Futures Flat With Early Close On Deck

And there it is: the Santa Rally which we predicted would begin a week ago after Abu Dhabi removed much of the AI capex fears festering the OpenAI ecosystem, the S&P has rocketed to a new record high on Tuesday, with stocks looking set for a quiet start to the abbreviated Christmas Eve session. As of 8:00am ET, S&P 500 futures and Nasdaq 100 contracts were little changed following four days of gains in US stocks which signal confidence among investors that 2026 will bring decent corporate earnings growth and easing inflation, not to mention the restart of the Fed’s QE Lite which has so far injected $40bn into the market. The result is relative calm in equities, with no down month since April and a VIX which is below 14. In premarket trading, Nike gained 2.1% after a filing shows that Apple CEO Tim Cook purchased $2.95 million worth of shares. Intel shares fall as much as 3.1% in premarket trading after Reuters reported that Nvidia halted a test that uses the chip manufacturer’s 18A technology to produce its chips, while a Commerce Department official said Intel is not “too strategic to fail.” Wednesday’s shortened cash trading session finishes at 1 p.m. ET. Most of the drama is playing out in commodities, with gold, silver and platinum all hitting fresh record highs. On today’s economic calendar we have the latest MBA Mortgage Applications (-5.0%) and the weekly Initial and continuing jobless claims.

In premarket trading, Mag 7 stocks trade mixed after four straight days of gains (Alphabet +0.5%, Tesla +0.2%, Amazon +0.1%, Microsoft little changed, Apple -0.2%, Meta -0.3%, Nvidia -0.4%)

• AST SpaceMobile Inc. (ASTS) is up 2.7% after launching its largest-ever satellite from India, the first in a series of deployments to help the company compete against Elon Musk’s SpaceX in delivering space-based connectivity to mobile phones.
• Dynavax (DVAX) jumps 38% after Sanofi says it will start a cash tender offer to acquire all outstanding shares of the vaccine maker for $15.50 per share in cash, reflecting a total equity value of ~$2.2 billion.
• Intel (INTC) falls 3.2% after Reuters reported that Nvidia halted a test that uses the chip manufacturer’s 18A technology to produce its chips.
• Nike (NKE) gains 2.1% after a filing shows that Apple CEO Tim Cook purchased $2.95 million worth of shares on Dec. 22.
• Ramaco (METC) is up 7.7% after the coal mining company announced a share repurchase program of up to $100 million of the currently outstanding shares of its Class A common stock.

In other corporate news, Sanofi agreed to buy Dynavax Technologies for about $2.2 billion, as the French drugmaker tries to expand a vaccines business currently anchored by its flu shot franchise. Emeryville, California-based Dynavax soared 38% in premarket.

Investors are drawing optimism from a US economy that continues to outperform expectations, supporting earnings prospects in the year ahead. At the same time, money markets still see scope for at least two Federal Reserve rate cuts in 2026, a backdrop that could lift a broader range of stocks even as valuation concerns linger around pace-setting tech shares.

“Recent sessions suggest Santa may still arrive,” wrote Ipek Ozkardeskaya, analyst at Swissquote. After that “reality may bite. Parts of the technology market probably look bubbly, and next year’s earnings season will be less about shiny numbers and more about where revenues actually come from.”

In commodities action, precious metals hit more record highs, buoyed by geopolitical concerns and expectations for more interest-rate cuts in 2026. Gold touches $4,500 an ounce for the first time, while silver and platinum also surge to all-time highs. The moves put gold and silver on track for their best yearly gains since 1979. Copper is also at a new record around $12,200 a ton, and is set for its biggest annual rise since 2009

Gold has climbed more than 70% this year and silver is up about 150%, putting both on track for their strongest performance since 1979. The gains have been underpinned by elevated central-bank purchases, the return of Fed QE and huge inflows into exchange-traded funds. Momentum was also boosted by President Donald Trump’s push to reshape global trade and his threats to the Fed’s independence.

