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Stocks retreat as Fed, weak PMIs dominate sentiment

US equities started December on the back foot on Monday as weaker US manufacturing data weighed on sentiment and traders looked ahead to next week’s Federal Reserve (Fed) interest rate decision, where markets are increasingly expecting another rate cut. The downbeat tone on Wall Street, which ended a recent winning streak, coincided with a sharp selloff in cryptocurrencies and a rise in global bond yields, including Japanese government bonds, as investors braced for a possible shift away from ultra‑loose policy by the Bank of Japan. Asian stock markets were trading mixed on Tuesday, while European stocks slipped on Monday.

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

USA Interest Rates
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US stock markets began December on a weak note on Monday, with the Dow Jones Industrial Average falling 0.9% to 47,289.33 points, the S&P 500 losing 0.5% to 6812.63 points and the Nasdaq 100 ending 0.4% lower at 25,342.85 points, halting a five-day winning streak. Investors reduced risk after weak US manufacturing data from the ISM survey fuelled concerns about the economic outlook ahead of next week’s Fed interest rate decision, where markets see a high probability of another rate cut. Beyond US stocks, global markets remained cautious on Tuesday after a sharp selloff in cryptocurrencies and bonds, with ten-year Japanese government bond yields briefly hitting a 17-year high. Bitcoin, often seen as a barometer of risk appetite, recovered about 1% to around USD 87,200 after a more than 5% drop on Monday, but is still about 30% below its October peak. Gold retreated 0.6% on Tuesday, trading around USD 4200 per ounce.

US manufacturing PMI signals deeper contraction

In macroeconomic data, US manufacturing activity weakened in November, with the ISM Manufacturing PMI falling to 48.2 from 48.7 in October, according to data released on Monday. New orders declined further to 47.4 from 49.4 and the Employment Index dropped to 44.0 from 46.0, while production returned to expansion at 51.4 compared with 48.2 previously. Prices continued to rise, with the Prices Index edging up to 58.5 from 58.0, reflecting ongoing cost pressures from tariffs and higher metals prices, even as supplier deliveries accelerated and inventories contracted more slowly. Despite the sector’s ninth straight month of contraction, ISM said the broader US economy remained in expansion, with three of the six largest manufacturing industries, including computer and electronic products and food, beverage and tobacco products, still recording growth.

Asia stocks mixed on Fed cut hopes

Asian equity markets edged higher on Tuesday as expectations increased for a Fed interest rate cut next week, although Japanese stocks lagged due to rising prospects of tighter policy from the Bank of Japan. Korea’s Kospi was leading regional gains, climbing 1.9% after the US confirmed that general tariffs on South Korean imports, including autos, would be reduced to 15% retroactive to the start of November. Australia’s S&P/ASX 200 was up 0.2%. Japan’s Nikkei 225 was trading essentially flat, remaining under pressure as Bank of Japan Governor Kazuo Ueda signalled a possible rate increase in December, which boosted the yen and weighed on the country’s export-oriented stock market. Hong Kong’s Hang Seng Index was also little changed, whereas mainland China’s CSI 300 was down 0.6%.

Euro-area factory growth slows in November

Euro-area manufacturing activity weakened in November, with Eurozone Manufacturing PMI slipping back below the growth threshold to 49.6 from 50 in October, a five-month low, according to data collected between Tuesday 12 November and Thursday 21 November. The output index remained in expansionary territory for a ninth consecutive month but eased to 50.4 from 51, its weakest pace in the current upturn, as new orders, including export demand, declined again and firms ran down backlogs. Germany and France, the currency bloc’s two largest economies, saw their manufacturing PMIs fall further into contraction and to nine-month lows, dragging on overall euro area conditions even as most smaller member economies registered growth. European stock indices finished Monday's session slightly weaker. The Euro Stoxx 50 was virtually unchanged, edging up less than 0.1%, while Germany’s DAX slipped 1% and France’s CAC 40 fell 0.3%. The Swiss Market Index was also little changed, ending the session with a marginal gain of less than 0.1%.

UK manufacturing PMI returns to growth

UK manufacturing activity moved back into expansion in November, with the S&P Global UK Manufacturing PMI rising to 50.2 from 49.7 in October, its highest level in 14 months, according to data collected between Wednesday 12 November and Tuesday 25 November. Output increased for a second month, supported by firmer domestic demand and a slower decline in export orders, while overall new business stabilised after a 13‑month downturn, although growth was limited to investment goods producers and larger firms.

Corporate and economic calendar

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

Economic data in focus: euro-area Consumer Price Index (11:00), euro-area unemployment rate (11:00), US JOLTS jobs report (16:00).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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