Markets experienced a sudden downturn in the year-end Santa rally, with investors opting to cash in on recent robust market performance. FedEx, considered an economic barometer, saw a significant decline in its shares after disappointing results, while consumer confidence exceeded expectations. The clash between FedEx’s results and positive consumer sentiment reflects a divergence in economic perspectives.
The S&P 500 closed down 1.5%, and the market’s reaction to positive economic indicators suggests a possible clash between the overtightening hard landing camp and the soft landing narrative. The focus now shifts to the upcoming U.S. Personal Consumption Expenditures (PCE) inflation report, with expectations of its impact on the Fed‘s stance and market dynamics into the new year.
In the oil markets, trading sessions were mixed and relatively low-liquidity, with adjustments in petroleum contracts coinciding with the release of the U.S. Energy Information Administration (EIA) report. The report showed a significant increase in total oil and petroleum product supplies, and despite the ongoing Red Sea risk, the market appears to factor in a small risk premium, reflecting the perception that the situation does not represent a major escalation that would significantly impact overall production or disrupt major supply routes. Prices seem to gravitate toward a rangebound scenario.