“Even though equity markets are doing well, even though data points to a bit of a risk-on environment, I do think that, on the margins, that people want to be defensive against inflation and other risks as much as possible,” Geoff Yu, EMEA macro strategist at BNY, told Bloomberg TV. “Hence, gold is doing well.”

With most European markets either closed or on a half-day, the Stoxx 600 equity index is little changed after nothing a fresh record high Tuesday and is set for a third straight year of gains. The benchmark is also on track for one of its strongest quarters in two years amid lingering optimism around global economic growth and lower borrowing costs.  France’s CAC 40 Index gained 0.1% and the UK’s FTSE 100 was down 0.2% as of 9:09 a.m. in London. Stock exchanges in Germany, Italy, Denmark, Switzerland and Finland are shut through the day. The UK, France and Spain will be open for half-day of trading. 

Ipek Ozkardeskaya, senior analyst at Swissquote, said stocks are still likely to rally in the final days of the year. “And after that? Reality may bite. Parts of the technology market probably look bubbly, and next year’s earnings season will be less about shiny numbers and more about where revenues actually come from.”

Among individual movers, Sanofi SA dipped after the French drugmaker said the US Food and Drug Administration has issued a complete response letter for its experimental multiple sclerosis drug. The French pharmaceutical firm also agreed to buy Dynavax Technologies for about $2.2 billion. BP Plc edged higher after agreeing to sell a majority stake in its Castrol division to US investment firm Stonepeak Partners in a deal valuing the business at $10.1 billion including debt.

Asian stocks eked out a small gain, as losses in Japan and South Korea were offset by gains in China and Vietnam. The MSCI Asia Pacific Index rose as much as 0.4% before paring slightly, on course to cap its fourth day of gains. Tech names including TSMC, SK Hynix and Advantest led the rise.  

In FX, the dollar fell for a third day, extending its decline for the year to 8.4% and marking the greenback’s biggest annual slide since 2017.The Bloomberg Dollar Spot Index fell 0.2%, adding to its 0.3% slip on Tuesday; USD/JPY dropped 0.4% to 155.84. The pair has been under pressure on increasing concerns about that Japan may intervene to support the yen

In rates, gilts reverse an early decline, and yields are now little changed, while other European bond markets are closed.  US yields richer by up to 1bp across the curve in a flattening move, tightening 2s7s and 7s30s spreads a touch on the day. Treasury 10-year yields trade around 4.155%, richer by 0.8bp on the day with gilts lagging in the sector. Treasury is selling $44 billion 7-year notes at 11:30 am New York. Ahead of today’s sale, the WI 7-year yield is about 3.934% which is ~15bp cheaper than the November stop-out of 3.781%

In commodities, precious metals hit more record highs, buoyed by geopolitical concerns and expectations for more interest-rate cuts in 2026. Gold touches $4,500 an ounce for the first time, while silver and platinum also surge to all-time highs. The moves put gold and silver on track for their best yearly gains since 1979. Copper is also at a new record around $12,200 a ton, and is set for its biggest annual rise since 2009. Oil prices are edging higher, with Brent trading around $62.50/barrel.

The US economic calendar includes weekly jobless claims at 8:30 am.

Market Snapshot

• S&P 500 mini little changed
• Nasdaq 100 mini little changed
• Russell 2000 mini little changed
• Stoxx Europe 600 little changed
• CAC 40 +0.1%
• 10-year Treasury yield little changed at 4.16%
• VIX +0.1 points at 14.13
• Bloomberg Dollar Index -0.2% at 1199.44
• euro little changed at $1.1798
• WTI crude +0.2% at $58.52/barrel

