Bitcoin Surges as Trump Proposes Strategic Reserve Plan

Bitcoin jumped above $106,000 after Donald Trump suggested creating a US bitcoin strategic reserve like the oil reserve. Chinese retail sales missed expectations at +3.0% y/y for November, while bond yields in China dropped to record lows amid weak economic sentiment. Markets await the Federal Reserve meeting this Wednesday, with a 97% probability of a quarter-point rate cut and potential guidance for a slower pace of reductions in 2025.

Equities

The FTSE 100 dropped 0.1% on Friday following a surprise contraction in the UK economy for October, though it still managed to secure gains for the fourth consecutive week. The mid-cap FTSE 250 fell 0.3%, posting a 0.5% weekly loss, its first in four weeks.

Data revealed a 0.1% decline in GDP for October, matching the previous month’s fall, marking the first consecutive declines since early 2020. The pound weakened against the dollar, as traders speculated on the Bank of England’s upcoming rate decisions.

Among individual stocks, Wizz Air fell 5.7% after RBC lowered its price target on the airline from 2,700p to 2,500p. Endeavour Mining extended losses, sliding 3%, amid weaker copper prices driven by a stronger dollar. Industrial and precious metal miners were also under pressure, with sectoral losses of 2% and 3.1%, respectively.

However, St James’s Place rose 1.9% to a more than one-year high after Deutsche Bank upgraded its rating to "buy" from "hold," raising the target price to 1,150p from 775p. Diageo climbed 2.3%, contributing to a 2.1% sectoral gain for beverage stocks.

In the United States, the S&P 500 ended flat at 6,051.09, while the Dow Jones Industrial Average slipped 0.2% to 43,828.06. The Nasdaq Composite edged up 0.12% to 19,926.72, securing its fourth straight week of gains.

Broadcom surged 24% after forecasting first-quarter revenue above Wall Street estimates, driven by strong demand for its AI chips, pushing its market capitalisation above $1 trillion for the first time. Marvell Technology rose 10.8%, while Nvidia dropped 2.2%. Overall, the semiconductor index added 3.2%.

Home furnishings retailer RH jumped 16.95% following higher-than-expected third-quarter revenue. Meanwhile, D.R. Horton slipped 0.89% after J.P. Morgan downgraded the homebuilder to "underweight." Technology stocks continued their upward trajectory, buoyed by stable inflation data and expectations of a 25 basis-point rate cut at the Federal Reserve’s December 17-18 meeting. Traders put the likelihood of this rate cut at 97%, though future pauses in January remain a possibility.

Forex & Commodities

The US dollar recorded its best week in a month, with the dollar index rising nearly 1% to 107, as investors adjusted expectations for a slower pace of Federal Reserve rate cuts in 2025. The dollar strengthened against the yen, climbing 0.69% to 153.695, its highest since late November, following reports that the Bank of Japan may refrain from raising rates at its meeting next week. Sterling fell 0.45% to $1.2616, its weakest since early December, after data showed the UK economy contracted by 0.1% in October, contrary to expectations of growth.

Gold prices edged higher on Monday, with spot gold up 0.2% at $2,653.86 per ounce, as investors awaited the Federal Reserve’s meeting this week. The focus remains on whether policymakers signal a pause in January after an anticipated 25-basis-point rate cut. Spot silver steadied at $30.59 per ounce, while platinum slipped 0.5% to $920.20, and palladium ticked up 0.2% to $954.25.

Oil prices retreated from recent highs as traders took profits ahead of the Federal Reserve meeting. Brent crude fell 0.4% to $74.20 a barrel, and West Texas Intermediate dropped 0.5% to $70.93. The declines followed a 6% rally last week, driven by new EU sanctions on Russian oil and expectations of tighter restrictions on Iranian supplies. However, forecasts of ample global supply in 2025 and weaker Chinese demand have tempered further gains.