Cautious sentiment ahead of Central Bank decisions

A 94% probability of a 25-bps rate cut by the Fed, though slower easing is anticipated in 2025

By Farah Mourad | 17 December 2024

Market open
  • Chinese retail sales slowed significantly in November

  • European markets focus on UK wage growth and Germany's Ifo expectations

  • Gold and silver prices weaken ahead of the Fed meeting

Investors tread carefully ahead of a busy week for central bank decisions, with the Federal Reserve's Wednesday meeting taking center stage. Market participants assign a 94% probability to a 25-basis-point rate cut but expect a slower pace of easing in 2025.

Asia-Pacific Markets

Chinese November retail sales grew at a sharply reduced pace, raising concerns about waning consumer spending, while industrial output matched expectations. The property sector continues to face headwinds despite stable home prices.

In a bid to support growth amid significant economic challenges, Beijing plans to increase its GDP deficit target to 4% for 2025, up from the 3% cap. Nevertheless, leadership remains committed to achieving a 5% annual growth target, even as external risks—such as potential US tariffs under a returning Trump administration—persist.

European Markets

Key European data releases include UK wage growth figures, as well as Germany's Ifo expectations and ZEW economic sentiment indices for December. These reports could provide fresh insights into regional economic resilience amidst global uncertainty.

Commodities


Gold
prices edge closer to a one-week low amid renewed selling pressure in early European trading. Expectations that the Federal Reserve will take a cautious approach to cutting rates continue to underpin elevated US Treasury yields, strengthening the US Dollar and reducing gold's safe-haven appeal.


Silver extends its losing streak as short-term momentum indicators show a lack of strong directional movement. Initial support is seen at the psychological $30.00 level, with further downside risk toward its three-month low of $29.65.


WTI crude remains flat around $70.20 as traders await clarity from the Fed’s interest rate decision. Concerns over sluggish global demand—particularly in China, the world’s largest oil importer—limit the commodity's upside. Weaker-than-expected Chinese retail sales exacerbate fears of declining consumption, further pressuring oil prices.

This week’s events, especially central bank decisions and key economic data, are likely to shape market direction across asset classes.