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Stocks climb, China data disappoints

Global equities advanced midweek, buoyed by rising hopes for a Federal Reserve (Fed) rate cut in December and strong gains in technology shares. Disappointing Chinese industrial data and renewed property sector concerns weighed on Chinese stocks. European shares rallied on optimism over Ukraine peace progress, and UK markets saw volatility due to the government’s Autumn Budget. The US dollar retreated slightly, while gold was stable around USD 4160 per ounce and bitcoin shot up to around USD 91,400. US Treasury yields were holding steady, with the 2-year just below 3.5% and the 10-year below 4.0%.

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

Strategist China
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Most Asian equity markets climbed on Thursday, bolstered by a sustained rally in US technology shares and growing expectations for a Fed interest rate cut in December. Chinese indices lagged, with the CSI 300 essentially flat, while Hong Kong’s Hang Seng Index was up 0.2%. Chinese stocks were dragged down by property shares, which lagged due to renewed concerns over the state of the country’s real estate sector, with China Vanke falling over 6% as it sought bondholder approval to delay payments. Japan’s Nikkei 225 was trading 1.3% higher and Korea’s Kospi gained 0.7%. Australia’s S&P/ASX 200 was just marginally higher, lagging amid uncertainty over further rate cuts.

China industrial profits slump in October

Industrial profits in China dropped 5.5% year-on-year in October, marking the steepest decline since June, as trade tensions with the US and weak domestic demand weighed on earnings. Growth for the first ten months of the year slowed, with profits rising only 1.9% compared to the same period last year, down from a 3.2% increase for the January to September period. The mining sector saw a sharp contraction in profits while manufacturing and utility providers managed modest gains; retail sales growth in October was the weakest in over a year and fixed-asset investment shrank for the first time since 2020. Policymakers have signalled a shift towards supporting consumption, but Beijing may avoid major stimulus for the moment since the economy remains on track to meet its annual growth target of about 5%.

US stocks climb ahead of Thanksgiving

US equities extended gains on Wednesday as hopes for another interest rate cut in December lifted sentiment, with dovish comments from Fed officials and weak economic data supporting expectations for looser policy. The Dow Jones Industrial Average advanced 0.7% to 47,427.12 points, the S&P 500 increased 0.7% to 6812.61, and the technology-heavy Nasdaq 100 added 0.9%. Shares of new S&P 500 entrant Robinhood surged almost 11% after announcing a majority stake acquisition in LedgerX. US markets are closed on Thursday.

Fed report highlights slowing US labour market

The latest Fed Beige Book, published on Wednesday, indicated that US economic activity was largely unchanged in recent weeks, while employment conditions weakened across about half of the twelve Fed districts. Many companies are reportedly implementing hiring freezes or relying on natural attrition rather than conducting layoffs, and consumer spending has softened further. After having lowered interest rates by half a percentage point to a range of 3.75% to 4% in September and October, the Fed’s next monetary policy decision is set for 9–10 December. Market participants increasingly expect a further quarter-point rate cut at that meeting, though there remains internal debate within the Fed about the timing and scale of additional easing.

European equities gain amid Ukraine talks

European stock markets extended gains on Wednesday, supported by progress in peace negotiations between the US, Ukraine and Russia. The EuroStoxx 50 climbed 1.5%, while the Swiss SMI rose 0.5%. Technology stocks led advances following strong leads from international markets, with ASML shares jumping 5.7% in Amsterdam trading, whereas food and beverage companies lagged. Germany’s DAX advanced 1.1%, France’s CAC 40 added 0.9%.

UK Autumn Budget triggers tax hikes, volatility

UK Finance Minister Rachel Reeves announced extensive tax rises and welfare spending increases on Wednesday after the Office for Budget Responsibility (OBR) accidentally published its forecasts before the budget, sending government bond yields and the pound higher. The OBR’s report detailed a freeze on income tax thresholds through 2030-31, new levies on expensive property, increased taxes on pensions and investment income, and a three-year stamp duty exemption for UK share listings, projecting tax rises to deliver GBP 26.1 billion by 2029-30. Ongoing fiscal challenges are likely to drag on, with government borrowing set to rise due to new social spending such as scrapping the two-child welfare cap. The OBR now forecasts UK economic growth to average just 1.5% over the next five years, 0.3 percentage points lower than its March projection.

Corporate and economic calendar

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: GfK German Consumer Climate (08:00) and European Central Bank monetary policy meeting minutes (13:30).

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Editor: Alessandro Fezzi
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