MARKET WRAPS

Stocks:

European shares posted solid gains on Thursday after the Federal Reserve offered hints it could cut interest rates next year.

"They [Fed policymakers] endorsed the idea of a policy pivot thanks to an encouraging fall in inflation and sounded way more dovish than everybody expected at their announcement yesterday - which clearly exposed that the policy pivot is coming," Swissquote Bank said.

The focus now turns to decisions by the Bank of England at 1200 GMT and the European Central Bank at 1315 GMT to see whether they follow suit or stick to the mantra of rates staying higher for longer.

Stocks to Watch

Demand for chemical products will remain constrained in 2024, as major economies face inflation and higher interest rates, Fitch said.

The industry will also feel the impact of a slower-than-expected recovery in China, according to Fitch. The neutral sector outlook reflects expectations that "conditions will not materially improve from the bottom-of-the-cycle levels that prevailed in 2023."

Recent years have seen a buildup of "significant" new global capacity, which puts more pressure on chemical makers, Fitch said, adding this may "lead to the closure of uncompetitive assets, especially in regions disadvantaged by higher energy or feedstock costs."

U.S. Markets:

The post-Fed cheer looks set to continue on Thursday, with stock futures gaining and bonds rallying.

U.S. economic updates set for release include the weekly jobless claims data, November retail sales and November import prices, all due before the opening bell, with business inventories for November due latyer in the session.

Costco and Lennar will release results after the closing bell.

Forex:

The Fed's signals that interest-rate cuts are on the horizon saw the dollar drop sharply on Wednesday, a move which could extend further, MUFG said.

"The dollar is now more at risk of further weakness heading into early next year. Market participants have moved to price in even earlier and more aggressive Fed rate cuts into next year."

The Swiss franc stayed roughly steady, having very briefly risen slightly, after the SNB left its policy rate on hold at 1.75%, as expected.

The SNB said inflationary pressure had "decreased slightly" over the past quarter but warned that "uncertainty remains high" and that inflation is likely to increase again somewhat in the coming months.

Meantime, Norway's central bank surprised markets by raising its key policy rate , saying that a final hike in the current cycle was needed to ensure that inflation doesn't remain too high for an extended period.

Norges Bank increased its key policy rate by 25 basis points to 4.50%, versus a Dow Jones poll before the decision that had pointed to an unchanged rate of 4.25%.

The Norwegian krone rose sharply on the news, with EUR/NOK hitting a two-month low of 11.4459 just after the decision.

Bonds:

Eurozone government bond yields tracked Treasury yields sharply lower, after the Fed's dovish pivot. The drop was bigger on the short end, with the two-year Schatz yield falling 15 basis points to 2.489%.

While the Fed left the fed funds rate target at 5.25%-5.50%, as expected, "every vehicle of Fed communication--the statement, the dots, and Powell's press conference--was unambiguously dovish," RBC Capital Markets said. However, RBC continues to expect the first Fed rate cut in June 2024.

Energy:

Oil futures rose close to 2%, bolstered by signals of potential interest rate cuts next year by the Fed and a larger-than-expected weekly withdrawal from U.S. crude storage.

"Positive sentiment in the broader financial market pushed up oil prices, " ING said.

"However, the market remains cautious as economic concerns continue to cloud demand prospects."

Global oil-demand growth is expected to slow next year, reflecting weaker major economies in the wake of higher interest rates, according to the IEA.

Metals:

Base metals and gold rose sharply after the Fed took a dovish turn, a strong bullish tailwind for risk assets and commodity markets, Peak Trading Research said.


EMEA HEADLINES

ECB, Bank of England Expected to Follow the Fed on Keeping Rates Steady

The European Central Bank and the Bank of England are expected to follow the same course as the Federal Reserve in keeping interest rates unchanged this month.

Both make their final decisions of the year on Thursday, and economists expect them to hold steady. The ECB will update its forecasts for inflation and growth, giving investors clues about when rates might change.


Credit Agricole to Stop Financing New Fossil Fuel Extraction Projects

Credit Agricole said it aims to achieve carbon neutrality by 2050 and that it won't finance any new fossil fuel extraction projects.

The French lender said Thursday it expects to increase 80% of its exposure to low carbon energies through 2025 totalling 13.3 billion euros ($14.46 billion).


