Daily Market Commentary 1st December 2023

Markets closed out a very strong month of trading with equity markets charging and bond yields tumbling. The US share markets have booked big gains for the November month, and are now setting their sights on the Santa Claus Rally. This has been triggered largely by the collapse in inflation across Europe and the USA. Inflation in Europe has been tamed by rises in interest rates and recession, while the Fed has led the way with hawkish monetary policy. This may be the end of the cycle, with ‘peak inflation’ having been reached and Western Central Banks now looking to cut interest rates in 2024. OPEC+ left their current production levels in place, with Saudi Arabia and Russia extending their production cuts into Q1 2024. Energy prices and deficit/debt spending remain the key to inflation, in the coming year. The US Dollar continues to regain ground, with the EUR falling below 1.0900, while the GBP dropped back to 1.2600.

The stronger reserve had commodity currencies struggling to hold ground, with the AUD looking to retain 0.6600, while the NZD trades around 0.6150. NZ Business Confidence surged, welcoming the new Government, while Australian and NZ Building Permits spiked. Markets now will focus on closing out the year with falling inflation and interest rates boosting economic growth.