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Moving Markets Today: Asia Tracks Wall Street Decline, Oil Prices Rise on Middle East Supply Concerns, China’s December Services Surge, Spotlight on UK Services PMI and U.S. Labor Market Data 

Global markets declined as U.S. stocks faced profit-taking after a strong 2023 finish. Asian markets followed suit on the heels of the Fed signalling a delayed rate cut in its minutes. Oil prices rose amid Middle East supply concerns. China’s services sector expanded at its fastest pace in five months, while Japanese manufacturing contracted due to lower demand. Thursday’s key events include the UK Services PMI, German inflation data, U.S. ADP employment report, weekly jobless claims, and Services PMIs. Here are five key takeaways for your day. 

Fed Officials Indicate Prolonged Period of Elevated Interest Rates: Minutes 

Most Federal Reserve officials aim to keep borrowing costs elevated, according to the minutes of their December meeting, dashing hopes for an early interest rate cut. Recent data also reveals a continued but slowing contraction in U.S. manufacturing in December. Simultaneously, U.S. job openings dropped for the third consecutive month in November, indicating a gradual easing of labour market conditions, with a decline of 62,000 to 8.790 million openings. 

U.S. bankruptcy filings surged by 18 per cent in 2023, driven by higher interest rates, stricter lending standards, and the winding down of pandemic support, according to data from Epiq AACER. However, the total number of insolvency cases remains well below pre-COVID-19 levels, with filings increasing from 378,390 in 2022 to 445,186 last year, Reuters reported. 

Donald Trump has appealed to the U.S. Supreme Court to reverse a ruling that prevents him from being excluded from Colorado’s presidential primary ballot. 

China’s Services Activity Boom, Japanese Manufacturing Contracts Due to Lower Demand 

China’s services sector saw its fastest growth in five months, driven by a substantial increase in new business, according to a private survey. The Caixin/S&P Global services purchasing managers’ index (PMI) rose to 52.9 in December, marking a three-month high and surpassing November’s 51.5. This indicates heightened optimism in the sector and the strongest performance since July. 

Japan’s manufacturing sector contracted significantly for the most extended period in 10 months in December, driven by decreased demand in the region. The au Jibun Bank Japan manufacturing purchasing managers’ index dropped to 47.9, the lowest since February, falling below the critical 50-point threshold indicating contraction. 

UK Companies Upbeat on Revenue, Cautious on Investments: BCC Survey 

British companies are cautiously optimistic about sales growth this year, with 56 per cent anticipating an increase in turnover in the next 12 months, up from 53 per cent three months ago. However, investment remains a concern, as only 24 per cent reported increased investment in the last three months, with 58 per cent reporting no change and 19 per cent indicating a decrease, according to a recent survey by the British Chambers of Commerce. 

What’s Coming Up 

Thursday brings German inflation data, UK Services PMI release, and a closely watched U.S. ADP employment report and weekly jobless claims preceding Friday’s critical non-farm payrolls. Eurozone inflation figures are also anticipated. Limited corporate results, with a focus on Next and B&M, will reveal insights into UK high street retailers’ performance during the crucial Christmas trading period. 

Asian Markets Echo Wall Street’s Drop, U.S. Dollar Rebound 

The S&P 500 closed at 4,704.81, down 0.8 per cent, accompanied by a 1.18 per cent drop in the Nasdaq and a 0.76 per cent fall in the Dow Jones. Disruption at Libya’s main oilfield pushed oil prices higher, impacting airline stocks. Mega-cap stocks like Nvidia, Apple, and Tesla slid between 0.7 per cent and 4 per cent. Asian markets mirrored the trend, with Hong Kong’s Hang Seng down 0.1 per cent, China’s CSI 300 falling 0.8 per cent, and South Korea’s Kospi shedding 0.9 per cent. Meanwhile, Japan’s Topix edged up by 0.1 per cent. The 10-year Treasury yields briefly exceeded 4 per cent, settling at 3.920 per cent in Asian trading. The dollar remained strong, rising by 0.088 per cent to 102.49 against a currency basket. Oil prices climbed 3 per cent due to disruptions in Libya’s primary oilfield, with U.S. crude at $72.94 per barrel (up 0.33 per cent) and Brent at $78.34 (up 0.12 per cent). Spot gold inched 0.24 per cent higher at $2,045.73 per ounce.