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Tech stocks drop as Fed caution hits markets

Global equity markets declined to start the week, with technology shares coming under sharp pressure ahead of Wednesday’s Nvidia earnings and as investors grew more sceptical about further interest rate cuts from the Federal Reserve (Fed). US stocks closed significantly lower on Monday, while Asian indices followed suit, led by poor sentiment in Japan amid dipolomatic tensions with China. Sentiment was further weighed down by robust US manufacturing data and a notable contraction in Swiss gross domestic product (GDP), with bitcoin also extending losses amid waning risk appetite. Meanwhile, gold also slipped but remained above USD 4000 per ounce.

  • Date
  • Auteur Shane Strowmatt, Senior Investment Writer
  • Temps de lecture 5 minutes

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Asian equity markets declined on Tuesday, mirroring overnight US losses, with technology stocks under pressure ahead of key Nvidia earnings and ongoing concerns over stretched valuations in artificial intelligence-related firms. Japan’s Nikkei 225 dropped 3.2%, weighed down by surging long-dated government bond yields linked to uncertainties about funding Prime Minister Sanae Takaichi’s planned spending package, and by continued diplomatic tensions with China. Broader sentiment was further dampened by news of Chinese restrictions on Japanese movies and ongoing weakness in financial and commodity sectors in Australia. Korea’s Kospi dropped 3.3%, and Australia’s S&P/ASX 200 was down 1.9%. Hong Kong’s Hang Seng Index fell 2%, while mainland China’s CSI 300 lost 0.8%.

US equities retreat on monetary policy doubts

Major US stock indices started the week lower on Monday, with the Dow Jones Industrial Average dropping 1.2% to 46,590.24 points amid increased scepticism about further rate cuts by the Fed. Expectations for lower interest rates receded after several Fed officials signalled caution, while market participants also awaited key economic data and Nvidia’s quarterly results. Alphabet shares climbed more than 3% after Berkshire Hathaway acquired a significant stake, whereas Apple fell nearly 2% as Berkshire trimmed its holding by 15%. Nvidia shares slipped almost 2% ahead of earnings.

US manufacturing strength dampens rate cut hopes

The Empire State Manufacturing Index jumped sharply in November, rising to 18.7 points from 10.7 in October, signalling a significant improvement in industrial activity in New York State, according to data published by the New York Fed on Monday. The gains were driven by substantial increases in new orders and shipments, alongside a modest uptick in employment and longer working hours, while price pressures stayed elevated but showed some signs of easing. Financial markets responded negatively on concerns that the robust data will make a December interest rate cut by the Fed less likely. Consensus had anticipated a decline in the index, underscoring the surprising strength of the US economy.

Swiss GDP contracts sharply in third quarter

Swiss GDP shrank by 0.5% in the third quarter compared with the previous quarter, according to seasonally adjusted data released by SECO on Monday, as the economy suffered from both a global slowdown and the imposition of 39% US tariffs on Swiss goods in August. This downturn follows weak second-quarter growth of 0.1% and is attributed mainly to a marked decline in the chemicals and pharmaceuticals industries, with services also underperforming. While Swiss exporters are set to benefit from a new trade agreement announced last week lowering US tariffs to 15%, the export sector continues to grapple with the strong franc and ongoing competitive pressures. SECO now expects Swiss GDP to rise just 0.9% next year, a downgrade from previous forecasts. On Monday, the Swiss Market Index fell 0.4%.

Euro-area growth revised upwards for 2025

The European Commission announced on Monday that euro-area gross domestic product is forecast to rise by 1.3% in 2025, an upgrade from the previous estimate of 0.9%, driven primarily by strong exports in the first half of the year. Growth is expected to edge down to 1.2% in 2026, before rebounding to 1.4% in 2027, with inflation predicted to slow to 2.1% next year and 1.9% in 2026. Despite improved financing conditions and resilience amid external challenges, the aggregate budget deficit and public debt ratios are projected to worsen, reaching 3.2% and 88.8% of GDP respectively this year, with further increases by 2027. Germany's deficit is set to climb next year due to greater defence spending, while France is forecast to reduce its fiscal gap over the coming years. The Euro Stoxx 50 slipped 0.9% on Monday, Germany’s DAX dropped 1.2%, and France’s CAC 40 retreated 0.6%.

Bitcoin declines as investor risk appetite wanes

Bitcoin briefly fell below USD 90,000 for the first time in seven months on Tuesday, reflecting broader caution toward risk assets as doubts persist over future Fed interest rate reductions. The cryptocurrency has now erased its 2025 gains, down almost 30% from an October peak above USD 126,000, with volatility compounded by institutional and listed-company sell-offs. Ether has also weakened, losing nearly 40% from its August high to below USD 3000, as the negative sentiment in crypto persists following a leverage wipeout last month.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Home Depot, Medtronic, and Xiaomi.

Economic data in focus: Swiss industrial production (08:30), US industrial production (15:15) and US durable goods orders (16:00).

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Editor: Alessandro Fezzi
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