Fed’s Hawkish Outlook for 2025 Drove Most Markets Down

The BLOM Stock Index (BSI) compiled by BLOM Invest Bank daily rose weekly by 6.93% to 2,312.85 points on December 20^th, 2024.

On the Beirut Stock Exchange (BSE), the real estate sector dominated trading, accounting for 97.76% of the exchange’s total trading value, while the remaining were by the banking sector (2.08%) and industrial sector (0.16%). The most noteworthy trades throughout the mentioned period included:

As for the BLOM Preferred Shares Index (BPSI), it decreased by 0.94% to record 27.52 on December 20^th, 2024.

*Prices are as of the time of writing this report

US stock markets declined over the course of the week. S&P 500, Dow Jones, and NASDAQ decreased by 3.04%, 3.39%% and 2.78% respectively recording 5,867.08, 42,342.24, and  19,372.77. S&P 500 and NASDAQ started the week in green ahead of Federal Open Market Committee (FOMC) meeting and after the release of the S&P Global Flash PMIs that revealed strong growth of services sector while manufacturing sector decline deepened. Later on, the Federal Open Market Committee (FOMC) decided a 25 bps rate cut in its Wednesday meeting as expected but its outlook for 2025 drove the three stock indices down as it signaled only two rate cuts in the upcoming year instead of previous forecasts of four.

*Prices are as of the time of writing this report

Across the Atlantic, main European stock markets dropped over the course of the week as Eurozone Flash PMIs revealed continued contraction of private sector in December signaling concerns regarding next year’s growth. Fed’s rate cut deepened the decline of European stock markets. As such, STOXX 600 declined by 3.03% to record 500.78.

In France, CAC 40 decreased by 2.82% this week to record 7,200.71. In addition to Fed’s rate cut and hawkish outlook for 2025, CAC 40 was affected also by other events. First, Moody’s unpredictably lowered France’s credit ratings last Saturday Aa2 to Aa3 as the political instability will raise concerns about its public finances in the coming years. Meanwhile, French president Macron appointed a new prime minister. On the economic side, preliminary estimates revealed that the private sector contracted for the fourth consecutive month with manufacturing contracting at a faster pace than the services sector.

In the United Kingdom, PMI data displayed unattractive results as new orders of British companies declined and the employment dropped the most since 2009 (except for the pandemic period) as UK’s new Labor budget increased payroll tax. Also, Bank of England (BoE) kept interest rates unchanged at 4.75% as UK inflation increased for the second consecutive month and met forecasts of 2.6% annually in November. As such, FTSE 100 dropped by 3.26% recording 8,029.57.

In Germany, DAX fell by 3.42% reaching 19,708.72, affected by Fed & BoE decisions. In addition, German Chancellor Olaf Scholz lost the confidence vote freeing the way for national elections in February.

*Prices are as of the time of writing this report

Asians stock markets also declined this week in line with Western equity markets with Japanese NIKKEI leading the decrease by 1.95% to record 38,701.90.

*Prices are as of the time of writing this report

As for the MSCI Emerging Market index, it also fell this week by 2.28% to record 1,081.76 points.

*Prices are as of the time of writing this report

Most Arab stock markets declined in line with the global trend except for the Dubai Financial Market and Abu Dhabi Securities Exchange that rallied by 4.72% and 0.81% respectively to record 5,057.42 and 9,340.33.

 Disclaimer:

This article is a research document that is owned and published by BLOMINVEST Bank SAL.

No material from this publication may be modified, copied, reproduced, repackaged, republished, circulated, transmitted or redistributed directly or indirectly, in whole or in any part, without the prior written authorization of BLOMINVEST Bank SAL.

The information and opinions contained in this document have been compiled from or arrived at in good faith from sources deemed reliable. Neither BLOMINVEST Bank SAL, nor any of its subsidiaries or affiliates or parent company will make any representation or warranty to the accuracy or completeness of the information contained herein.

Neither the information nor any opinion expressed in this research article constitutes an offer or a recommendation to buy or sell any assets or securities, or to provide investment advice.

This research article is prepared for general circulation and is circulated for general information only.