The Dollar Index fell to a two-week low. Natural gas prices fell by 7%

At Wednesday’s close, the Dow Jones Industrial Average (US30) was down 0.31%. The S&P 500 Index (US500) was down 0.38%. The Nasdaq Technology Index (US100) decreased by 0.85%. Negative corporate news on Wednesday pressured the broad market. Dell Technologies (DELL) closed down more than 12% after reporting weaker-than-expected total net revenue for the third quarter. In addition, HP Inc. (HPQ) shares closed down more than 11% after its first-quarter adjusted earnings per share guidance came in below consensus.

On Wednesday, the Dollar Index fell by 1% to below 106, its lowest in two weeks, as investors digested a batch of economic data and information on Donald Trump’s cabinet picks. PCE prices and core PCE prices rose in line with expectations, while personal income and spending came in stronger than expected. In addition, home sales unexpectedly rose, Q3 GDP growth was unchanged at 2.8%, and jobless claims unexpectedly remained at a 7-month low. These data confirmed the Fed’s cautious approach to further rate cuts.

The Canadian dollar remained above 1.4 per US dollar, near its lowest level since mid-2020 at 1.41 on November 15, after US President-elect Donald Trump reiterated his tariff threats, including tariff hikes of 25% on Canada and Mexico and 10% on China. Given that oil, gas, and energy are Canada’s largest exports to the US, along with automobiles, this news negatively impacted investor sentiment. Meanwhile, the Bank of Canada (BoC) is expected to continue easing rates next month, although the likelihood of a 50bp rate cut has diminished due to stronger-than-expected inflation data.

Equity markets in Europe were declining yesterday. Germany’s DAX (DE40) fell by 0.18%, France’s CAC 40 (FR40) closed down 0.72%, Spain’s IBEX 35 (ES35) lost 0.33% and the UK’s FTSE 100 (UK100) closed plus 0.20%. ECB Executive Board spokesman Schnabel said the ECB should be wary of cutting interest rates too much as borrowing costs are already close to the neutral threshold, and a rate cut could backfire. Swaps discount the odds of a 25bp ECB rate cut at the December 12 meeting by 100% and a 50bp rate cut at the same meeting by 16%.

WTI crude oil prices fell to $68.30 per barrel on Wednesday, marking the third straight day of losses as traders reacted to the latest Energy Information Administration (EIA) report and weighed geopolitical events and upcoming OPEC+ decisions. The EIA report showed an unexpected increase in US gasoline inventories ahead of the Thanksgiving holiday, while crude oil inventories fell more than expected, and imports from Mexico hit a record low. Markets are also focused on Sunday’s OPEC+ meeting, where a potential postponement of planned production increases could ease oversupply fears.

The US natural gas (XNG) prices fell more than 7% to $3.2/MMBtu on Wednesday as markets assessed the outlook for the US gas supply. The latest report from the EIA showed that utilities drew 3 billion cubic feet of natural gas from storage in the week ended November 22, largely in line with market expectations ranging between a slight increase and a slight decrease. While this result supported the view that the gas withdrawal season has begun, it was well below the 5-year average.

Asian markets traded flat on Wednesday. Japan’s Nikkei 225 (JP225) fell by 0.80%, China’s FTSE China A50 (CHA50) rose by 1.25%, Hong Kong’s Hang Seng (HK50) gained 2.32%, and Australia’s ASX 200 (AU200) was positive +0.57%.

The Bank of Korea unexpectedly cut its discount rate for the second consecutive month. The cut, which reduced the benchmark rate by 25 basis points to 3%, surprised market expectations for a pause. The decision, citing weakening inflation and a weakening economy, brought borrowing costs down to the lowest level since October 2022.