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All eyes on the Fed

Global markets started the week cautiously as investors focused on a series of major central bank meetings, led by the US Federal Reserve’s (Fed) interest rate decision and updated projections on Wednesday. US equities ended last week with small gains after inflation data broadly matched expectations, while European stocks also advanced modestly. In Asia, equity markets were mixed to start the new week, as traders weighed weaker Japanese growth data against expectations that the Bank of Japan (BOJ) will still move towards policy normalisation later this month. Fresh Chinese trade figures highlighted resilient overall export growth but a continued shift away from the US market. Gold prices were trading higher around USD 4220 per ounce, while bitcoin was trading firmer at around USD 91,600. US Treasury yields were edging up across the curve, with the 2-year yield around 3.6%, the 10-year yield near 4.1%.

  • Data
  • Autore Shane Strowmatt, Senior Investment Writer
  • Tempo di lettura 5 minuto

US dollars
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This week, monetary policy is in the spotlight as the Fed announces its interest rate decision and releases its economic and interest rate projections on Wednesday, while the Swiss National Bank sets rates and presents its monetary policy assessment on Thursday. Central bank action also features in other major economies, with the Reserve Bank of Australia deciding on rates on Tuesday and the Bank of Canada publishing its rate decision on Wednesday. Labour market data in the United States remain important for gauging economic momentum, with the Job Openings and Labor Turnover Survey due on Tuesday and weekly jobless claims on Thursday. Inflation dynamics are another key theme, with China releasing consumer and producer price indices on Wednesday and Germany, France and Spain publishing November consumer price data on Friday, offering investors fresh insight into price pressures in the euro area.

Asian stocks mixed ahead of Fed decision

Asian equity markets traded in tight ranges on Monday as investors awaited a widely expected interest rate cut by the Fed later this week. Expectations for a 25-basis-point cut have risen amid softer US economic data, although comments from Fed officials, including Chair Jerome Powell, have underlined that a December move is not guaranteed, limiting risk appetite. Japan’s Nikkei 225 was trading 0.1% higher after revised data showed Japan’s economy contracted at an annualised rate of 2.3% in the third quarter, weaker than the previous 1.8% estimate due to soft capital spending and domestic demand, but markets still see a high likelihood that the BOJ will proceed with a rate increase at its meeting in mid-December given persistent inflation and firm wage growth. Korea’s Kospi was up 1.3%, whereas Australia’s S&P/ASX 200 was 0.1% lower.

China exports shift away from US market

Hong Kong’s Hang Seng Index was trading 1% lower, while mainland China’s CSI 300 was 0.8% higher, after customs data released Monday showed China’s exports rose 5.9% year-on-year in November, rebounding from a 1.1% decline in October. Imports grew a modest 1.9% amid persistent weakness in domestic demand. Shipments to the US fell 28.6%, marking an eighth consecutive month of double-digit declines despite a recent tariff truce between US President Donald Trump and Chinese President Xi Jinping, whereas exports to the European Union and the Association of Southeast Asian Nations climbed more than 8% and nearly 15%, respectively. The shift in trade flows helped lift China’s overall trade surplus to nearly USD 1.1 trillion in the first 11 months of the year, up 21.6% from the same period in 2024, with rare earth exports jumping 24% in November and soybean imports rising 13%. Market participants broadly expect policymakers at the upcoming Central Economic Work Conference later this month to maintain an economic growth target of around 5% for 2026 and to deploy additional fiscal and monetary easing to counter a protracted property slump and ongoing manufacturing weakness.

US equities inch higher - inflation data meets expectations

On Friday, US stock indices advanced modestly as investors continued to position for another interest rate cut by the Fed next week, leaving the Dow Jones Industrial Average up 0.2% at 47,954.99 points and extending its weekly gain to around 0.5%. The broader S&P 500 rose 0.2% and the technology-heavy Nasdaq 100 climbed 0.4%, with roughly in-line PCE inflation data leaving market expectations for further monetary easing unchanged. Core US personal consumption expenditures (PCE) inflation, the Fed’s preferred gauge that excludes food and energy, rose 0.2% in September from the previous month and 2.8% year-on-year, with the annual rate coming in slightly below the market's expectations, according to data that was released on Friday due to the recent government shutdown. Headline PCE increased 0.3% on the month, also leaving overall inflation at 2.8% year-on-year, in line with forecasts. In corporate news, shares in media group Warner Bros. Discovery jumped more than 6% after streaming provider Netflix emerged as the leading bidder with an offer of USD 27.75 per share, while Netflix stock fell almost 3% amid concerns about the high purchase price.

Euro-area GDP and employment edge higher

Eurostat reported on Friday that seasonally adjusted gross domestic product in the euro area rose by 0.3% in the third quarter, accelerating from 0.1% in the second quarter, while EU output grew by 0.4% after 0.3%. Year-on-year, GDP expanded by 1.4% in the euro area and 1.6% in the EU, slightly below the increases recorded in the previous quarter. Household consumption, government spending and gross fixed capital formation all made positive contributions to quarterly growth, while net trade weighed on GDP as imports rose faster than exports. Employment increased by 0.2% in the euro area and 0.1% in the EU compared with the prior quarter, with 0.6% and 0.5% annual gains respectively, and labour productivity, measured per person employed, rose by 0.7% in the euro area and 1.1% in the EU versus the same quarter a year earlier. European stock markets posted slight gains on Friday. The Euro Stoxx 50 inched up 0.1%, while Germany’s DAX outperformed with an increase of 0.6%. France’s CAC 40 dipped 0.1% but Switzerland’s SMI rose 0.3%, leaving the region broadly supported ahead of the Fed’s policy decision this week.

Corporate and economic calendar

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

Economic data in focus: German manufacturing production (08:00), Swiss SECO consumer sentiment (09:00).

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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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