Aurelia Butler

By Abhijith Ganapavaram and Utkarsh Shetti(Reuters) -American Airlines on Tuesday lifted an hour-long ground stop of all its flights in the U.S. due to an unspecified technical issue, a notice on the U.S. aviation regulator’s website showed. More

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Few major catalysts are expected to drive market sentiment, with trading volumes expected to be light in the final days of the year, raising the prospect of choppy trading.Stock markets will shut at 1:00 p.m. ET on Tuesday and will be closed for Christmas on Wednesday.At 05:15 a.m., Dow E-minis were up 12 points, or 0.03% and S&P 500 E-minis were up 7 points, or 0.12%, and Nasdaq 100 E-minis were up 38.25 points, or 0.18%.After a stellar run to record highs following an election that sparked hopes of pro-business policies under U.S. President-elect Donald Trump, Wall Street’s rally hit a bump this month as investors grappled with the prospect of higher interest rates.The U.S. Federal Reserve eased borrowing costs for the third time this year last Wednesday, but signaled only two more 25-basis-point reductions in 2025, down from its September projection of four cuts, as policymakers weigh the possibility of Trump’s policies stoking inflation.Traders expect the Fed to leave rates in the range of 4% to 4.25% by the end of 2025, from between 3.75% and 4% about 10 days ago, according to CME’s FedWatch tool.Markets are currently in a historically strong period called the “Santa Clause rally”. The S&P 500 on average has gained 1.3% in the last five days of December and first two days of January, according to data from the Stock Trader’s Almanac going back to 1969.However, market participants are questioning if U.S. stocks’ climb to new record highs will materialize in the coming days, amid concerns about the health of the market under the surface and sky-high valuations.The benchmark S&P 500 fell about 1% in December but the equal-weight S&P 500, a proxy for the average index stock, is down 5.8%.”Expensive/unprofitable growth stocks and low-quality cyclicals appear to be the most vulnerable to potentially higher-for-longer interest rates and less liquidity,” Michael Wilson, equity strategist at Morgan Stanley (NYSE:MS), said in a note.The S&P 500 and the Nasdaq notched two consecutive sessions of gains on Monday, helped by gains in a handful of megacap and growth companies.Among individual stocks, U.S. Steel fell 2.3% in premarket trading as Nippon Steel’s $15-billion bid for the company has been referred to U.S. President Joe Biden, who has long opposed the tie-up. More

LONDON (Reuters) -European shares edged up on Tuesday, though moves were subdued in a holiday-curtailed week, while the U.S. dollar held near a two-year high helped by elevated U.S. Treasury yields as investors bet on fewer Federal Reserve rate cuts in 2025.The pan-European STOXX 600 index was up 0.3%. Britain’s FTSE 100 and France’s CAC 40 were both up 0.5%. German stocks were closed for the Christmas holiday. In Asia, Chinese stocks rose after sources told Reuters that Beijing planned to issue a record amount of special treasury bonds next year as it ramps up fiscal stimulus to revive a faltering economy.The CSI300 blue-chip index and Shanghai Composite Index both ended 1.3% higher. Hong Kong’s Hang Seng Index advanced 1.1%.The news came shortly after China’s finance ministry said authorities would ramp up fiscal support for consumption next year by raising pensions and medical insurance subsidies for residents as well as expanding consumer goods trade-ins.Still, investors remain cautious on the outlook for the world’s second-largest economy, particularly as it faces the threat of hefty tariffs from U.S. President-elect Donald Trump.”China faces significant challenges entering 2025. The ongoing real estate crisis has shattered consumer confidence while a potential trade war with the United States could trigger the worst growth slowdown in decades,” said Ronald Temple, chief market strategist at Lazard (NYSE:LAZ).”Investor expectations have been raised and dashed more than once in China in recent years, and 2025 may prove to be no different. China’s economic and market outlook might largely depend on the speed and magnitude of government reforms.”Elsewhere, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4%, tracking Wall Street’s Monday gain.FED FOCUSAfter a recent run of central bank decisions, this week is much quieter, leaving the rates theme the main driver of market moves.”Meagre news and data flow should keep the focus on a more hawkish Fed,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. Markets are now pricing in about 35 basis points of easing for 2025, implying one quarter-point rate cut and around a 40% chance of a second. The two-year Treasury yield, which is sensitive to changes in Fed rate expectations, last stood at 4.3427%, while the benchmark 10-year yield steadied near a seven-month high at 4.5967%. [US/]”Like markets, the Fed will need to consider U.S. policies on tariffs and immigration in its inflation and growth outlook. We believe the subtle slowing in the U.S. labor market will still be the Fed’s paramount concern,” said analysts at Citi Wealth.”While always uncertain, our base case expectation for a 3.75% policy rate is unchanged. It’s a far cry from the 1.7% U.S. policy rate average of the past 20 years.” Earlier this month, the Fed cut its main interest rate for third time this cycle, taking the Fed funds rate to 4.25%-4.5%. Ahead of Trump’s return to the White House in January, global central banks have urged caution over their rate paths due to uncertainty on how his planned tariffs, lower taxes and immigration curbs might affect policy.Data on Monday showed U.S. consumer confidence unexpectedly weakened in December as the post-election euphoria fizzled and concerns about future business conditions emerged.In currencies, the dollar index held near a two-year high at 108.19, having climbed more than 2% in December so far. The euro eased 0.1% to $1.0391, while the yen languished near last week’s five-month low at 157.08 per dollar.Japan’s Finance Minister Katsunobu Kato on Tuesday reiterated Tokyo’s discomfort with excessive foreign exchange moves and put speculators on notice that authorities are ready to act to stabilise a faltering yen.Spot gold was little changed at $2,613 per ounce, having risen about 27% this year, heading for its biggest yearly gain since 2010. Oil prices edged higher, with Brent crude futures rising 0.6% to $73.08 a barrel, while U.S. crude gained 0.6% to $69.67 per barrel. [O/R] More

