Donald Trump Steven Mnuchin

  • Asian markets closed mixed, European stocks are sinking, but the US futures market is signalling gains. Many markets are either closed today or will shut early.
  • Treasury Secretary Steve Mnuchin’s call with the heads of six major US lenders Sunday was a bizarre attempt to stem brutal recent losses in markets.  
  • Fears that the US government shutdown could continue into January, and Trump’s suggestion that he aims to fire Fed Chairman Jerome Powell, have hit market confidence. 

Investors have a lot to parse through on Christmas Eve after the most brutal week for US markets in a decade, wading through thin trading and early exchange closures before signing off for the holiday. 

  • They’re scratching their heads. Treasury Secretary Steve Mnuchin just shocked the market by invoking crisis-era language in describing a call to top bank CEOs. Mnuchin is slated to convene with a crises team of government banking and finance officials on Monday after a bloody month for US markets. Last week, the Dow fell by nearly 7 percent, showing the worst weekly average since 2008.
  • They’re heaving a sigh of relief. White house advisors including Mnuchin reportedly convinced President Donald Trump that he lacks the authority to fire Federal Reserve Chairman Jerome Powell. In what would have been an astonishing break for an independent Fed, Trump had asked aides whether he could fire him, presumably in retaliation for raising rates for the fourth time under his leadership.
  • They’re weighing the end of one of the most astonishing bull markets in history. Propped up by loose monetary policy, stock markets have soared. From the 2009 low to the September 2018 highs, US stocks have gained more than 280%. Slowing global growth, a trade war, and hawkish Fed policy is helping usher in what looks to be a new era for stock markets.
  • They’re not even at their desks. The US stock market will close on Monday at 1 pm EST. Markets in the UK, Holland, France, Ireland and Spain will also close early on Monday. The following markets are closed all day: Austria, Denmark, Finland, Germany, Italy, Norway, Sweden, Switzerland, Czechia, Hungary, and Poland. And the government is continuing what many politicians have projected to be a potentially lengthy partial shutdown. 

It’s painting a mixed picture. “Markets still under pressure from last week’s more hawkish Fed update, exacerbating fears about slowing growth and more expensive refinancing following years of stimulus,”  said Michael van Dulken, head of research at Accendo Markets, in a note. 

Here’s the roundup:

US Futures are trading up, with the S&P 500 rallying 0.6% in premarket trading, while the Nasdaq is up 0.8%. The Dow is 0.5% higher. 

In Asia, China’s Shanghai Composite closed up 0.4% while Australian markets closed up 0.5%. MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.5% to its lowest in seven weeks.

In Europe, stocks slipped amid weak trading with a number of exchanges closed on Christmas Eve with most closing early. The FTSE 100 is down 0.8% and the CAC 40 fell 1% as of 10 am in London (5 a.m EST).

The dollar and gold rose as investors sought safe havens while Brent Crude and WTI are both flat, up 0.2% and down 0.2% respectively. 

The US 2-year and 10-year Treasuries yield curve flattened to 14 basis points Friday, indicating bond market concerns about slowing global growth and highlighting greater recessionary fears in credit markets. 

SEE ALSO: Treasury secretary Mnuchin calls top US bankers amid turmoil in markets and White House

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