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Markets rebound after difficult week

Global equity markets began the new week with a rebound, with Asian stocks advancing. US indices recovered sharply on Friday, closing out a challenging week for investors. Renewed expectations for a US Federal Reserve rate cut and bargain buying helped lift sentiment, with Wall Street rallying on Friday despite persistent concerns over high-valued technology stocks. Gold prices eased and were trading around USD 4,060 per ounce on Monday, while bitcoin bounced back from a recent sell-off, trading around USD 87,200. US Treasury yields were broadly steady, with the 2-year yield at 3.5% and the 10-year yield at 4.1%. The upcoming holiday-shortened US week will revolve around key releases on inflation and GDP, while important economic data from Switzerland, Germany and France are set to guide investors further throughout the week. 

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

Stock market indices
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This week, attention turns to a packed macroeconomic calendar despite a holiday-shortened week in the United States, with US markets closed on Thursday for Thanksgiving and closing early on Friday. In the US, key releases include September's Core Personal Consumption Expenditures Price Index on Wednesday, alongside third-quarter gross domestic product (GDP). European data features third-quarter GDP from Germany (Tuesday) and France (Friday), as well as important inflation readings from Germany, France, and Spain spread throughout the week. The Swiss economy is also in focus with third-quarter GDP and the KOF Leading Indicators on Friday. Japan begins the week with a market holiday and ends the week with the Tokyo Consumer Price Index (CPI).

Asian stocks rebound as Fed cut bets grow

Asian equities mostly advanced on Monday, driven by renewed market expectations for a US Federal Reserve rate cut in December. Bargain hunting boosted battered technology shares, though volumes were limited by a holiday in Japan; Australia’s S&P/ASX 200 was up 1.3%, while Korea’s Kospi edged down 0.2%. Hong Kong’s Hang Seng Index gained 2%, while mainland China’s CSI 300 was little changed. Chinese chipmaker stocks fell sharply, following reports that the US may allow Nvidia to sell advanced chips in China. Airline shares in China retreated due to widespread cancellations of flights to Japan, reflecting heightened diplomatic tensions between Beijing and Tokyo. Market sentiment improved after dovish signals from US central bank officials at the end of last week, while broader Asian tech stocks continued to recover from recent losses.

US equities rebound at end of a weak week

Major US stock indices recovered on Friday, with the Dow Jones Industrial climbing 1.1% to 46,245.41 points, despite closing the week nearly 2% lower in one of its weakest performances in recent months. Investors bought shares in traditional sectors such as Coca-Cola, Nike and Merck & Co, while large technology stocks including Microsoft and Oracle were avoided as concerns over high valuations tied to artificial intelligence weighed on sentiment. The Nasdaq 100 and S&P 500 also ended the day higher, up 0.8% and 1% respectively.

US business activity accelerates in November

Business activity in the US expanded at a faster pace in November, with the S&P Global Flash Composite Purchasing Managers' Index (PMI) Output Index rising to 54.8 from October’s 54.6, a four-month high, according to data published on Friday. The improvement was led by the services sector, where activity and new business both reached their strongest levels since July, while manufacturing output edged lower but remained expansionary. Companies reported the largest increase in new orders this year, though input costs also surged - primarily due to tariffs - resulting in an acceleration of selling price inflation, particularly in services. Despite cost pressures and a record buildup of unsold factory inventories, business optimism for the year ahead strengthened amid reduced political uncertainty and hopes for further policy support.

Eurozone business activity expands solidly

Eurozone business activity continued to grow at a robust pace in November, with the Flash Composite PMI Output Index posting 52.4, only slightly below October’s 52.5, according to provisional S&P Global data released on Friday. Growth remained centred on the services sector, where business activity reached an 18-month high, while manufacturing output rose marginally, but at the slowest rate in eight months amid waning demand and further declines in Germany and France. Input costs increased at the fastest pace since March, driven by renewed cost inflation in both services and manufacturing, though output price rises slowed to their weakest in over a year. European stock markets saw divergent performances on Friday. The Euro Stoxx 50 slipped 1%, Germany’s DAX fell 0.8%, while France’s CAC 40 was essentially flat and Switzerland’s SMI increased by 0.7%.

UK retail sales decline

British retail sales volumes fell by 1.1% in October from September, marking the first monthly decrease since May, while sales were only 0.2% higher compared to October last year, according to Office for National Statistics data released on Friday. Consumer morale weakened this month as uncertainty ahead of finance minister Rachel Reeves’ budget next week led shoppers to delay purchases, especially ahead of Black Friday promotions. Retailers continued to express concerns over subdued discretionary spending, with retail volumes now 3.3% below their pre-pandemic level. Recent updates from supermarket Sainsbury’s and Marks & Spencer show optimism for Christmas trading, but elevated household savings and apprehension about tax increases weigh on broader consumer activity.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Julius Baer.

Economic data in focus: Swiss employment data (08:30), German ifo Business Climate Index (10:00), European Central Bank President Christine Lagarde speaks (15:50), Canadian manufacturing sales (14:30), Dallas Fed Manufacturing Index (16:30). 

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