hezbollah breaks.

Spot silver rose 1% to $31.33 per ounce; Platinum fell 1.3% to $940.6; Palladium rose 0.5% to $976.56.

Oil market

Oil prices fell nearly 2% on Wednesday as investors waited for OPEC+to make a decision on production cuts. Last week, the decline in US crude oil inventories was greater than expected, providing some support for oil prices. Brent crude oil futures fell 1.78%, settling at $72.31 per barrel. US crude oil futures fell 2% to $68.54. Analysts say that the market is uneasy and investors are paying attention to the upcoming OPEC+conference.

Industry sources told Reuters that OPEC+is likely to extend the production cuts until the end of the first quarter of next year during its meeting on Thursday. Kpler's Chief Americas Oil Analyst Matt Smith said, "Although it is expected that the lifting of production cuts will be postponed, the speeches at the meeting will have the greatest impact

The US Energy Information Administration (EIA) stated that the decline in US crude oil inventories last week exceeded expectations, and refinery production accelerated. Last week, the increase in gasoline and distillate inventories exceeded expectations. The upward trend only provides some support for oil prices.

Israel threatened on Tuesday that if the ceasefire agreement with Hezbollah breaks down, Israel will launch another war against Lebanon, and stated that this time Israel's attack will go deeper and target the Lebanese state itself.

South Korean lawmakers submitted a motion to impeach President Yoon Suk yeol, who declared martial law on Tuesday but withdrew it within hours, triggering a political crisis in Asia's fourth largest economy.

foreign exchange market

The overall change in the US dollar on Wednesday was not significant, indicating that the US economy is slowing down and the possibility of a rate cut in December still exists. The EUR/USD rose slightly on Wednesday, but fell from its intraday high after the French parliament overturned the government through a vote of no confidence as expected.

The Korean won was one of the most volatile currencies on Tuesday, rising against the US dollar due to suspected central bank intervention and the South Korean Ministry of Planning and Finance's promise to provide "unlimited" liquidity support to the market. South Korean President Yoon Suk yeol suddenly declared martial law on Tuesday evening, but it was lifted a few hours later.

French far right and left-wing lawmakers joined forces to support a motion of no confidence against Prime Minister Barnier and his government, with 331 lawmakers (more than half) voting in favor. After the results were announced, the euro rose slightly against the US dollar to 1.0512. It is expected that Barnier and his government will soon submit their resignation to President Macron. Eugene Epstein, Head of Transactions and Structured Products for Moneycorp North America, said“

At this point, it's really a question how bad the situation will get. We're not sure what the voting results will be, nor are we sure how long the budget will be used as a bargaining chip to address political interests of all parties. Three sources told Reuters that French President Macron plans to quickly appoint a new prime minister if the government falls on Wednesday. Barnier's downfall will deepen France's political crisis and may further suppress the euro.

Investors also digested the speech made by European Central Bank President Lagarde at the European Parliament hearing on Wednesday. She stated that the European Central Bank will continue to lower interest rates, but has not made any commitment to the pace of easing. The European Central Bank will hold a meeting on December 12th, and economists generally expect the bank to cut interest rates by another 25 basis points, which will be the fourth rate cut this year.

Private employment in the United States saw moderate growth in November, but lower than expected, while the annual salary of current employees increased for the first time in 25 months.

The ADP National Employment Report shows that there was an increase of 146000 private employment positions in November, and a downward revision of 184000 in October. Economists surveyed by Reuters previously expected an increase of 150000.

At the same time, service industry activity in the United States slowed down in November after experiencing significant growth in recent months. The Institute for Supply Management (ISM) Non Manufacturing Purchasing Managers' Index (PMI) in the United States sharply rose to 56.0 in October, the highest since August 2022, and then fell to 52.1 in November. Analysts surveyed by Reuters predict that the Purchasing Managers' Index for the service sector will slow down to 55.5.

According to CME's FedWatch, the probability of a 25 basis point rate cut in US federal funds futures this month has increased from 73% late Tuesday to 78%, while the probability of suspending easing has decreased from 27% the previous day to 22%.