Top Overnight News

• American Economy Keeps Powering Ahead, Defying Dire Predictions: WSJ
• Trump posted “Growth is up and Inflation is down in President Trump’s first year”.
• NEC Director Kevin Hassett said President Trump has “a bunch of great Fed chair candidates”, via Fox Business; Precious metals are skyrocketing for good reason.
• Gold tops $4500 while silver, platinum surge to new peaks: RTRS
• China Is Worried AI Threatens Party Rule—and Is Trying to Tame It: WSJ
• Russia to Demand Changes to US Peace Plan Seen as Starting Point: BBG
• Ukrainian troops withdraw from eastern town of Siversk: RTRS
• Zelenskiy seeks meeting with Trump to hammer out issue of territory: RTRS
• Two police officers killed by bomb in Moscow near site of Russian general’s killing: RTRS
• Russia plans a nuclear power plant on the moon within a decade: RTRS
• Italy Orders Meta to Allow Competing AI Chatbots on Whatsapp: BBG
• Snowflake is reportedly in talks to purchase Observe for around USD 1bln, according to The Information.
• Apple CEO bought some USD 3mln of Nike stock: BBG
• Sanofi to acquire hepatitis B vaccine maker Dynavax for $2.2 billion: RTRS
• BP to sell 65% stake in Castrol to Stonepeak for $6 billion: RTRS
• Lockheed Martin awarded USD 10bln modification to previously awarded US Air Force contract: Pentagon
• Boeing awarded USD 2bln contract by US Air Force: Pentagon
• Whoever Trump Picks, the Next Fed Chair Won’t Be Independent: WSJ

Trade/Tariffs

• Chinese Commerce Ministry holds roundtable with foreign trade firms.
• China’s Foreign Ministry said we firmly opposes the indiscriminate use of chip tariffs and unreasonable suppression of China by the US. Urges the US to correct its wrong practices. Will take corresponding measures to safeguard rights and interests if the US persists.
• Japan and US agree to expedite the USD 550bln investment project, according to Bloomberg, citing a statement.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed and within narrow ranges following a largely positive lead from Wall Street. APAC lacked conviction amid light newsflow and anaemic volumes as markets wound down ahead of the holidays. ASX 200 edged lower, with weakness in Tech and Healthcare outweighing strength across the mining complex. Nikkei 225 held onto modest gains, oscillating around the 50.5k level despite JPY strength, supported by a calmer domestic bond market. Hang Seng and Shanghai Comp varied, with little in the way of fresh domestic catalysts. Price action broadly reflected the indecisive regional risk tone.

Top Asian News

• Earthquake of magnitude 5.50 hits Taipei, via Reuters witnesses.

The FTSE 100 (-0.1%) is incrementally this morning, whilst the CAC 40 is posting marginal gains; cash trade for DAX 40, FTSE MIB and the SMI remain shut on account of Christmas Eve.

Top European News

• Italy Orders Meta to Allow Competing AI Chatbots on Whatsapp
• Belgium’s Central bank Says Will Appeal €300K FSMA Fine
• BNP Paribas’ Farber Sees Value in Single B European Credit

Central Banks

• BoJ Oct 29–30 meeting minutes (two meetings ago): Members agreed the BoJ will continue to raise rates if economic and price forecasts materialise. Many members said the likelihood of economic and price forecasts materialising has heightened, but must maintain policy to confirm whether positive wage-setting behaviour will not be disrupted. One member said the timing of a rate hike is approaching, but authorities should wait a bit longer to scrutinise the direction of the new administration’s policies.

FX

• DXY is essentially flat and trades within a narrow 97.74 to 97.96 range. Nothing really driving things for the index this morning, given the usual holiday-lull. Traders will await Jobless Claims later today, but aside from that the docket is void of anything pertinent from a Dollar perspective. G10s are also broadly little changed vs the USD, aside from the JPY which is the marginal outperformer this morning.
• JPY marginally strengthened against the USD in overnight trade, but without a specific catalyst. The strength likely a continuation of the more aggressive jawboning heard via Finance Minister Katayama earlier in the week, where she stated they had a “free hand” to take bold action in the FX market. Thereafter, in the European session, Reuters reported that Japan is to reduce its new issuance of super-long JGBs next fiscal year to around JPY 17tln. A source report which comes after PM Takaichi rejected any “irresponsible bond issuance or tax cuts”. USD/JPY currently trading at the lower end of a 155.57 to 156.28 range.
• South Korean Presidential office said they are closely watching FX.
• South Korea’s pension fund said to implement strategic foreign exchange hedging measures, according to Reuters sources.
• Brazilian Central Bank to offer USD 2bln in Dollar auction with repurchase agreements on 26th December.

