Calm Prevails in Equity Markets with Thanksgiving Weekend

US equity markets are closed on Thursday for the Thanksgiving holiday. In the final full session of the shortened trading week, stocks surged again in the wake of last week’s strong rebound.

Wall Street’s major indexes racked up their fourth straight week of gains. The Dow Jones Industrial Average rose by 443 points or 1.27% for the week, the benchmark S&P 500 added 45 points or 1.00%, and the tech-heavy Nasdaq Composite was up 125 points or 0.89%. The VIX, Wall Street's fear index, fell below 12.50, down almost 10% over the week.

Investors held onto optimism, speculating that the Federal Reserve has concluded its extended series of interest rate hikes. Yet, the Labor Department reported Wednesday that jobless claims dropped by 24,000 to 209,000. The previous week's total of 233,000 claims had marked the highest count since August. That said, the four-week moving average only dropped by 750 to reach 220,000.

Furthermore, durable goods orders contracted at a faster pace than expected in October (-5.4% vs -3.1% expected). University of Michigan price growth expectations rose for a second straight month in November despite growing signs that price increases are slowing. Declining consumer sentiment amid expectations of a resurgence of inflation would be expected to result in slower holiday sales. Black Friday sales could provide deeper insights into the resilience and strength of the US economy. The first indication of this trend was provided by Mastercard Spendingpulse. They said Saturday that U.S. retail sales on Black Friday rose 2.5% year-over-year, excluding automotive sales (data not adjusted for inflation).

Overall, traders appeared to interpret these numbers as indications of a potential easing in the world's largest economy, though it will likely remain resilient enough to avoid slipping into a recession.

In Europe, equity markets were mixed. The MSCI EMU rose by 0.71% while the FTSE edged down 0.21%. In its latest financial stability review, the European Central Bank points out that “demand for loans is cooling exceptionally quickly and loan losses are starting to rise, albeit from low levels. The ongoing correction in real estate markets – both commercial and residential – may compound these dynamics.”

In Asia, China's deepening property crisis and slowing industrial growth weighed on stock indexes. The Shanghai Composite was down 0.44%. On the flip side, the Nikkei edged up 0.12%. Japan's core consumer price index ascended by 2.9% in October from a year earlier, marking its first increase in four months and the fastest gain for services prices since 1993, as per official statistics disclosed on Friday by the Ministry of Internal Affairs and Communications.

Argentine Stocks Soar on Milei Election

In South America, President-elect Javier Milei of Argentina emphasized the non-negotiable closure of the country's central bank, a key promise in his campaign, as conveyed by an official statement shared on social media platform X. The S&P Merval Index, Argentina's flagship index, surged by an impressive 42% this week.

The Global X MSCI Argentina ETF (NYSE:ARGT), the sole ETF available to U.S.-based investors focusing on Argentine stocks, gained 15% over the week, marking its strongest performance since its inception in 2011.

Coinbase Stocks in the Ascendancy

Coinbase Global (COIN) saw a remarkable uptick in its shares, climbing 16.65% over the week. The company appeared to benefit from the turbulence engulfing Binance, the world’s largest cryptocurrency exchange, as the latter grappled with legal woes. Earlier, Binance had pleaded guilty to breaking U.S. anti-money laundering laws as part of a whopping $4.3 billion settlement. Additionally, its renowned founder and CEO, Changpeng Zhao (CZ), confessed and declared intentions to step down.

Recent data highlights a substantial increase in Coinbase's Bitcoin reserves, contrasting with Binance's diminishing reserves. Analysts suggest that Binance's legal troubles might bolster Coinbase’s standing and potentially smooth the regulatory path for U.S. regulators to approve Bitcoin ETFs.

All Sectors Rally Again    

All S&P sectors ended the week in positive territory, with those that lagged the most this year exhibiting the strongest gains, such as healthcare (+2.20%), consumer staples (+1.44%) and real estate (+1.05%). Energy was the poorest performer with a modest gain of 0.25% for the week, weighed down by natural gas and crude oil prices. Natural Gas Dec 2023 futures traded below $2.87/MMBtu, down 3.21% over the week, on the outlook for warmer U.S. temperatures. WTI crude prices slid 0.46%, extending their losing streak to five weeks with a cumulative loss of 14.88% over the period. They closed just above $75 a barrel after an unexpected delay in an upcoming OPEC+ meeting (originally planned for 25 and 26 November 2023, rescheduled to Thursday, 30 November 2023). Lastly, the release of some hostages in Gaza has reduced the geopolitical risk premium.

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