Australian Dollar Slides as RBA Softens Inflation Outlook

The Australian dollar dropped 0.6% to $0.6401 following a dovish statement from the Reserve Bank of Australia, which removed a prior reference to keeping all options open for future policy. European stocks gained, bolstered by China’s shift to a more accommodative monetary policy, particularly benefiting mining and luxury goods sectors. Meanwhile, bond yields in China fell to record lows, reflecting doubts about the long-term impact of Beijing's policy measures.

Equities

The FTSE 100 rose 0.5% on Monday, driven by strong performances in the energy and mining sectors. Shares of BP climbed 4.3% after the company announced a partnership with Japanese power generator JERA to establish one of the world’s largest offshore wind operations, advancing BP's renewable energy goals.

Mining stocks also contributed significantly, with Glencore, Antofagasta, and Rio Tinto rising between 3.8% and 4.9%, as copper prices surged on China's plans for monetary easing. However, Whitbread fell 2.6% after UBS reduced its target price, and Domino’s Pizza Group slipped 3.4% despite a new five-year franchise agreement to expand its store network.

In contrast, Wall Street indices ended the day lower. The Dow Jones Industrial Average dropped 0.54%, the S&P 500 fell 0.61%, and the Nasdaq declined 0.62%. Nvidia lost 2.5% after China's antitrust regulator launched an investigation into the company, pressuring the tech sector.

Advanced Micro Devices dropped 5.7% after a downgrade from BofA Global Research, contributing to a 0.87% fall in the Philadelphia Semiconductor Index. Workday gained 5.1% following news it will be added to the S&P 500, while Comcast fell 9.5% due to weak broadband subscriber forecasts.

Hershey jumped 10.9% after reports that Mondelez might explore an acquisition of the company, though Mondelez shares slipped 2.3%. Meanwhile, Interpublic Group rose 3.6% as Omnicom was reportedly in talks to acquire the advertising company, leading to a 10.3% drop in Omnicom’s stock.

Forex & Commodities

The Australian dollar fell 0.68% to $0.63975, nearing a four-month low, after the Reserve Bank of Australia softened its tone on inflation, increasing expectations for rate cuts in early 2025. The New Zealand dollar also declined, dropping 0.55% to $0.5833.

In contrast, the US dollar remained steady, reaching a monthly high against the yen at 151.55 before retreating slightly to 151.075. The dollar index eased by 0.1% to 106.05, with traders eyeing US inflation data due on Wednesday for clarity on the Federal Reserve’s easing plans. Sterling edged up 0.09% to $1.27625, and the euro added 0.12% to $1.0566.

Gold prices rose 0.4% to $2,669.25 per ounce, supported by China’s announcement of a more accommodative monetary policy for 2025. This shift, paired with renewed central bank gold purchases, bolstered the safe-haven asset. US gold futures gained 0.2%, while silver and platinum showed marginal changes. Meanwhile, the US and UK announced sanctions targeting illicit gold trade.

Oil prices eased slightly, with Brent crude down 0.4% at $71.88 per barrel and US West Texas Intermediate falling 0.4% to $68.07. Gains from Monday were mostly retained, supported by China’s policy shift and data showing November’s crude oil imports had grown annually for the first time in seven months.