Nasdaq 100 Hovers as Chinese Stimulus and Syrian Collapse Spark Moves in Metals

Also, 10-year T-note, silver, crude oil and Japanese yen futures

1. Nasdaq 100 E-mini futures (/NQ): -0.2% 
2. 10-year T-note futures (/ZN): -0.15% 
3. Silver futures (/SI): +3.66% 
4. Crude oil futures (/CL): +1.71% 
5. Japanese yen futures (/6J): -0.64% 

From a failed coup in South Korea to the collapse of the French government to a revolution in Syria, December 2024 has produced a decade’s worth of geopolitical developments in just over a week’s time. That’s not to mention the OPEC+ announcement last week or the Chinese stimulus announcement overnight (which amounts to their most significant stimulus announcement since the Global Financial Crisis). These cross currents seem to be provoking significant shifts in capital across nearly all asset classes. And yet, on Monday, it’s more of the same for stocks: low volatility, low volume and a distinct lack of interest by bulls or bears near all-time highs. 

U.S. equity markets are having a sluggish start to the new trading week, insofar as there is a notable lack of significant price action in the major indexes when compared to reactions to the weekend’s news. Both the S&P 500 (/ESZ4) and Nasdaq 100 (/NQZ4) are backing off of all-time highs, although the environment—low volatility, low volumes—hasn’t changed much at all. The Russell 2000 (/RTYZ4) is the leader as rotation appears to be afoot: each of the equal-weighted S&P 500 and Nasdaq 100 are outperforming their market cap-weighted peers. 

Treasuries are giving back some of their gains in the wake of the November U.S. jobs report on Friday, thanks to quickly evolving geopolitical developments over the weekend. Notably, however, both notes (/ZNH5) and bonds (/ZBH5) have seen their recent drop in volatility sustained, leaving vol sellers lacking appealing opportunities. The Treasury auction schedule is heavy this week, with three-year notes (tomorrow), 10-year notes (Wednesday), and 30-year bonds (Thursday) all on the block. 

News broke over the weekend that the People’s Bank of China had ended its six-month hiatus and had resumed its accumulation of precious metals in November. Alongside the more timely news regarding Chinese stimulus, there’s a great deal of enthusiasm today for metals. Gold prices (/GCG5) are actually the laggard; the baton is currently held by silver (/SIH5), which has traded to its highest level since Nov. 6 (and may have carved out a short-term double bottom in the process). 

The sudden and dramatic collapse of the Assad government in Syria appears to be having little if any influence on energy markets; while prices are up across the board, volatility—the proxy for geopolitical stress—continues to trend lower. Instead, energy markets may be catalyzed by the news of increased Chinese stimulus intentions overnight; if the world’s second-largest economy is going to be growing faster, then demand for crude oil (/CLF5) should be running higher. OPEC+’s production hike delay announcement last week speaks to difficult demand conditions for energy markets heading into 2025. 

Higher energy prices and higher yields are usually a bad mix for the Japanese yen (/6JZ4), and that’s what’s playing out at the start of the week. But the U.S. dollar is down everywhere else, with the Australian dollar (/6AZ4) arriving as biggest mover on today. Chinese policymakers pledged a new commitment to stimulus, with Chinese President Xi Jingping saying that “[China] must be fully prepared to achieve next year’s economic targets.” 

Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx

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