Fixed Income

• EGBs closed.
• JGBs were firmer for much of the overnight session but spent it drifting lower, paring recent Takaichi-inspired gains. The main move came in the European morning as Reuters reported that Japan is set to cut 2026 ultra-long JGB issuance by around JPY 17tln, a report that in a somewhat delayed reaction, lifted JGBs by around 20 ticks to a test of 133.00 to the upside. Reminder, BoJ’s Ueda is tentatively scheduled to speak on Christmas Day.
• USTs in a thin 112-08 to 112-12+ band. Docket ahead features US weekly jobless claims and then a 7yr auction after the 5yr auction on Tuesday, a tap that was mixed overall with a better tail though the b/c was below the prior.
• Gilts opened flat just above 91.00 before dipping to a 90.80 trough and then rebounding back to the figure with specifics light.
• Japan is to reduce its new issuance of super-long JGBs next fiscal year to around JPY 17tln, according to Reuters sources. JGB Mar’26 lifted from 132.78 to a test of 133.00 to the upside in the 15-minutes from 09:10GMT following this report.

Commodities

• As Christmas Eve trade gets underway, WTI and Brent briefly pulled back to USD 58.25/bbl and USD 62.22/bbl before extending on Tuesday’s gains to peak at USD 58.76/bbl and USD 62.76/bbl as the European session continues.
• Spot XAU briefly extended above USD 4500/oz, continuing the gains made in the metal space this year, before a sharp pullback as traders take profit going into Christmas. XAU peaked at USD 4526/oz early in the APAC session before the sharp pullback to USD 4471/oz. Thus far, the yellow metal continues to hover just below USD 4500/oz as light European trade continues.
• 3M LME Copper is set for its best year since 2009, helped by the near 7% gains made in December. After setting a new ATH of USD 12.17k/t in Tuesday’s session, the red metal opened just shy of the ATH but pulled back to a trough of USD 12.06k/t, filling the price gap. Just as the European session got underway, 3M LME Copper surged higher to a new ATH of USD 12.28k/t and holds above USD 12.2k/t as the European morning continues.
• Naftogaz announces that Russia attacked Ukraine’s oil and gas infrastructure overnight.
• Shell’s (SHEL LN) manufacturing centre, Corunna, reported potential for increased flaring and noise for the next few hours due to process interruption.
• US Private Inventory (bbls): Crude +2.4mln (exp. -2.4mln), Distillate +0.7mln (exp. +0.4mln), Gasoline +1.1mln (exp. +1.1mln), Cushing +0.6mln.
• US Private Inventory Expectations (bbls): Crude (exp. -2.4mln), Distillate (exp. +0.4mln), Gasoline (exp. +1.1mln).

Geopolitics

• Russia’s Kremlin announces that Special Envoy Dmitriev has reported to Putin on the trip to the US; On peace deal, says Russia will now formulate its position and continue contacts in very near future.
• Naftogaz announces that Russia attacked Ukraine’s oil and gas infrastructure overnight.
• Ukrainian President Zelensky said we are significantly closer to finalising a plan with the US but mainly split on territorial issues. Ukraine expects an answer from Russia on Wednesday to end the war. Draft plan opens the way for ‘potential’ demilitarised zones and freeze combat on current lines. Plan does not require Kyiv to formally renounce NATO bid.
• Ukrainian drone attack sparks fire at industrial site in Russia’s Tula region, according to the regional governor.
• Russian President Putin said Russia “reject Israel’s repeated violations of Syrian territory”, via Al Arabiya.

US Event Calendar

• 7:00 am: US Dec. MBA Mortgage Applications, prior -3.8%
• 8:30 am: US Dec. 20 Initial Jobless Claims, est. 223,000, prior 224,000
• 8:30 am: US Dec. 13 Continuing Claims, est. 1.9m, prior 1.9m