US futures are lower but well off session lows as investors turn to other regions for better value following this month’s torrid rally in US equities, while bitcoin inched closer toward the landmark $100,000 level, trading less than a thousand dollars away from the vaunted resistance level. As of 8:00am, S&P futures are down 0.1%, and Nasdaq futures drop 0.2%, as NVDA and META fell -1.0% and -0.7%, respectively, while the rest of Mag 7 are mostly unchanged. Bond yields are 2-4bp lower and the Bloomberg Dollar index rose 0.3% to stay on course for an eighth straight week of gains as it hit a 2 year high as the EUR tumbled after another set of dismal PMI prints. In commodities, oil and base metals are lower; precious metals are higher. Today, the key focus will be global PMI releases. Expectations are for the PMI Mfg and Srvcs to print at 48.9 and 55.0, respectively, largely in line with expectations.
In premarket trading, Alphabet slipoed less than 1% after the Information reported that OpenAI is considering developing a web browser and recently struck deals to power search features for retail, travel and other websites. Gap jumped 15% after raising its full-year outlook as the apparel retailer attracts wealthier shoppers seeking value. Here are some other notable movers:
The decline in US equity futures coincided with gains in Europe and Japan. Bank of America strategists warned that the Nasdaq 100 was approaching a level versus the S&P 500 that could trigger the unwinding of the trade favoring US equities. Nasdaq 100 contracts fell 0.4% on Friday. Investors piled into US stocks this month, spurred on by expectations that Donald Trump’s economic policies to cut tax rates and support American industry will drive corporate profits higher. Over the same period, equities in Europe have been largely flat due to fears over lackluster economies and rising geopolitical tensions.
“We had a knee jerk reaction after the election when the US market went up and all others struggled,” said Guy Miller, chief market strategist at Zurich Insurance Co. “Markets like Europe are priced for the advantage US has, so some money will be gravitating to the major laggards.”
Meanwhile, euro area PMIs dipped back into contraction in November. The bad data was good enough to push stocks higher on expectations of more ECB rate cuts, although European stocks traded off session highs with Stoxx 600 up 0.3% with banks and autos the worst-performing sectors. Healthcare and real estate shares made the biggest gains, while tech outperformed the benchmark, after investors shrugged off concerns over Nvidia’s revenue outlook. Here are some of the biggest movers on Friday:
Earlier in the session, Asian equities rose, rebounding from two days of declines, as the tech-heavy markets of Taiwan and Korea led a rally. The MSCI Asia Pacific Index climbed as much as 0.7% before paring the gains, with TSMC providing the biggest boost. Australian stocks hit a record high, while benchmarks in Japan and India also rose. Key gauges dropped in mainland China and Hong Kong, as Baidu’s sales decline triggered a selloff in major internet names. The regional benchmark has shown resilience this week after a selloff over geopolitical tensions and China’s slowing growth pushed it down toward its 200-day moving average. Investors continue to monitor US President-elect Donald Trump’s moves as he prepares to take office. Elsewhere in Asia, Adani Group companies advanced after a $27 billion rout on Thursday following a US indictment against Gautam Adani over allegations of bribery. The company denied the allegations.
In FX, the dollar remained on track for an eighth straight weekly advance, which would be the longest streak in about 14 months. The currency has risen 2.5% so far this month, adding to October’s gains of nearly 3%, and hit a 2 year high as the euro tumbled. The euro pares a drop after tumbling to the lowest level in about two years versus the dollar on growth concerns. Money markets assign higher odds of a 50-basis-point interest rate cut from the ECB in December after business activity in euro area unexpectedly shrank. Pound falls 0.7% to $1.25 as UK PMI data showed private sector stagnating.
“The US dollar made another march to the upside, with some safe-haven flows likely contributed from Ukraine-Russia geopolitical developments,” said Jun Rong Yeap, market strategist at IG Asia. “We may expect tensions to persist as both sides vie to gain some political leverage ahead of any upcoming negotiations under a Trump administration,” he said.
