Generally speaking markets really hate it when governments get too involved in the economy or investing whether it be tariffs, sanctions, capital gains or dividend taxes, antitrust actions or other things.
Nvidia is down 2.2% in premarket trading, dragging NASDAQ futures down 0.2% after China announced over the weekend that it has started an investigation into the chipmaker’s actions related to the country’s anti-monopoly laws. This reminded me of how the 2000 market peak aligned with the launch of antitrust actions against some of the biggest technology companies at the time. On the other hand, cryptocurrencies have gone to record highs on anticipation of a friendlier US government although this morning, Bitcoin is down 1.0% and has slipped back under $100,000.
Dow futures are flat this morning, as is the Dax, while the FTSE is up 0.5%. Reports on the potential for more China stimulus sent the Hang Seng up 2.75% overnight and today has stoked rallies in commodities with US Crude Oil gaining 1.4% and Copper climbing 2.0%. Gold is up 0.8%, while Silver is up 2.9%.
Central banks start holding their last meetings of the year this week. Investors may look not only to see if rate cuts are continuing but for hints toward how many rate cuts may be on the way next year. The Reserve Bank of Australia is expected to hold tomorrow, the Swiss National Bank is expected to deliver a 0.25% rate cut on Thursday.
The Bank of Canada is expected to announce a 0.50% interest rate cut on Wednesday. Recent weakness in the Canadian Dollar may be related to dovish monetary policy in addition to threats of new tariffs. China trade numbers come out tomorrow. US inflation numbers are also due this week with consumer prices due on Wednesday and producer prices on Thursday.