DAILY MARKET NEWS - 14-12-2023

Ariff Azraei

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The Fed kept rates steady at 5.5% today, but many expect cuts could start as early as March. Some analysts think gradual easing begins then, others say aggressive cuts may hit in May. Either way, cheaper money looks inevitable in 2024. That likely means lower mortgage rates and could pump up assets. However, ongoing wage growth or commercial real estate troubles may delay cuts. Plus, the government's huge debts put pressure to act fast. Home buyers should get ready for a rollercoaster ride in 2024. Lower rates may lift demand and prices, but the timing is up in the air.


A widespread rally was sparked by the Fed's dovish turn, which indicated a halt to rate hikes and possible early cuts in 2024. All major S&P 500 sectors climbed, with rate-sensitive real estate and utilities leading the charge. Euphoria does not come to all after Pfizer's stock plunged as the company forecasted 2024 COVID-19 vaccine and treatment sales to be up to $5 billion below Wall Street expectations.


Gold surged to a one-week high, fueled by the Fed's unexpected pivot towards lower rates in 2024. The dollar and Treasury yields plunged, offering a haven for equity and commodity. With three rate cuts projected, gold's allure as a non-interest-bearing asset is poised to shine brighter in the coming year. Market eyes now shift to other central banks, with the ECB and Bank of England decisions potentially adding further momentum.


Oil prices rebounded on Thursday, buoyed by dovish Fed signals, a larger-than-expected draw in US crude inventories, and a weaker dollar. OPEC's dismissal of demand worries and Middle East supply concerns also offered support. Despite COP28's landmark deal on transitioning away from fossil fuels, the pact's impact on near-term oil prices remains minimal.


Asian currencies feasted on a softer dollar as the yen surged to a four-month high and risk-heavy currencies like the Korean won and Philippine peso followed suit, with India remaining an outlier on trade deficit woes. Market now await the European Central Bank and Bank of Japan meetings for further cues on global monetary policy and its impact on Asia's diverse economies.