Daily Brief - 19 Dec 2023

Adobe's $6 billion plan post-Figma deal fallout

Adobe Inc. didn't manage to merge with Figma, leaving it with a hefty $6 billion. They're thinking of putting this money into developing their own AI tech and buying back shares. Despite their efforts, there's still worry about rivals like Figma and Canva, who are winning over the younger crowd and growing fast. Adobe's shares did well this year thanks to their AI work, but the threat from these startups isn't going away. They might spend more on AI and might buy some smaller companies to stay ahead. Meanwhile, they're also thinking about how to use their cash to make shareholders happy.

BOJ holds negative rates leaving markets guessing

The Bank of Japan (BOJ) kept its negative interest rate unchanged, surprising those expecting a rate hike. This decision led to a slight dip in the yen's value. Investors are now keenly waiting for Governor Ueda's briefing for any clues about when rates might go up. Swaps traders think there's a high chance of a rate hike by April. The decision was good news for the stock market, as low rates and a weaker yen help businesses. However, many believe a rate increase is likely soon, as inflation continues to exceed targets.

Fed’s pivot is forcing stock market sceptics to become believers

The Federal Reserve's recent change in policy, leaning towards lower interest rates, has got even the most cautious stock market experts thinking positively. Big names in finance, like Morgan Stanley's Mike Wilson and Piper Sandler's Michael Kantrowitz, who were previously not so keen on stocks, now see good times ahead for the US stock market. This change of heart comes after a strong year for the S&P 500, defying earlier fears of a downturn due to high interest rates. While some experts remain cautious, expecting only modest gains next year, this shift in Fed policy has generally brightened the outlook for stocks in 2024.