Global Factors influencing ASX stocks on 07 December 2023

On 07 December 2023, at AEDT 12:20 PM AM, the benchmark index S&P/ASX 200 is trading lower today, declining 10.30 points or 0.14%, and is currently trading at 7,168.10 levels. Out of 11 sectors, 6 are trading lower along with the S&P/ASX 200. The Energy and Financial sectors were the top 2 declining sectors, down by 2.01% and 0.56% in their index values.

Also read: Mid-Market: S&P/ASX 200 Trading Lower By 0.17%; Dragged Down By Decline in Oil Prices

On that note, let us look at a few global reasons impacting the stock market today:

1. Key U.S. indices ended lower in their previous session. NASDAQ Composite, NASDAQ-100, Dow jones, and S&P 500 ended lower by 0.58%, 0.56%, 0.19%, and 0.39% respectively.

2. On Wednesday, the Dow closed lower amid job market concerns. ADP data revealed only 103,000 jobs added in November, below the expected 130,000. Energy stocks declined as oil prices dipped below US$70 per barrel, the lowest since June. Despite a notable drop in U.S. inventories, increased gasoline supplies and record crude production impacted market sentiment. The Dow's sluggish performance persisted despite indications of a slowing job market, fueling expectations of a potential Federal Reserve rate cut in the near future.

3. AbbVie Inc. and Cerevel Therapeutics Holdings Inc have entered a definitive agreement for AbbVie to acquire Cerevel, including its substantial neuroscience pipeline with multiple clinical-stage and preclinical candidates. This acquisition strengthens AbbVie's presence in the field of neuroscience, introducing a diverse range of potentially superior assets. The acquired assets have the potential to reshape treatment standards for psychiatric and neurological disorders, addressing significant unmet needs among patients.

4. The Federal Reserve has the flexibility to reduce its policy rate by about a percentage point next year while maintaining its "higher for longer" stance. This apparent contradiction can be explained by the Fed's view of a "neutral" policy rate, which is around 2.5%. Any rate above this level is considered restrictive, meaning it could impede economic growth. Currently, the Fed's official fed funds rate is within the 5.25-5.50% range, and futures market pricing indicates a potential reduction to around 4.00% by the end of the next year. This adjustment aligns with the Fed's strategy to manage monetary policy in a way that supports the economy without overheating or causing excessive inflation.

5. The Hang Seng and FTSE 100 is up by 0.83% and 0.34%.

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