US markets extended losses as rising oil prices and a sharp sell-off in tech stocks weighed on sentiment , overshadowing dovish signals from the Federal Reserve. Key Market Moves S&P 500 fell 0.4% to 6,343.72 Nasdaq dropped 0.7% to 20,794.64 Dow Jones rose 0.1% to 45,216.14 Key takeaway: Tech weakness and oil-driven inflation fears are dragging the broader market lower. What’s Driving the Sell-Off? 1. Oil Prices Surge Again Crude oil jumped over 5% to around US$105 Driven by ongoing US–Iran–Israel conflict Higher oil = higher inflation risk = pressure on equities 2. Tech Stocks Lead the Decline Heavy losses in AI, chip, and data-related names: Applied Digital : -13.5% AXT Inc : -13% Micron Technology : -9.9% Arm Holdings : -5% Intel : -4.5% Super Micro Computer : -4.1% AI and semiconductor stocks are facing profit-taking and valuation concerns 3. Fed Comments Not Enough to Lift Sentiment Jerome Powell signaled no immediate rate hikes despite rising energy pri...
The UK government reported a smaller-than-expected budget deficit in November, offering a brief respite for Finance Minister Rachel Reeves, who faces mounting challenges to balance public finances amid a slowing economy and rising inflation.
Key November Borrowing Figures
- Public Sector Net Borrowing:
- £11.249 billion, lower than the £13 billion forecast by economists polled by Reuters.
- A £1.8 billion reduction in inflation-linked debt compensation due to a 0.3% fall in the retail price index(RPI) in September helped narrow the deficit.
Year-to-Date Borrowing
- April–November 2024/25 Financial Year:
- Borrowing totaled £113.2 billion, similar to the same period in 2023/24.
- Despite November’s improved figures, borrowing has exceeded expectations in eight out of 11 months in 2024.
Challenges Ahead for Reeves
Fiscal Rules Under Strain:
- Reeves pledged to balance day-to-day spending with tax revenues by the end of the decade.
- Plans include significant borrowing for public services and infrastructure investment, diverging from previous Conservative policies.
Economic Headwinds:
- Zero GDP Growth: The Bank of England predicts stagnation for Q4 2024.
- Rising Inflation: Recent upticks could drive higher borrowing costs.
- Alison Ring of ICAEW warns that "money remains extremely tight and that is unlikely to change any time soon."
Tax Increases:
- Reeves’ budget announced the largest tax hikes in three decades, primarily through higher employer social security contributions, to stabilize public finances.
Revised October Borrowing Data
- October’s borrowing was adjusted upward by £800 million, highlighting ongoing volatility in fiscal metrics.
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