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Weak payroll data keeps Fed cut in focus

US private payrolls unexpectedly declined in November, underscoring signs of cooling in the labour market just a week before the Federal Reserve’s (Fed) next policy decision. US equities extended their recovery on Wednesday, with major indices inching higher as investors maintained strong expectations for another interest-rate cut and shifted their attention towards Friday’s US personal consumption expenditures inflation release. Asian stock markets were trading mostly firmer on Thursday, led by strong gains in Japanese technology and semiconductor shares, while European bourses ended Wednesday’s session mixed but generally supported by solid growth in euro-area private sector activity. Gold prices were softer, trading around USD 4180 per ounce, Bitcoin was stable around USD 93,300 and US Treasury yields moved slightly higher midweek.

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

Jobs sign
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US private-sector employment fell by 32,000 in November, according to ADP data released on Wednesday, marking a sharp reversal from an upwardly revised gain of 47,000 in October and undershooting the market’s expectations for continued job growth. Small businesses with fewer than 50 employees drove the weakness with a loss of 120,000 positions, while larger firms added 90,000 jobs, leaving the overall decline the largest since March 2023. Annual pay growth for job stayers slowed to 4.4%. The report represents the last labour-market input for the Fed before its policy meeting next week, where markets largely expect another quarter-point interest-rate cut amid internal debate over the balance between employment risks and inflation pressures.

US stocks extend recovery on Wednesday

Markets interpreted the weak labour market data as positive for risk assets as it increases the likelihood of a Fed rate cut next week, which continues to support sentiment. US equities advanced further on Wednesday, with the Dow Jones Industrial rising 0.9% to 47,882.90 points, its highest level since mid-November, while the S&P 500 gained 0.3% to 6849.72 points and the Nasdaq 100 added 0.2% to close at 25,606.55 points. Traders are now shifting their focus to Friday’s US personal consumption expenditures inflation release for clues about the direction of inflation ahead of the Fed decision. Among major technology names, electric vehicle maker Tesla climbed about 4% on optimism over potential US President Donald Trump support for robotics, contrasting with a 2.5% decline in software giant Microsoft after reports of more cautious artificial-intelligence growth targets.

Asia stocks mixed despite Fed hopes

Asian equities were mostly higher on Thursday, with most markets tracking only modest overnight gains on Wall Street. Japan was a clear outperformer as the Nikkei 225 climbed 2.4%, supported by strength in technology and semiconductor shares, whereas South Korea’s KOSPI fell 0.2%. Most other regional benchmarks, saw mild gains. Australia’s S&P/ASX 200 was trading 0.3% higher after digesting October trade data, which showed the country’s trade surplus grew slightly less than anticipated amid weaker foreign demand for key commodities. Hong Kong’s Hang Seng Index and mainland China’s CSI 300 were up 0.2% and 0.3%, respectively.

Swiss inflation at standstill in November

Swiss consumer prices were unchanged year-on-year in November, as the consumer price index stood flat compared with the same month last year, according to data released by the Federal Statistical Office on Wednesday. Compared with October, prices fell by 0.2%, largely due to lower costs for hotel stays, package holidays abroad and new cars. Core inflation, which excludes particularly volatile components, rose by 0.4% versus November 2024, and the overall index reached 107.0 points, based on December 2020 as 100. Housing rents as well as prices for heating oil and air transport increased, partly offsetting the declines in travel-related services. Switzerland’s SMI slipped 0.3% on Wednesday.

Euro-area private sector activity accelerates

Euro-area private sector output grew in November at its fastest pace in two-and-a-half years, with the Eurozone Composite PMI Output Index rising to 52.8 from 52.5 in October, according to survey data released on Wednesday. The increase, which pushed the indicator above its long-run average of 52.4, was driven mainly by services, where activity reached a 30-month high of 53.6, while manufacturing production growth eased to a nine-month low. All five euro-area countries for which HCOB publishes a composite PMI reported expansion, with Ireland posting its strongest upturn in three-and-a-half years, Spain recording the second-fastest growth despite a slight slowdown, Italy seeing its best performance since April 2023, France returning to growth after 15 months of contraction and Germany losing some momentum after October’s 29‑month peak. European stock markets were mixed but mostly firmer on Wednesday. The Euro Stoxx 50 rose 0.2%, while France’s CAC 40 added 0.2%. Germany’s DAX was little changed, closing marginally lower with a loss of 0.1%, as investors weighed prospects for global monetary easing against ongoing growth and geopolitical uncertainties.

Corporate and economic calendar

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

Economic data in focus: Swiss Purchasing Managers’ Index (09:30), UK Purchasing Managers’ Index (10:30), Brazilian gross domestic product (13:00), US weekly initial jobless claims (14:30), Canadian trade balance (14:30) and Canadian Purchasing Managers’ Index (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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