Rise and shine everyone.

China’s shift in monetary policy has sparked optimism in global equities. For the first time since 2011, the Politburo changed its overall monetary stance from “prudent” to “moderately loose,” pledging to support consumption “forcefully and in all directions.” This supportive move comes ahead of the Central Economic Work Conference (CEWC) later this week, marking a strategic pivot reminiscent of the 2008–2010 Global Financial Crisis era. Asian markets responded positively, with a clear bias toward China-related equities.

In South Korea, political tensions remain elevated following the failed impeachment motion against President Yoon and an unsuccessful motion to investigate First Lady Kim Keon-hee for alleged corruption. The opposition has vowed to continue pushing for impeachment votes weekly, setting the stage for a prolonged standoff with the ruling party.

Speculation over the Bank of Japan’s (BOJ) policy trajectory continues, with Nikkei reports suggesting the next rate hike may come in January 2025 rather than at the upcoming December 19 meeting. Meanwhile, a private research institute forecasts over 10,000 company bankruptcies in Japan for 2024, marking the highest level since 2013.

The U.S. remains in focus after strong November payroll data last week and comments from President-elect Trump in his first post-election interview. Trump reiterated plans to extend tax cuts and maintained support for Fed Chair Powell but acknowledged that new tariffs could pressure prices.

Elsewhere, French equities outperformed, with the CAC-40 leading European markets as President Macron considers appointing a caretaker prime minister, with an announcement expected as early as December 10. Crude oil prices climbed amidst the turmoil in Syria, where President Assad was ousted by rebel forces, signaling potential instability in the region.

Markets are buoyed by a combination of China’s pro-growth stance, seasonal tailwinds like the “Santa Rally,” and bullish macroeconomic data, with eyes firmly set on central bank decisions in the weeks ahead.

Chart of the Day

“Earnings-day moves reach a 15-year high: Long-short equity investors continue to grapple with the large event-day moves seen over the past few quarters. This quarter, 12% of S&P 500 stocks moved more than 10% on their earnings day.

In the first three quarters of the year, about 40% of stocks saw some mean-reversion on the day following their earnings release. However, in the latest quarter, 53% of stocks moved in the same direction on the day after their earnings-day move.

Bottom line: Predicting earnings-day direction has been critical, and understanding positioning is key to interpreting trading dynamics following earnings releases.” - Goldman Sachs.

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)