U.S. Stock Outlook | Three Major Index Futures Decline, Allianz Economist El-Erian: U.S. Economic Performance in 2025 Will Outperform Peers

1. As of December 26 (Thursday) before the US stock market opens, the three major US stock index futures are all down. As of the time of writing, Dow futures are down 0.43%, S&P 500 index futures are down 0.47%, and Nasdaq futures are down 0.52%.

1. As of the time of writing, the German DAX index is down 0.18%, the UK FTSE 100 index is up 0.42%, the French CAC40 index is up 0.14%, and the Euro Stoxx 50 index is down 0.19%.

1. As of the time of writing, WTI crude oil is up 0.53%, priced at $70.47 per barrel. Brent crude oil is up 0.48%, priced at $73.52 per barrel.

Market News

Allianz Chief Economist El-Erian: The US economy will outperform its peers in 2025, but inflation persists. Allianz Chief Economic Advisor Mohamed El-Erian stated that considering the amount of foreign capital the US is attracting and the scale of its investments in future productivity, competitiveness, and growth drivers, the US is likely to continue outperforming other major economies in 2025. One consequence of this success is that the Federal Reserve has not smoothly lowered interest rates by 1.75%-2% as the market expected a year ago. This trend will continue: in the December policy meeting, the Federal Reserve indicated that it would reduce the number of rate cuts in 2025 and raise the terminal (long-term) interest rates. However, national political and geopolitical turmoil, along with limited prospects for significant improvement, indeed pose risks to the durability of the US economic uniqueness. Even if the US economy continues to outperform expectations compared to other countries, the range of possible outcomes in terms of growth and inflation has widened.

The outlook for interest rate cuts is murky! Does the Federal Reserve really have to look at Trump's face to act? The Federal Reserve may need to observe the economic policies (including import tariffs) of President-elect Trump to more accurately predict the direction of inflation and interest rate changes in the first half of next year. Last week, the Federal Reserve lowered its benchmark federal funds rate to 4.5%, marking the third consecutive rate cut; nevertheless, it raised its recent inflation expectations and mentioned the "high uncertainty of economic policy impact assessment" from the new government. Given the anticipated new economic reality, the Federal Reserve also halved its rate cut forecast for 2025, and the market currently expects the Federal Reserve to only cut rates twice in the next 12 months Russia launches counter-sanction move: incorporating Bitcoin into the international payment system. Russian Finance Minister Anton Siluanov stated on Wednesday that to respond to Western sanctions, Russia has amended its laws to allow businesses to use Bitcoin and other digital currencies in international payments. Sanctions have complicated trade between Russia and major partners like Turkey, as local banks are extremely cautious about transactions involving Russia to avoid scrutiny from Western regulators. This year, Russia has permitted the use of cryptocurrencies in foreign trade and has taken steps to legalize the mining of cryptocurrencies like Bitcoin. Russia is one of the global leaders in Bitcoin mining.

Individual Stock News

NVIDIA (NVDA.US) receives strong support from retail investors! Net purchases exceed $30 billion in 2024. According to Vanda Research, retail investors have invested nearly $30 billion in NVIDIA (NVDA.US) stock this year. As of December 17, it has become the stock with the highest net purchases from retail investors in 2024. Compared to the SPDR S&P 500 ETF Trust, which tracks a broad benchmark of the U.S. stock market, the net inflow of funds into NVIDIA from retail investors is nearly double that of the latter. It is also expected to replace Tesla (TSLA.US), which was the favorite among retail investors in 2023, attracting the most net purchases from this group.

Confident in completing the acquisition! Nippon Steel extends the deadline for acquiring U.S. Steel (X.US). Japan's Nippon Steel announced on Thursday that it has extended the deadline for the $15 billion acquisition of U.S. Steel (X.US) and expressed confidence that this acquisition will protect and develop the American company. The expected closing date has been revised from the previous third or fourth quarter of 2024 to the first quarter of 2025. On Monday, a U.S. foreign investment committee will submit its decision to approve or block the deal to President Biden, who has 15 days to make a decision. Both Biden and his successor Trump have expressed opposition to the purchase. Nippon Steel stated on Thursday, "Nippon Steel hopes the president will take this time to conduct a fair and fact-based assessment of the acquisition. We still believe that this acquisition will protect and develop U.S. Steel."

Time is the scarce resource! Honda Motor (HMC.US) and Nissan's merger cannot enhance competitiveness in the short term. Honda Motor and Nissan Motor expect that the merger will create significant benefits for the world's third-largest automotive group, but fierce competition from China raises doubts about whether they can complete the merger in a timely manner. The two Japanese automakers announced on Monday that they have agreed to enter formal negotiations regarding the merger. Although the outcome of the deal remains uncertain and will partly depend on Nissan's progress in returning to profitability, both parties aim to complete the transaction by August 2026. Nissan's primary partner, Mitsubishi Motors, will decide by next month whether to participate. The two automakers aim to achieve synergies exceeding 1 trillion yen ($6.4 billion) by leveraging common platforms, sharing R&D, and joint procurement. Their operating profit target exceeds 3 trillion yen, a 54% increase compared to last year's merger performance MicroStrategy (MSTR.US) increases fundraising for Bitcoin, digital asset prices rise accordingly. Bitcoin prices rose on Thursday, closely related to MicroStrategy's announcement of a plan. The company plans to issue more shares to raise funds to purchase more Bitcoin. This news boosted market sentiment, driving up Bitcoin prices. Earlier, Bitcoin prices had reached an intraday high of $99,876.70. A broader cryptocurrency index, including Ethereum, Solana, and Dogecoin, also recovered from Wednesday's decline, rising by 0.2%.

Toyota (TM.US) Japanese stocks expected to achieve the largest two-day gain since August, rumored to increase ROE to 20%. Toyota's shares listed on the Tokyo Stock Exchange rose for the second consecutive day, expected to achieve the largest two-day gain since August. Earlier reports cited an unnamed executive stating that Toyota plans to double its return on equity (ROE) to 20%. Boosted by this news, Toyota's Japanese shares closed up 4.57% on Wednesday. A Toyota spokesperson stated that the company has "no specific target or deadline" for return on equity. Morgan Stanley MUFG Securities analyst Shinji Kakiuchi noted in a report that if the report is accurate, "the company needs to improve the returns of its value chain to further enhance profit margins." The analyst added, "We will also be watching whether Toyota will raise funds by selling its holdings to further enhance shareholder returns."

Important Economic Data and Event Forecast

Beijing time 21:30: Initial jobless claims in the U.S. for the week ending December 21 (10,000)