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Morning Research Notes - 19.12.24
US markets closed lower on Wednesday, with the Dow and Nasdaq both finishing in the red at the conclusion of the Fed’s FOMC meeting. The Dow extended its losing streak to ten days, while the Nasdaq also saw a significant drop, as the Fed indicated a slower pace of rate cuts in the coming year, reducing the number of expected cuts for 2025. Major commodities had a bearish day yesterday: Spot gold closed down 0.2% to $US2,646.57 per ounce, Iron Ore ended the day 0.5% lower to close at $US104.5 per tonne, and Brent Crude fell 1.2% to $US73.06 a barrel.
Wall Street closed lower on Wednesday after the U.S. Federal Reserve's expected 25 basis point rate cut, but the central bank also reduced the number of projected rate cuts in the coming year. Policymakers now expect two interest rate cuts by the end of 2025, down from four in September, and set up the likelihood of a pause in January. The Dow Jones fell 393.11 points, or 0.90%, marking its tenth consecutive daily loss, the longest losing streak since 1974. The S&P 500 dropped 1.08% and the Nasdaq lost 1.28%. Treasury yields rose following the Fed's decision, and the dollar strengthened against a basket of global currencies. European shares saw modest gains, buoyed by technology stocks, while emerging market stocks and Japan's Nikkei both closed lower.
The Australian stock market closed lower on Thursday, with the ASX 200 falling by 0.06%. The mixed momentum was reflected across major sectors: Utilities (0.31%), Info Tech (0.53%) and Health Care (0.58%) managed to notch gains. Contrastingly, Materials (-0.19%) and Financials (-0.40%) closed down. Major commodities had a bearish day yesterday: Aluminium, Copper, Zinc and Nickel all closed in the red, falling by 1.81%, 0.90%, 1.37% and 1.35% respectively.
Chart of the day
Tungsten, a critical metal used in aerospace, defense, and electronics, has become a strategic commodity in US-China trade relations, with the US historically relying on China for its supply, creating potential vulnerabilities. Since the 2018 US-China trade war, the US has sought to diversify its tungsten imports, leading to a decline in China's share and an increase in imports from alternative suppliers like Canada and Germany. Trade tensions have further impacted the market, with the US imposing tariffs on Chinese tungsten and China restricting exports to the US. The reopening of a tungsten mine in South Korea, secured with a long-term supply contract to the US, may help address these supply chain challenges.
Source: MacroBond
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