This plan of a significant increase from the 1 trillion yuan issued in 2024 highlights Beijing’s push for stronger fiscal stimulus to support an economy facing headwinds.The move comes as Chinese officials brace for the potential impact of higher U.S. tariffs under Donald Trump’s incoming administration. The funds raised will focus on stimulating consumption through subsidy programs, supporting business equipment upgrades, and driving innovation in advanced industries, the report said.Following the announcement, yields on China’s 10-Year and China 30-Year treasury bonds edged up by 1.7 and 2.1 basis points, respectively.The planned special treasury bond issuance in 2025 would mark the largest on record and underlines Beijing’s readiness to go even deeper into debt to counter deflationary pressures and maintain economic momentum.”The issuance ‘exceeded market expectations,” noted Tommy Xie, head of Asia Macro (BCBA:BMAm) research at OCBC Bank. He added that since the central government is best positioned to take on additional debt, such measures are viewed positively and are expected to provide further economic support.China typically reserves special treasury bonds for targeted policy objectives, bypassing standard budget plans. These instruments are considered a tool for extraordinary circumstances, allowing the government to secure funding for specific projects.Out of the total issuance planned for 2025, approximately 1.3 trillion yuan will be allocated to finance “two major” and “two new” initiatives, the sources told Reuters.The “new” programs include subsidies for consumers to replace old cars and appliances, as well as incentives for businesses to upgrade large-scale equipment. The “major” projects will focus on infrastructure development, such as building railways, airports, and farmland, while also strengthening national security capabilities.According to the report, a significant portion of China’s planned 3 trillion yuan special treasury bond issuance for next year will be directed toward investments in “new productive forces,” a term used by Beijing to describe advanced manufacturing sectors like electric vehicles, robotics, semiconductors, and green energy.One of the sources reportedly indicated that over 1 trillion yuan will be allocated to this initiative. The remaining funds will be used to recapitalize major state-owned banks, which are grappling with narrowing margins, declining profits, and rising levels of bad debt.The planned bond issuance for 2025 represents approximately 2.4% of China’s 2023 gross domestic product (GDP). For comparison, Beijing raised 1.55 trillion yuan in special bonds in 2007, equivalent to 5.7% of the country’s economic output at the time. More

Japan is neighbours with an increasingly assertive China and a nuclear-armed North Korea that has been deepening military ties with Russia. “I think it’s important to strengthen the U.S.-Japan alliance even further… and share a common understanding of the situation in north-east Asia,” he said at a press conference, adding that no dates for a potential meeting were set yet. Ishiba, in office since October, has sought a meeting with Trump, but told reporters last month that the president-elect’s camp had said meetings with world leaders were restricted under the Logan Act before Trump’s January inauguration.Trump has met with Akie Abe, the widow of the late Japanese Prime Minister Shinzo Abe. Ishiba also said his cabinet plans to approve on Dec. 27 a draft state budget for the next fiscal year from April.He also pledged to work on measures to raise minimum wages and to eliminate public concerns for the future to boost private consumption. More