Markets Navigate Inflation, Earnings, and Volatility: A Week of Mixed Signals

Last week saw notable economic updates and corporate earnings reports that shaped market movements. Key central bank decisions included the RBA holding rates steady, the Bank of Canada cutting rates, and the ECB and Swiss National Bank adjusting policies to address inflation and economic growth challenges. US inflation data highlighted a modest rise in CPI and PPI, reflecting mixed trends in consumer prices and production costs, while jobless claims reached a two-month high, signaling potential labor market cooling.
On the corporate front, Oracle, Adobe, and Costco delivered earnings reports with mixed market reactions. Oracle missed estimates but highlighted strong cloud growth. Adobe beat expectations yet fell on a weak outlook, while Costco surpassed forecasts, driven by e-commerce gains and strong membership revenue. Commodities and equities showed varied performance, with crude oil rising significantly and the S&P 500 and DJIA experiencing declines.

Tuesday, December 10

5:30 am – Australia: Cash Rate (AUD)
The RBA kept the cash rate at 4.35%, citing persistently high underlying inflation at 3.5%, above the 2.5% target midpoint. Inflation is not expected to return to target until 2026, despite significant declines since 2022.
The AUDUSD exchange decreased by 0.9% from the previous trading session.

15:30 – USA: CPI m/m (USD)
The Consumer Price Index (CPI) for All Urban Consumers (CPI-U) increased by 0.3 percent in November, following four consecutive months of 0.2 percent rises. Over the past year, the all-items index grew by 2.7 percent before seasonal adjustment. Shelter was the primary driver of the monthly increase, accounting for nearly 40 percent of the rise, with a 0.3 percent gain. Food prices also climbed by 0.4 percent, led by a 0.5 percent increase in grocery prices and a 0.3 percent rise in dining-out costs. Energy prices edged up by 0.2 percent, with gasoline increasing 0.6 percent.
Core inflation, which excludes food and energy, also rose by 0.3 percent for the month. Significant contributions came from categories like shelter, used cars and trucks, which increased by 2.0 percent, and household furnishings. Over the last 12 months, core inflation grew by 3.3 percent, while energy prices fell by 3.2 percent and food prices rose by 2.4 percent.
The EURUSD decreased 0.33%.

16:45 – Canada: Overnight Rate (CAD)
The Bank of Canada lowered its target overnight rate to 3.25%, citing weaker-than-expected GDP growth and a rise in unemployment to 6.8%. Consumer spending and housing activity improved, but business investment and exports lagged. Inflation remains near 2%, with moderating pressures on prices.
The USDCAD exchange rate decreased by 0.08% compared to the previous day’s close.

10:30 am – Switzerland: SNB Policy Rate (CHF)
The Swiss National Bank cut its key interest rate by 50 basis points to 0.5%, surpassing expectations. The move aims to address weak inflation, currently at 0.7%, and the strong Swiss franc, which continues to challenge exports and economic growth. Inflation is projected at 1.1% for 2024 and 0.3% for 2025. Chairman Martin Schlegel noted negative rates are unlikely but possible if needed, as the SNB monitors economic and currency developments.
The USDCHF was up 0.9% compared to the previous day’s close.

15:15 – Europe: Main Refinancing Rate (EUR)
The ECB cut key interest rates by 25 basis points, lowering the deposit facility rate to 3.00% to guide inflation toward its 2% target. Inflation is projected to decline to 1.9% by 2026, though wage and price adjustments remain slow. Economic growth forecasts have been reduced, with 0.7% growth expected in 2024. The ECB emphasized a flexible, data-driven approach to future policy decisions.
The EURUSD exchange rate ticked lower by 0.24% from the previous day.

15:30 – USA: PPI m/m (USD)
The Producer Price Index (PPI) for final demand rose 0.4% in November, the largest monthly increase since February 2023, and 3.0% over the past year. Goods prices led the rise with a 0.7% increase, driven by a 3.1% jump in food prices, while services prices edged up 0.2%. Core PPI, excluding food, energy, and trade, inched up 0.1% for the month and 3.5% over the year. Key drivers included higher costs for chicken eggs and wholesale margins, offset by declines in energy and transportation services.
The USDJPY price increased 0.05% compared to the previous day’s close.

15:30 – USA: Unemployment Claims (USD)
US jobless claims rose to 242,000 last week, the highest in two months, with continuing claims reaching 1.89 million, a three-year high. Seasonal factors likely influenced the spike, but persistently high claims and a 4.2% unemployment rate suggest a cooling labor market.
The US Dollar Index was up 0.36%.

09:00 am- UK: GDP m/m (GBP)
The UK’s GDP fell by 0.1% in October 2024, following a similar decline in September. Over the three months to October, GDP grew 0.1%, with gains in services and construction offset by a decline in production. Manufacturing and mining drove a 0.6% drop in production, while services output remained flat.
The GBPUSD price declined by 0.4%.

• Crude Oil
  Crude oil prices increased by 5.84% over the past week
  Brent Oil
• Brent increased by 4.65% compared to the previous week
  Gold
• The precious metal Gold (XAUUSD) concluded the week on Friday with a 0.6% weekly increase
  Silver
• XAGUSD decreased by 1.3% from the previous week

1. S&P 500 decreased by 0.66%
2. DJIA was down by 1.83%
3. NASDAQ 100 increased by 0.69%

• LeddarTech Holdings Inc. (LDTC) 506.06%
• SEALSQ Corp (LAES) 339.81%
• WISeKey International Holding AG (WKEY) 280.58%

Monday, December 9: Oracle Corporation (ORCL)
Wednesday, December 11: Adobe Inc. (ADBE)
Thursday, December 12: Costco Wholesale Corporation (COST)

Oracle (ORCL) shares fell over 7% after missing quarterly earnings and revenue estimates and issuing a weak forecast. Revenue grew 9% to $14.06 billion, with cloud services up 12% and cloud infrastructure surging 52%, driven by AI demand. Despite the miss, Oracle shares are up 80% this year, their best performance since 1999.
ORACL shares price decreased by 9.55% from the previous week.

Adobe (ADBE) reported strong Q4 results, with earnings of $4.81 per share and revenue of $5.61 billion, up 12.6% and 11.1% year-over-year, respectively. However, shares fell over 10% on a weaker-than-expected fiscal 2025 outlook, with revenue guidance below estimates. Growth in Digital Media and Experience segments continues to drive performance, supported by AI-powered tools. Fiscal 2025 earnings are projected at $20.20-$20.50 per share on $23.3-$23.55 billion in revenue.
ADBE shares experienced a surge of 15.78%.

Costco (COST) beat estimates with earnings of $4.04 per share and $62.15 billion in revenue, boosted by a 13% rise in e-commerce and 5.2% global sales growth. Strong demand for jewelry, home goods, and Kirkland Signature products drove performance.
COST shares decreased by 0.33% from the previous week.

In conclusion, last week reflected a mix of economic developments and corporate earnings that influenced global markets. Central banks tackled inflationary challenges with varied policy adjustments, while US inflation data showed modest increases, indicating persistent price pressures. Key corporate earnings highlighted strong growth in sectors like cloud services and e-commerce, though market reactions were mixed due to cautious forecasts. Commodities and equities saw diverse movements, underscoring a dynamic and evolving economic landscape. These trends highlight the continued interplay between macroeconomic policies, corporate performance, and market sentiment.