In rates, treasuries advanced across the curve, following a bigger bull-steepening move in German bonds after euro-area PMIs missed analysts’ estimates. Swaps market subsequently priced in faster and deeper ECB interest-rate cuts, placing a greater-than-50% chance of a 50bp reduction next month. US yields lower by 3bp-4bp across maturities, leaving curve spreads within 1bp of Thursday’s close. The 10-year US yield around 4.39% trails Germany’s by Bunds and gilts jump, led by shorter-dated maturities. German two-year yields fall 10 bps while the UK equivalent drops 5 bps. The US session also includes PMI readings along with University of Michigan sentiment gauge.
In commodities, oil prices advanced, with WTI rising to around $70 a barrel. Spot gold climbs $38 to $2,708/oz.
Bitcoin, which hit another record high, trimmed gains after earlier flirting with the $100,000 level on bets President-elect Donald Trump’s support for crypto and a looser regulatory environment will help the industry. The latest developments included SEC corrupt head Gary Gensler’s decision to step down in January. His tenure was marked by a flurry of catastrophic crypto enforcement actions, which the industry expects will peter out under Trump.
Looking at today's calendar, US economic data includes November preliminary S&P Global US PMIs (9:45am), November final University of Michigan sentiment (10am) and November Kansas City Fed services activity (11am)
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A more detailed look at global markets courtesy of Newsquawk
APAC stocks mostly sustained the momentum from Wall St where stocks ultimately gained after whipsawing on geopolitical-related headlines and amid mixed data, although pressure was seen in China after weak earnings and an underwhelming briefing from Beijing. ASX 200 rallied with energy leading the advances seen in nearly all sectors aside from tech, while sentiment was also unfazed by the contractions across Australia flash PMI figures. Nikkei 225 gained following confirmation from Japanese PM Ishiba of a JPY 39tln stimulus package, while the latest inflation data from Japan printed mostly in line with expectations and is unlikely to have any ramifications for BoJ policy. Hang Seng and Shanghai Comp were pressured with Baidu the worst performer in the Hang Seng Index following a decline in its profit and revenue, while sentiment was also not helped by the PBoC's net liquidity drain and after comments from China's Vice Commerce Minister on foreign trade failed to inspire.
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European bourses began the session entirely in the green, but sank into negative territory following the release of the French, German and then the EZ-wide PMI figures which continue to fuel anxiety related to growth within the region. European sectors opened with a strong positive bias, but following the PMI figures sectors are now mixed and display a slight defensive bias. Healthcare takes the top spot alongside Utilities, benefiting from the risk-off sentiment whilst Real Estate benefits from the relatively low yield environment. US equity futures are lower across the board in tandem with the dip in sentiment seen in Europe following the region's poor PMI figures.
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Fixed Income
Commodities
Geopolitics: Middle East
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US Event Calendar
DB's Jim Reid concludes the overnight wrap
Markets continued to make steady gains yesterday, with the S&P 500 (+0.53%) up for a 4th consecutive session, whilst Bitcoin traded above $99,000 intraday for the first time. Moreover, perceived safe havens did very well because of growing geopolitical fears, with assets like the Japanese yen, gold and German bunds all outperforming. That came after Ukraine said yesterday morning that Russia had launched an intercontinental ballistic missile, although US officials later described it as an “intermediate-range ballistic missile” that was based on an ICBM model. So that added to fears about a broader escalation in hostilities, and several commodities saw a direct reaction to those developments.
In terms of the specific moves, they broadly resembled what happened during the 2022 commodity shock, albeit to a much lesser extent. For instance, European natural gas futures (+3.22%) hit a one-year high of €48.30/MWh, and are now on track for their biggest monthly gain in over a year. Oil prices rose as well, with Brent crude up +1.95% to a two-week high of $74.23/bbl. Now it’s worth bearing in mind that natural gas prices are still below their levels for the entirety of 2022, so this is hardly a repeat of that energy shock just yet. But even so, those concerns still contributed to a fresh decline in the Euro, which fell a further -0.66% against the US Dollar to $1.0474, which is its lowest closing level since October 2023.
