Stock bulls are pinning their optimism on what’s known as the “Santa Claus Rally” to push stocks to new records, even as exuberance over artificial intelligence and the Federal Reserve’s interest rate path are questioned. Traditionally, the rally is believed to occur during the last five trading sessions of a year and the first two of the new ones.
“As equity markets enter the fourth year of a bull market, our underlying market call remains constructive,” wrote Scott Chronert, head of U.S. equity strategy at Citigroup Inc. this week in a note. “The current fundamental backdrop clearly presents the opportunity for continued AI-related tailwinds for large-cap growth.”
The S&P 500 Index gained for the fifth day on Wednesday in a shortened session ahead of the Christmas holidays. The S&P 500’s VIX index of expected volatility fell to its lowest level this year.
Elsewhere, the most important movements took place in precious metals. Silver gained for a fifth day and gold rose as much as 0.6% as geopolitical tensions continued.
Spot silver rose as much as 2.2% to $73.4393 an ounce. The white metal is up about 150% this year in a rally that has accelerated since a historic short squeeze in October. Gold for immediate delivery neared the record above $4,525 an ounce set on Wednesday. Frictions in Venezuela, where the US has blocked oil tankers, have increased the precious metal’s appeal.
In a major move on Thursday, the Chinese yuan rose above the psychological mark of 7 per dollar in offshore trading for the first time since September 2024. The gains have been driven by speculation that the central bank will allow a gradual appreciation of the currency to boost market confidence. The move came after the People’s Bank of China strengthened its daily benchmark interest rate to the highest level since September 2024.
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