Rise and shine everyone.

U.S. equities closed mostly lower yesterday. Nvidia shares dipped as Chinese regulators launched a probe into its 2020 Mellanox acquisition, citing potential anti-monopoly violations. This is significant as China contributes 15% to Nvidia’s data center revenue ($4.5 billion in Q3). AMD was also down.

Chinese ADRs gained after authorities officially shifted monetary policy to a “moderately loose” stance, aiming to support growth. However, they have since moved lower from yesterday’s highs.

This morning, the Australian dollar dropped 0.8%, and 3-year yields fell by 9 basis points after the RBA held rates steady but softened its policy tone. The removal of “not ruling anything in or out” from its statement signaled a dovish shift, compounded by acknowledgment of weaker-than-expected economic data. Governor Michele Bullock clarified that the phrasing change was intentional and that rate changes (cuts or hikes) were not discussed.

South Korean equity markets rebounded by 2%, with the Korean won appreciating 0.3%, as the opposition leader expressed support for the national budget. However, uncertainty remains, with reports suggesting the ruling party is deliberating President Yoon’s potential exit by February or March 2025, reflecting ongoing political tensions.

In Japan, the yen weakened to its lowest levels since late November, trading in the 151 range against the USD. A strong 5-year Japanese Government Bond (JGB) auction, reflecting high demand, lowered expectations of a BOJ rate hike in December. Analysts now project the next potential hike in January 2025.

Global markets will be cautious this week and next as traders reassess equity valuations amidst anticipation of key U.S. CPI data and major central bank decisions from the ECB (this week) and the Fed, BOE, and BOJ next week.

In case you missed it, I was on Fox Business last night with a brief update on our US outlook.

Chart of the Day

This is sentiment being tracked through earnings calls. Clearly, the sentiment has been turning positive on the consumer over the last few quarters.

Calendars

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