Vassili Serebriakov, a foreign exchange strategist at UBS in New York, said, "The Federal Reserve may cut interest rates again in December, which will put pressure on the US dollar because the market is already bullish on it. But unless the US data really deteriorates (which we haven't seen yet), any weakness in the US dollar will be short-lived

The President of the Federal Reserve Bank of St. Louis, Alberto Musalem, stated on Wednesday that he expects the Fed to continue cutting interest rates, but he is not yet ready to make a decision at the policy meeting later this month.

Federal Reserve Chairman Powell said on Wednesday that the current economy is stronger than expected when the Fed began cutting interest rates in September, and seems to be sending a signal of support for slowing down the pace of interest rate cuts in the future.

In South Korea, the Korean won rebounded on Wednesday after plummeting overnight due to the announcement of martial law by the South Korean president. The US dollar fell 0.8% to 1413.6 Korean won in the latest exchange rate. But politics remains the focus, with South Korean lawmakers submitting a motion to impeach the president on Wednesday.

The USD/JPY also rose, rising 0.6% to 150.52, after media reports cast doubt on expectations of a rate hike by the Bank of Japan this month, leading to a decrease in government bond yields.

international news 

Powell's statement that the Federal Reserve can be more cautious has largely not changed expectations of interest rate cuts

Federal Reserve Chairman Powell stated on Wednesday that the US economy has performed stronger than when interest rate cuts began in September, which may lead policymakers to be more cautious in further rate cuts. Powell said, "We can be more cautious because we are trying to find a neutral stance." Powell's remarks on Wednesday seemed to align with more cautious policymakers and largely echoed the previous view that the Federal Reserve could "carefully" consider interest rate cuts without rushing to act. Powell's remarks on Wednesday did not significantly change the current expectation of another 25 basis point rate cut in December.

South Korean opposition party needs to fight for key 8 votes to pass presidential impeachment case

According to Yonhap News Agency, the ruling National Power Party of South Korea decided on Thursday to oppose the motion to impeach President Yoon Suk yeol. The opposition party needs a two-thirds majority of votes to pass the impeachment motion, which requires the support of eight ruling party members. If successfully submitted to Congress, lawmakers may vote on the impeachment bill as early as Friday. If the impeachment case is passed and supported by the Constitutional Court, Yoon Seok yeol will become the second South Korean president to be impeached since former President Park Geun hye in 2017. At that time, the large-scale candlelight protests triggered by the scandal of cronies' involvement in politics led to the downfall of Park Geun hye. If Yoon Seok yeol is suspended from exercising his powers due to the passage of the bill by the National Assembly, Prime Minister Han Deok soo will take over the presidency. If a president in distress resigns or is dismissed, new elections will be held within 60 days.

Federal Reserve's Beige Book: Economic activity grows slightly, businesses become more optimistic about demand outlook

The latest Beige Book survey by the Federal Reserve shows that after being largely flat in the first few months, economic activity slightly increased in November, and businesses are more optimistic about the demand outlook. Overall, economic activity has achieved a slight increase, with moderate growth expectations in most regions. Business contacts optimistically predict that demand will increase in the coming months. Consumer spending remains stable overall. The recent brown book report depicts a more bleak economic picture than official statistics, with growth rates close to zero, declining recruitment rates, and only a slight increase in prices. In many cases, this contradicts overall economic data, which shows that economic activity remains strong.

Federal Reserve Chairman Powell: Oppose the President's Proposal to Express Opinions on Interest Rate Policy

On December 4 local time, Federal Reserve Chairman Powell said in an interview that the Federal Reserve was created by Congress to act on behalf of all Americans without considering politics, which is a "national law". Powell added that he is not concerned that Congress will change the independence of the Federal Reserve and opposes the suggestion that the president should express an opinion on interest rate policy. Regarding the US economy, Powell stated that the inflation rate has decreased and the unemployment rate is relatively low, and the current situation is "very good". Powell pointed out that the US economy is stronger than expected in September, so the central bank can be more cautious when cutting interest rates. When asked about the national debt issue, Powell stated that the US federal budget is on an "unsustainable track" and needs to be resolved as soon as possible.

