Nasdaq Breaks 20,000 Barrier as Inflation Data Spurs Market Optimism | Daily Market Analysis

Key events:

• Switzerland - SNB Interest Rate Decision (Q4)
• Eurozone - Deposit Facility Rate (Dec)
• Eurozone -ECB Interest Rate Decision (Dec)
• USA - Initial Jobless Claims
• USA - PPI (MoM) (Nov)
• Eurozone - ECB Press Conference
• USA - 30-Year Bond Auction

The Nasdaq closed above 20,000 for the first time on Wednesday, marking a historic milestone as technology stocks rebounded strongly following inflation data that aligned with expectations. The report bolstered predictions of a Federal Reserve interest rate cut in the upcoming week.

The Nasdaq Composite climbed 1.8%, ending the session at a record-breaking 20,034.89. In contrast, the Dow Jones Industrial Average slipped by 99 points (0.2%), while the S&P 500 advanced 0.8%. Tech stocks led the market recovery, with Alphabet Inc. and NVIDIA Corporation (NASDAQ: NVDA) driving gains.

Alphabet (NASDAQ: GOOGL) surged over 5%, extending its rally from the previous day after unveiling a groundbreaking development in quantum computing that could significantly accelerate computing speeds. Tesla Inc. (NASDAQ: TSLA) also soared 5% to reach an all-time high, continuing its upward trajectory fueled by optimism about CEO Elon Musk's perceived influence with the president-elect. Since the election, Tesla shares have jumped 64%.

The USD/CHF pair retraced some of its recent gains as the US dollar lost momentum after ending a four-day winning streak. Trading around 0.8840 during Thursday's Asian session, the Swiss franc remained stable ahead of the Swiss National Bank’s expected 25 basis point rate cut later in the day. This reduction, the fourth in a row, is aimed at maintaining inflation within the central bank's 0–2% target range.

However, speculation is mounting about a more aggressive 50 basis point cut in December to stimulate economic growth. Inflation in Switzerland ticked up to 0.7% in November from 0.6% in October but fell short of forecasts. Meanwhile, third-quarter GDP growth slowed to 0.4%, down from 0.6% in Q2, reflecting economic sluggishness.

The Japanese yen faced selling pressure on Thursday, lifting the USD/JPY pair toward the mid-152.00s, close to a recent two-week high. Market participants have begun to scale back expectations of another interest rate hike from the Bank of Japan in December. Rising US Treasury yields and positive equity sentiment further weakened the yen.

Despite these factors, traders remain cautious, awaiting next week’s BoJ policy meeting. Limited US dollar price movement has also capped the pair’s upside. Still, optimism that the Federal Reserve will take a measured approach to future rate cuts continues to support the dollar’s recent gains.

The Australian dollar halted its two-day decline against the US dollar on Thursday, supported by robust domestic employment figures. November’s seasonally adjusted Employment Change showed a gain of 35,600 jobs, far exceeding the expected 25,000 and the previous figure of 12,100. Meanwhile, the unemployment rate fell to 3.9%, a level not seen since March and well below market estimates of 4.2%.

Despite these positive developments, the AUD/USD pair struggled against a broadly stronger US dollar following the release of the US inflation report. The November Consumer Price Index (CPI) rose to 2.7% year-over-year, up from 2.6% in October, while core CPI increased by 3.3%. However, expectations of a Federal Reserve rate cut next week have kept the greenback’s rally in check.

The EUR/USD pair edged higher during Thursday’s Asian session, recovering from a four-day losing streak. Trading near the psychological level of 1.0500, the pair gained over 0.10% as traders awaited the European Central Bank’s policy decision.

The ECB is widely expected to announce another rate cut to address the Eurozone’s economic challenges. Investors are divided, however, on whether the central bank will opt for a larger reduction. All eyes will be on ECB President Christine Lagarde’s post-meeting remarks for clues about further easing measures in 2025, which could significantly impact the euro’s trajectory.