The Dollar Index strengthened on Powell’s comments. The Bank of Mexico cut the rate to 10.25%

The Dow Jones (US30) decreased by 0.47% on Thursday. The S&P 500 Index (US500) was down 0.60%. The NASDAQ Technology Index (US100) lost 0.66%. 

On Thursday, Fed Chairman Powell clarified that there was no need for an immediate rate cut, citing the economy’s strength, a robust labor market, and stable inflation. Powell’s comments echoed his colleagues, who favor a cautious approach to future rate cuts. As a consequence, markets have lost confidence in a December rate cut and now have a 58% chance of it happening, down from 80% before the speech. In addition, investors believe that the incoming Trump administration may push for higher trade tariffs, tax cuts, and higher budget deficits, which could lead to higher inflation and further limit the Fed’s ability to reduce borrowing costs.

The Walt Disney Company (DIS) is up more than 6%, topping the Dow Jones Industrials list, after reporting fourth-quarter adjusted EPS of $1.14, above the consensus of $1.10, and saying it expects high-single-digit adjusted EPS growth in fiscal 2025, above the consensus of 4%. Cisco Systems (CSCO) closed down more than 1% after estimating FY 2025 revenue of $55.3–56.3 billion, below the average consensus estimate of $55.88 billion.

The Bank of Mexico lowered its benchmark interest rate to 10.25% in November 2024, which was widely expected and in line with trends in major economies. The Central Bank eased monetary policy, noting improving trends in core inflation but remaining cautious due to risks of stagnant core inflation and potential currency depreciation. Overall inflation rose from 4.66% y/y in mid-September to 4.76% y/y in October due to a supply shock affecting non-core inflation, while core inflation eased to 3.8% y/y. 

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 1.37%, France’s CAC 40 (FR40) closed 1.32% higher, Spain’s IBEX 35 (ES35) gained 1.29%, and the UK’s FTSE 100 (UK100) closed up 0.51%. The report on the ECB’s October 16–17 meeting was seen as dovish as policymakers believe inflation continues to fall. There was broad agreement that incoming data from the September meeting had increased confidence in the ongoing disinflation process and that inflation would converge toward the medium-term target.

WTI crude oil prices fell to as low as $68 a barrel on Friday, driven by concerns that the global oil market may be moving into a state of oversupply. On Thursday, the IEA predicted an oil surplus next year, attributing it to slowing demand growth in China and rising global production. The agency also noted that the surplus could become even more pronounced if OPEC+ follows through on plans to restore previously halted production. Additional pressure on commodities such as oil is being exerted by the strengthening dollar, which has risen to a two-year high, making dollar-priced commodities less attractive. In addition, EIA data showed that US crude oil inventories rose by 2.1 million barrels last week, exceeding the expected increase of 1.9 million. 

The US natural gas prices (XNG/USD) fell below $2.9/MMBtu following the release of the EIA report on gas in storage. The data showed that US utilities added 42 billion cubic feet of natural gas to storage last week, slightly below the expected 43 Bcf. Gas in storage is now 6.1% above the seasonal norm. This is the fourth consecutive week of exceeding the seasonal norm, last seen in October 2022. 

Silver prices stabilized near $30.30 an ounce on Friday but were still on track for a fourth straight weekly decline as a strengthening US dollar continued to weigh on the precious metal. The dollar’s rise was driven by expectations of a Federal Reserve rate cut following comments from Fed Chairman Jerome Powell on Thursday. Powell said the central bank was in no hurry to cut rates, citing a strong economy, stable labor market, and steady inflation.

Asian markets were mostly down yesterday with Japan’s Nikkei 225 (JP225) down 0.48%, China’s FTSE China A50 (CHA50) decreased by 0.99%, Hong Kong’s Hang Seng (HK50) lost 1.96%, and Australia’s ASX 200 (AU200) positive 0.31%. 

China’s retail sales rose to 4.8% y/y from 3.2% in September and hit the highest growth since February, helped by the week-long holiday and the latest shopping festival. Meanwhile, the unemployment rate fell to a four-month low of 5.0%, according to the survey, and industrial production continued to rise, albeit at a slightly slower pace. The statistics agency also noted that confidence in the real estate market strengthened on the back of appropriate policies, leading to an increase in the number of transactions in the market and a move towards stabilization.