Trump meets with the Prime Ministers of Qatar and Israel to promote ceasefire

A source familiar with the talks said on Wednesday local time that the Middle East envoy selected by US President elect Trump met with the prime ministers of Qatar and Israel to initiate Trump's diplomatic efforts to reach a ceasefire and hostage release agreement in Gaza before his inauguration on January 20th. Sources say that the incoming Middle East envoy Steve Witkoff visited Qatar and Israel at the end of November. Sources added that these meetings indicate that Qatar has resumed its role as a key mediator after suspending it last month. Hamas negotiators may return to the Qatari capital Doha to facilitate a new round of negotiations.

Hungary submits exemption application to the United States to allow it to continue paying natural gas fees to Russia

On December 4th local time, Hungarian Foreign Minister Szijjardo stated in Brussels that the Hungarian government has submitted an exemption application to the United States to allow it to continue paying natural gas fees to Gazprom in Russia. Szijjardo stated that the latest sanctions imposed by the United States have brought serious difficulties to Hungary and countries in the region, and the termination of Russian natural gas imports will result in affected countries being unable to access natural gas supplies. Siyardo stated that granting sanctions exemptions is not unprecedented. Several Russian banks also enjoy similar exemptions in the United States, as the US needs to import uranium from Russia, which is essential for the operation of nuclear power plants.

The French National Assembly has voted to pass a motion of no confidence against the government

On December 4th local time, the French National Assembly voted to pass a motion of no confidence against the current government. The French government is facing another restructuring. On the 2nd of this month, Barnier bypassed the National Assembly and forcibly passed a social security bill, causing strong dissatisfaction from far right and left-wing political parties. The far right National Alliance and the left-wing political party alliance "New People's Front" have both submitted a motion of no confidence against the Barnier government. On the afternoon of the 4th, the French National Assembly held a pre vote debate on the motion of no confidence against the government.

EU defense spending is expected to rise to 326 billion euros in 2024

On December 4th local time, data released by the European Defense Agency showed that the total defense spending of EU countries is expected to increase to 326 billion euros in 2024, equivalent to 1.9% of the EU's gross domestic product. Data shows that the total defense spending of EU countries in 2023 is approximately 279 billion euros, an increase of 10% compared to 2022. It is expected that the total defense spending of EU countries will further increase by 17% in 2024, reaching 326 billion euros.

World Tourism Organization: Global tourism industry is expected to achieve comprehensive recovery by the end of this year

The United Nations World Tourism Organization released the "World Tourism Barometer" on December 4th local time. The report points out that in the first nine months of 2024, approximately 1.1 billion tourists worldwide will travel abroad, and the tourism industry has recovered to 98% of pre pandemic levels. Despite facing economic, geopolitical, and climate challenges, the tourism industry has demonstrated strong resilience and is expected to achieve a comprehensive recovery by the end of this year.

Domestic news

The three leading industries in Shanghai are accelerating, with a market value approaching 2 trillion yuan

Since the beginning of this year, with the support of policies and funding, the output value of the three leading industries in Shanghai's manufacturing sector has grown rapidly in the first three quarters, and related listed companies have attracted much attention from institutions. According to statistics, there are currently 101 listed companies in the three leading industries in Shanghai, which belong to the A-share market. Over 60% of these listed companies have gone public in the past five years. From a market value perspective, the latest total market value of related listed companies reached 1.98 trillion yuan, an increase of over 191% compared to the end of 2019.

At the end of the year, the bond market went smoothly, with over 90% of pure bond funds reaching a historic high in net asset value

On December 4, the yield of medium and long-term treasury bond continued to decline, and treasury bond futures rose sharply. The main 30-year contract of treasury bond bond futures rose 0.7%, the main 10-year contract rose 0.27%, and the main five-year contract rose 0.16%. The yield of 240011 active spot bonds of 10-year treasury bond bonds fell to a new low and closed below 1.96%. On December 2, the yield of 10-year treasury bond entered the "first era" for the first time in many years, hitting a new low since April 2002. Since this year, the yield of treasury bond of all maturities has shown a continuous downward trend of shock. Up to now, the net worth of domestic pure bond funds has exceeded 90%, hitting a record high. At the same time, the heat of the bond market has once again risen, which has also raised concerns in the market about short-term pullbacks. Multiple public funds believe that the current monetary easing cycle is still underway, and the risk of a pullback is expected to be controllable. If there is a favorable timing for the layout, it is likely to occur.