Broadcom May Help Lead Early Rebound On Wall Street

The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to regain ground after moving mostly lower over the course of the previous session.

The tech-heavy Nasdaq is likely to benefit from a surge by shares of Broadcom (AVGO), as the chipmaker is soaring by 17.5 percent in pre-market trading.

The spike by Broadcom comes after the company reported better than expected fiscal fourth quarter earnings and said it expects continued strong demand for its custom AI chips.

Stocks may also benefit from optimism about the outlook for interest rates ahead of next week’s Federal Reserve meeting.

The Fed is widely expected to lower interest rates by another 25 basis points, although traders are likely to pay close attention to the accompanying statement for clues about future rate cuts.

Recent data showing inflation remains sticky has led to worries the Fed will lower rates slower than previously anticipated next year.

CME Group’s FedWatch Tool is currently indicating a 96.4 percent chance the Fed will cut rates by a quarter point next week but a 74.6 percent chance the central bank will then leave rates unchanged in late January.

On the inflation front, the Labor Department released a report this morning showing import prices in the U.S. unexpectedly edged higher in the month of November.

Stocks recovered from an early pullback during trading on Thursday but moved back to the downside over the course of the session. With the downward move, the Dow closed lower for the sixth consecutive session.

The major averages fell to new lows for the session going into the close of trading. The Dow slid 234.44 points or 0.5 percent to 43,914.12, the Nasdaq declined 132.05 points or 0.7 percent to 19,902.84 and the S&P 500 fell 32.94 points or 0.5 percent to 6,051.25.

The weakness on Wall Street came as some traders looked to cash in on the strong performance seen on Wednesday, when the tech-heavy Nasdaq closed above 20,000 for the first time ever.

Some negative sentiment was also generated in reaction to a Labor Department report showing producer prices in the U.S. increased by more than expected in the month of November.

The Labor Department said its producer price index for final demand climbed by 0.4 percent in November after rising by an upwardly revised 0.3 percent in October.

Economists had expected producer prices to inch up by 0.2 percent, matching the uptick originally reported for the previous month.

The report also said the annual rate of producer price growth accelerated to 3.0 percent in November from an upwardly revised 2.6 percent in October.

The annual rate of producer price growth was expected to rise to 2.6 percent from the 2.4 percent originally reported for the previous month.

While the Federal Reserve is still widely expected to lower interest rates next week, the data has raised some concerns about how quickly the central bank will cut rates early next year.

Gold stocks pulled back sharply along with the price of the precious metal, with the NYSE Arca Gold Bugs Index plunging by 3.8 percent after ending Wednesday’s session at its best closing level in over a month.

Significant weakness was also visible among steel stocks, as reflected by the 2.7 percent slump by the NYSE Arca Steel Index.

Airline stocks also came under pressure over the course of the session, dragging the NYSE Arca Airline Index down by 2.5 percent.

Energy stocks also saw considerable weakness amid a decrease by the price of crude oil, while networking stocks showed a notable move to the upside on the day.

Commodity, Currency Markets

Crude oil futures are rising $0.37 to $70.39 a barrel after falling $0.27 to $70.02 a barrel on Thursday. Meanwhile, after plummeting $47.30 to $2,709.40 an ounce in the previous session, gold futures are tumbling $25.90 to $2,683.50 an ounce.

On the currency front, the U.S. dollar is trading at 153.30 yen versus the 152.63 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0516 compared to yesterday’s $1.0468.

Asia

Asian stocks ended mixed on Friday after Chinese leaders pledged more stimulus measures during a two-day huddle of the Central Economic Work Conference in Beijing, a key economic meeting that sets policy priorities for the coming year.

Top officials vowed to deliver rate cuts and lower the reserve requirement for banks to maintain economic growth and ensure overall stability of employment and prices. However, the meeting lacked policy details of fiscal stimulus and monetary easing steps.

Investors also looked ahead to next week’s Federal Reserve meeting, with economists expecting a 25 basis point rate cut. The dollar index held steady in Asian trading, while oil and gold were poised for weekly gains.

