Market commentary

On Thursday, the major US stock indices remained largely flat, after experiencing a strong rally the previous day that pushed them to record highs. Traders are eagerly awaiting tomorrow’s critical jobs report, which could offer fresh insights into the US labour market. While the stock market held steady, other economic data painted a mixed picture. Initial jobless claims unexpectedly rose to 224 000, surpassing forecasts. Meanwhile, the US trade deficit came in lower than expected, providing some relief. This data reinforced comments made by Federal Reserve (Fed) Chair Jerome Powell at a summit in New York on Wednesday, where he characterised the US economy as being in “remarkably good shape.” Despite the economic fluctuations, the odds of a 25-basis point rate cut by the Fed later this month remained stable at 74%, unchanged from the previous day.

The FTSE/JSE All Share Index closed higher on Thursday, reflecting a mixed performance in global markets as investors weighed key US labour market data ahead of tomorrow’s highly anticipated nonfarm payroll (NFP) report. The market’s attention is squarely on Friday's NFP release, which could offer valuable insights into the robustness of the US economy, particularly in light of Federal Reserve Chairman Jerome Powell’s recent positive assessment. The JSE All Share rose by 0.62%, ending the day at 86 846 points, with major indices showing a mixed performance. The Top 40 Index outperformed, adding 0.74%, as investors seemed to take comfort in Powell’s optimism about the US economy despite some signs of volatility in global markets.

In the UK, the FTSE 100 rose slightly on Thursday, bouncing back from a 0.30% decline the day before. The rally came amid market focus on political developments in France, following the collapse of Prime Minister Michel Barnier’s government. This political turmoil weighed on market sentiment but failed to spark major declines in broader European indices. In corporate news, shares of Vodafone rose over 0.50% after receiving approval from the UK’s Competition and Markets Authority for its merger with Three, albeit subject to certain conditions. Additionally, energy giants Shell and Equinor announced plans to combine their UK offshore oil and gas operations, which will create the largest independent producer in the North Sea.

Across the Eurozone, both the STOXX 50 and STOXX 600 indices opened the day flat but soon turned positive, with the STOXX 50 gaining 0.50% and the STOXX 600 up 0.30%. European investors appeared to brush aside concerns over France's political instability. As expected, the French government collapsed following a no-confidence vote passed by far-right and left-wing lawmakers. This has left President Emmanuel Macron in search of a new Prime Minister, though the task is expected to be highly challenging. Despite the political uncertainty, French stocks performed strongly, with notable gains in Societe Generale (up 2.50%), BNP Paribas (up 1.90%), and Engie (up 1.20%).

In Asia, Japan’s Nikkei 225 Index rose 0.30% to close at 39 395, while the broader Topix Index edged up 0.06% to 2 742. These gains continued the momentum from earlier in the week, driven by optimism in the wake of new record highs on Wall Street. The US market rally was underpinned by strong corporate earnings and the increasing influence of artificial intelligence (AI) on the tech sector. Investors are particularly enthusiastic about the potential for AI to drive future growth, with major US tech companies benefiting significantly from the boom.

Chinese stocks also saw modest gains, with the Shanghai Composite rising 0.12% to 3 369 and the Shenzhen Component up 0.29% to 10 634. The recovery came as investors expressed hopes for further stimulus measures from Beijing, which would help address the country’s ongoing economic challenges. However, concerns over China’s economic slowdown and escalating trade tensions with the US kept many investors cautious. November’s PMI data showed a second consecutive month of expansion in China’s manufacturing sector, though growth in the services sector showed signs of slowing.

In commodities, WTI crude oil futures fluctuated around $68 per barrel, as OPEC+ confirmed it would maintain current production levels for the first quarter of 2025. This decision provided some stability to the oil market. Meanwhile, gold remained above $2 640 per ounce, trading within a tight range as investors continued to monitor the Fed’s upcoming policy moves, with the release of the key jobs report looming.