Closing Bell 20th December: Santa’s Rally Keeps Giving

Global Fund Managers Extend Their Equity Bets
According to Bank of America’s latest survey, global fund managers have significantly reduced their cash holdings to a two-year low, anticipating gains in technology stocks and bonds with expected US Federal Reserve rate cuts. The survey, involving 254 fund managers managing $US691 billion, revealed a cash level drop to 4.5% in December from 4.7% in November. This shift indicates a strong confidence in equities, with a majority of respondents expecting a ‘soft landing’ for the global economy over the next year. Only a minority foresee a potential ‘hard landing’, and opinions are divided on the likelihood of a US recession within the next twelve months.

Oil Holds Gains Amid Red Sea Attacks
Oil prices have remained near a two-week high due to increased concerns about shipping safety in the Red Sea, following a surge in vessel attacks. Key companies like BP Plc and Equinor ASA have suspended shipments through this critical conduit. Brent crude rose 1.7% to $US79.24 a barrel. The heightened tensions, caused by Houthi rebel attacks in Yemen, have contributed to oil’s rebound from a recent slump. However, market analysts remain uncertain about the long-term impact on oil prices, with indicators suggesting continued market weakness.

Chinese Banks Hold Benchmark Lending Rate for Fourth Month
Chinese banks have maintained their benchmark lending rates for the fourth consecutive month, aligning with the central bank’s decision not to cut policy interest rates. The one-year loan prime rate stays at 3.45%, and the five-year rate, crucial for mortgages, remains at 4.2%. These rates are determined by 18 banks’ best customer interest rates and published monthly by the People’s Bank of China. Despite not altering the medium-term lending facility rate, the central bank injected a record $US112 billion into the economy, addressing cash scarcity concerns. Economic data from November indicates ongoing challenges in China’s economic recovery, with slow credit growth and a persistent property crisis. Top Chinese leaders have signaled a continuation of loose monetary policy into the next year, suggesting potential rate cuts and adjustments to the reserve requirement ratio.