With commodity prices moving higher, that led to a fresh bout of concern about near-term inflation. In fact, the US 2yr inflation swap was up another +1.2bps yesterday to 2.71%. That’s its highest closing level since March 2023, just before SVB’s collapse occurred and the regional bank turmoil happened. So inflation is something increasingly on investors’ minds, particularly given the prospect of new tariffs under the incoming Trump administration. That said, sovereign bonds still rallied for the most part, particularly in Europe, as the geopolitical fears also led investors to price in more ECB rate cuts. Hence, yields on 10yr bunds fell -3.3bps to a three-week low, which was echoed to a lesser degree among 10yr OATs (-0.2bps) and BTPs (-0.9bps) as well.
When it came to equities, the story was generally one of consistent gains yesterday on both sides of the Atlantic, with the S&P 500 (+0.53%) and the STOXX 600 (+0.41%) both moving higher. The gains were pretty broad-based, and the equal-weighted S&P 500 actually put in a very strong gain of +1.29%. Instead, the main downward pressure came from the big tech stocks, with the Magnificent 7 slumping by -1.17%. That followed a -4.74% decline for Alphabet after the US Justice Department asked a judge to get Google to sell its Chrome browser. Separately, Nvidia (+0.53%) bounced back from a negative initial reaction to its earnings announcement overnight, and earlier in the session it even hit an all-time intraday high of $152.89.
In the meantime, investors had to digest a mixed set of labour market data from the US yesterday. On the bright side, the weekly initial jobless claims were down to 213k in the week ending November 16 (vs. 220k expected). That’s their lowest level since April, and it comes on the back of a clear declining trend in recent weeks, as the 4-week moving average also fell to its lowest since early May, at 217.75k. However, that was countered by some weakness among the continuing claims number, which was up to a three-year high of 1.908m in the week ending November 9 (vs. 1.88m expected). Overall though, investors focused on the positives, dialling back their expectations for Fed rate cuts, and pushing yields on 2yr Treasuries up +3.4bps to 4.35%. The 10yr yield (+1.2bps) also saw a modest increase to 4.42%.
Elsewhere, the search for the new US Treasury Secretary continues, and overnight it was reported by the Wall Street Journal that President-elect Trump had floated choosing former Fed Governor Kevin Warsh for the position, with the understanding that Warsh would be nominated for Fed Chair once Powell’s term ends in May 2026. The report then said that Trump was thinking of appointing Scott Bessent as head of the National Economic Council, and that Bessent could become Treasury Secretary if Warsh then became Fed Chair. While markets wait to hear who’ll lead the Treasury Department, Trump named Pam Bondi as his new nominee for Attorney General, following Matt Gaetz’s withdrawal from consideration.
Overnight in Asia, there’s been a fairly mixed performance for the major equity indices. In Japan, the Nikkei (+0.95%) has posted strong gains, along with South Korea’s KOSPI (+0.85%) and Australia’s S&P/ASX 200 (+0.85%). But Chinese equities have underperformed, with the CSI 300 (-1.51%) and the Shanghai Comp (-1.58%) both losing ground. US equity futures are also pointing lower as well, with those on the S&P 500 down -0.12%.
Those gains in Japan have come despite some stronger-than-expected inflation data overnight. Headline CPI was at +2.3% as expected in October, falling back from +2.5%, but the core-core inflation measure was up to a 6-month high of +2.3% (vs. +2.1% expected). So front-end Japanese bond yields have moved higher overnight, with the 2yr yield up +1.1bps to 0.58%, its highest level since 2008.
Looking forward, the main data highlight today will be the November flash PMIs from around the world, which will offer an initial indication of how the economy’s performed as we move deeper into Q4. Overnight, the readings so far have been fairly subdued, with Japan’s composite PMI coming in at 49.8, so just beneath the 50 mark that separates expansion from contraction.
Australia’s composite PMI also fell back into contractionary territory at 49.4, which is its weakest reading since January.
To the day ahead now, and data releases include the flash PMIs for November from the US and Europe, UK retail sales for October, and the University of Michigan’s final consumer sentiment index for November. Central bank speakers include ECB President Lagarde, Vice President de Guindos, the ECB’s Nagel, Villeroy and Schnabel, along with the Fed’s Bowman.
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