Bank Julius Baer anticipates a Santa rally in the US market. A Santa rally refers to the typical upswing in stock prices around late December. Bank Julius Baer's prediction comes amid a broader context of recent economic developments and decisions by the US Federal Reserve on rates in the US.
In a chat with CNBC-TV18, Mark Matthews from Bank Julius Baer said it may be a good time now to buy stocks during dips; expecting a Santa rally from December 25 to year-end.
The US Federal Reserve kept its key interest rate unchanged on December 13, marking the third consecutive hold. This move signals a shift from the rapid rate hikes seen over the past four decades aimed at controlling high inflation.
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The Federal Reserve also plans to implement three quarter-point rate reductions next year, fewer than the five anticipated by markets and some economists.
Simon Baptist, Chief Economist at the Economist Intelligence Unit, commented on this decision, noting that despite the expected rate cuts, interest rates are likely to remain high by the end of 2024. "Even with three projected rate cuts next year, interest rates are poised to remain significantly elevated by the conclusion of 2024," Baptist observed.
Also Read | Bank of England keeps interest rate unchanged at 5.25% a day after US Fed Reserve holds rates steady
US inflation eased again in November, with cheaper gas helping further lighten the weight of consumer price increases. However, prices in some areas — services such as restaurants, used cars, and auto insurance — continued to rise uncomfortably fast.
The report from the US Labor Department said the consumer price index rose just 0.1% from October to November. Compared with a year earlier, prices were up 3.1% in November, down from a 3.2% year-over-year rise in October.
While inflation still exceeds the US Fed’s 2% annual target it is cooling faster than expected. So, the Fed’s policymakers likely see no cause to further raise rates, at least for now.
The Dow Jones Industrial Average index has risen nearly 12% year-to-date (YTD). The Nasdaq Composite and S&P 500 have gained over 42% and 22% YTD, respectively.
For the entire interview, watch the accompanying video
(Edited by : Shweta Mungre)
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