China’s Shanghai Composite Index dove 2.0 percent to 3,391.88 and Hong Kong’s Hang Seng Index plunged 2.1 percent to 19,971.24 as policy updates from the high-profile economic policy meeting disappointed investors.

Japanese markets fell sharply after a business survey showed a slight improvement in the outlook for manufacturers, spurring debate over whether the Bank of Japan will raise its benchmark interest rate next week.

The Nikkei 225 Index slumped 1.0 percent to 39,470.44 after reaching a two-month closing high in the previous session. The broader Topix Index settled 1.0 percent lower at 2,746.56.

Heavyweights Fast Retailing and Tokyo Electron lost 2-3 percent. Oji Holdings surged 11.2 percent on share buyback news.

Seoul stocks ended a choppy session higher ahead of a second impeachment motion against President Yoon Suk Yeol in parliament this weekend. The Kospi rose half a percent to 2,494.46, extending gains for the fourth consecutive session.

Australian markets ended lower for a fourth day running, with miners leading losses. The benchmark S&P/ASX 200 Index slid 0.4 percent to 8,296 as investors scaled back their February interest rate cut bets. The broader All Ordinaries Index fell 0.4 percent to 8,550.30.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index closed 0.5 percent higher at 12,754.26.

Europe

European stocks traded flat to slightly higher on Friday but were on track to snap a three-week winning streak, heading into the Federal Reserve meeting next week.

In economic releases, data from Destatis revealed earlier today that German wholesale prices continued to decline in November, though at a slightly slower pace.

Wholesale prices decreased 0.6 percent year-on-year in November, slower than the 0.8 percent drop in October. Wholesale prices have been falling since May 2023, and the latest drop was the weakest in four months.

French consumer price inflation increased slightly as initially estimated in November, final data from the statistical office INSEE showed.

The consumer price index logged an increase of 1.3 percent annually in November, slightly up from 1.2 percent in October. The inflation rate came in line with the flash data published on November 29.

EU-harmonized inflation rose to 1.7 percent from 1.6 percent, as estimated.

Elsewhere, data out of U.K. showed Britain’s economy shrank for a second month in October, in a blow to the Labour government’s economic agenda.

GDP declined by 0.1 percent month-on-month, below expectations of 0.1 percent growth. The weaker-than-expected growth data sent the pound tumbling and spurred bets of speedier rate cuts by the Bank of England next year.

While the U.K.’s FTSE 100 Index is just above the unchanged line, the German DAX Index is up by 0.1 percent and the French CAC 40 Index is up by 0.2 percent.

Swiss Re has moved sharply higher after the reinsurer said it is targeting net income of $4.4 billion for 2025.

Similarly, Munich Re shares have also jumped after the German reinsurer unveiled a profit target of €6bn for 2025, with group insurance revenue expected to reach €64bn.

Pricer AB, a Swedish electronic shelf label provider, has also surged after its partner JRTech Solutions signed an agreement with Sobeys in Canada to install 5 million digital labels.

Meanwhile, Portmeirion Group shares have plummeted in London. The retailer of homeware and fragrance products has issued a profit warning, citing challenging and unpredictable market conditions.

Tullow Oil has also tumbled after U.S. oil company Kosmos Energy confirmed that it is in “very preliminary discussions” regarding a possible all-share offer for the London-listed explorer and production company.

U.S. Economic News

Import prices in the U.S. unexpectedly edged higher in the month of November, according to a report released by the Labor Department on Friday.

The Labor Department said import prices crept up by 0.1 percent in November, matching the downwardly revised uptick in October.

Economists had expected import prices to dip by 0.2 percent compared to the 0.3 percent increase originally reported for the previous month.

Meanwhile, the report said export prices were unchanged in November after jumping by an upwardly revised 1.0 percent in October.

Export prices were expected to slip by 0.2 percent compared to the 0.8 percent advance originally reported for the previous month.