December 17 Market Morning Report: Concerns over weak employment data, US stocks diverge as Wednesday's settlement approaches

Labor Market in Trouble, Unemployment Rate Hits Four-Year High

The US unemployment rate in November rose to 4.6%, the highest level since September 2021, surpassing market expectations of 4.4%. Despite non-farm payrolls adding 64,000 jobs, higher than the expected 45,000, there was a decline of 105,000 jobs in October, the largest drop since the end of 2020.

Data over the past six months reveal a concerning trend: private sector average monthly job gains of only 44,000, the slowest recruitment pace in the post-pandemic recovery cycle over six months. Companies prefer to rely on artificial intelligence(AI) to handle work tasks rather than hiring大量 new employees. This reflects a labor market stuck in a low layoffs, low hiring stalemate.

Federal Reserve Chair Powell stated last week that the current policy stance is likely to keep the unemployment rate stable, or at most increase by “one-tenth” to “two-tenths” (i.e., 0.1 to 0.2 percentage points). According to the CME FedWatch Tool, the probability of a rate cut again in January remains at 24%, unchanged from the previous trading day.

Global Stock Markets Diverge, Tesla Achieves New Milestone

The performance of the three major US stock indices was mixed: the Dow Jones fell 0.62%, the S&P 500 declined 0.24%, marking three consecutive days of decline, while the Nasdaq rebounded 0.23%. The China Golden Dragon Index dropped 0.34%.

European markets all declined: the UK FTSE 100 fell 0.68%, Germany DAX 30 declined 0.63%, and France CAC 40 decreased 0.23%.

In individual stocks, Tesla surged over 3% to set a new closing record, rising to become the seventh-largest company by market cap in the US. Meta performed well, up 1.49%. Nvidia, Microsoft, and Apple increased 0.81%, 0.33%, and 0.18%, respectively, while Google fell 0.54%, Amazon was flat with a 0.01% increase.

Commodity Markets Under Pressure, Precious Metals and Oil Decline

Commodity markets continued to weaken: gold slightly declined 0.06%, quoted at $4,302 per ounce. WTI crude oil fell 2.66% to $55.17 per barrel, reflecting market concerns over a global recession. The US 10-year benchmark Treasury yield is approximately 4.14%, down 4 bps from the previous trading day.

A scenario of falling bond yields, oil prices, and the US dollar is forming, which market analysts interpret as a sign of rising recession risks.

Cryptocurrency Market: Bitcoin Steady, Ethereum Pulls Back

Bitcoin increased 1.42% within 24 hours, currently priced at $87,653, with the latest real-time price at $87.71K, a 0.14% gain over 24 hours, continuing its recent upward trend. Ethereum declined 0.4% in 24 hours, priced at $2,950.8, with the latest real-time data at $2.94K, down 0.72%, facing technical correction.

Hong Kong night session futures closed at 25,219 points, 16 points below yesterday’s close. The China index night futures closed at 8,764 points, 6 points above yesterday’s close. As Wednesday settlement approaches, market liquidity will face new tests.

US Economic Data Mixed

US October retail sales were flat month-over-month, slightly below the expected 0.1% growth. Excluding autos, retail sales increased 0.4% month-over-month, slightly above the expected 0.3%.

The US December services PMI preliminary reading was 52.9, below the market expectation of 54 and the previous 54.1. The composite PMI preliminary was 53, also below the expected 53.9. Manufacturing PMI preliminary was 51.8, slightly below the expected 52.1. Overall, economic activity shows downward pressure.

Policy Developments: Trump to Deliver Nationwide Address

Trump is scheduled to deliver a prime-time speech to the nation at 9 PM Eastern Time on Wednesday. This comes near the end of his first year back in the White House, with declining public support and economic headwinds. The speech is expected to highlight his policy achievements over the past year and possibly preview new year policy priorities. The Republican Party aims to use this to prepare for the midterm elections in November next year, seeking to maintain control of Congress.

US Treasury Secretary Bessent stated that this week there will be one or two interviews for the next Fed Chair, with Trump likely to announce his choice in early January. The two main candidates are White House National Economic Council Director Harris and former Fed Governor Waller.

International Affairs: No Progress in Russia-Ukraine Conflict

Russian Deputy Foreign Minister Ryabkov reiterated that Russia will not make any concessions on territorial issues in Donbas, Crimea, Luhansk, Zaporizhzhia, and Kherson. Russia is prepared for diplomatic negotiations, but Kyiv and Moscow still have deep disagreements on territorial, security, and Western military deployment issues.

Major Tech Industry News

OpenAI has hired former UK Chancellor George Osborne to lead its global “Stargate” project’s overseas expansion, appointing him as Head of OpenAI for Countries. This $50 billion project aims to establish data centers abroad and advance negotiations with 50 countries on sovereignty AI development. This move follows Anthropic’s appointment of former UK Prime Minister Sunak as an advisor in October.

Morgan Stanley forecasts that, with technological and regulatory milestones achieved, Tesla’s Robotaxi fleet could expand significantly to 1,000 vehicles by 2026. The bank notes that the unsupervised testing in Austin is a key validation of Tesla’s autonomous driving strategy and one of the most important recent market catalysts.

Trade Tensions Escalate: US Threatens Countermeasures Against EU Digital Tax

The US Trade Representative’s Office issued a statement saying that if the EU and its member states continue to restrict US tech companies’ competitiveness with discriminatory measures, the US will use all available tools to counter. The US has named companies such as Accenture, Siemens, and Spotify as potential targets for new restrictions or charges.

The controversy centers on EU regulation and taxation of US tech giants like Google, Meta, and Amazon. Trump has repeatedly criticized such measures as non-tariff trade barriers and threatened to impose substantial tariffs on implementing countries. Recently, the EU has issued multi-million dollar fines to Apple, Meta, and Elon Musk’s X.

Economic Outlook: OECD Optimistic About AI Investment Boost

OECD Secretary-General Mathias Cormann stated that surging AI investment is driving global growth, and related investments are expected to continue increasing. The OECD has raised growth forecasts for several major economies this month, believing that technological spending provides support amid trade uncertainties.

The OECD projects global economic growth will slow to 2.9% next year, below this year’s 3.5%. Downside risks remain, as tariff impacts are not fully reflected, trade remains uncertain, and the economy faces multiple structural pressures.

Key Events to Watch

Upcoming releases include UK November CPI month-over-month, retail price index month-over-month, Germany December IFO Business Climate Index, Fed Waller’s speech, Williams’ speech at the conference, and US EIA crude oil inventory data for the week ending December 12. As Wednesday settlement approaches, market volatility is expected to increase.