Atos Shareholder Onepoint Raises Stake to 11.4%; Seeks Board Seats

Atos's anchor shareholder Onepoint has raised its stake in the company to 11.4% and is seeking to have three seats on the company's board.

Onepoint, which had a stake of 9.9% in Atos as of Nov. 1, said late Wednesday that it aims to keep buying Atos shares subject to market conditions, but that it doesn't intend to take control of the company.


Vivendi to Explore Split Into Three Businesses

Vivendi will examine a possible split into three businesses around Canal+, Havas and an investment company.

The French digital entertainment and communications company said its management board had proposed a study of the feasibility of a split into publicly-traded entities.


Credit Suisse to Pay $10 Million After SEC Alleges Prohibited Underwriting, Advising

Credit Suisse Securities and two affiliated entities will pay more than $10 million to settle charges from the U.S. Securities and Exchange Commission that it allegedly provided certain prohibited services.

The SEC said Wednesday that the bank acted as an underwriter and investment adviser to mutual funds after being prohibited from doing so by a New Jersey court in October 2022.


BP Docks Former CEO Bernard Looney as Much as $40 Million Over 'Serious Misconduct'

LONDON-BP said former Chief Executive Bernard Looney will lose out on as much as $40.6 million in compensation as the result of his abrupt resignation over past relationships with colleagues.

The significant cost to Looney of his September departure from the London-based company includes the maximum potential value of salary, pension payments, deferred bonuses and other compensation he might have received, before taxes, BP said in a release on Wednesday.


GLOBAL NEWS

Fed Begins Pivot Toward Lowering Rates as Inflation Declines

WASHINGTON-Slowing inflation prompted Federal Reserve Chair Jerome Powell to pivot away from raising interest rates and toward considering when to cut them, igniting a rally on Wall Street.

The Fed held its benchmark federal-funds rate steady at a 22-year high on Wednesday and offered every reason to think that its most recent increase this past July probably marked the end of the most aggressive cycle of hikes in four decades.


The Fed Underwrites the Recovery

The Federal Reserve has two mandates: inflation and unemployment. For two years, though, it behaved as if only the first mattered, raising interest rates so steeply that it knew it was courting recession.

This week, it pivoted. "You're getting now back to the point where both mandates are important," Fed Chair Jerome Powell told reporters Wednesday after the central bank's meeting. "We'll be very much keeping that in mind as we make policy going forward."


What to Watch in Retail Report: A Slow Start to the Holiday Season

Spending at retailers appeared sluggish at the start of the holiday shopping season, forecasters estimated, as a cooling economy and job market might be weighing on confidence.


House Votes to Back Opening of GOP Impeachment Probe of Biden

WASHINGTON-The House narrowly approved opening an impeachment probe into President Biden on Wednesday, hours after his son, Hunter Biden, defied a congressional demand to testify on Capitol Hill, marking a sharp escalation in the battle between the White House and Republicans.

The House voted 221-212 along party lines to formally authorize Republicans' impeachment probe, which party leaders initiated several months ago, hoping to add legal and political muscle to the investigation into whether the president had ties to his son's overseas business dealings. While GOP lawmakers have obtained testimony that Joe Biden before becoming president occasionally met with his son's business associates, they haven't uncovered support for those claims or established that he profited from his family's overseas endeavors.


Snubbed by the U.S. on Aid, Ukraine Turns to Bickering Europe

BRUSSELS-Ukrainian President Volodymyr Zelensky, having failed to secure new commitments for weapons from the U.S. this week, shifts his attention to Europe, where a fight is deepening over how to keep Ukraine's government running during its war with Russia.

While less visible than guns and ammunition, the aid is no less vital for Ukraine's survival. The European Union has provided Kyiv with billions of euros in crucial funding that has allowed it to keep hospitals, schools and power plants running, pay veterans' benefits and rebuild homes.


Israel-Hamas War Enters Deadlier Phase With More Close Combat

The Israeli military and Palestinian officials are reporting heavy losses in intense fighting in the Gaza Strip, as Israel faces pressure to quickly achieve its goal of eliminating Hamas.

(MORE TO FOLLOW) Dow Jones Newswires

12-14-23 0510ET