Before the U.S. September PCE release, European and American stocks rose, Japanese stocks fell, the yen strengthened, copper hit a new high, and gold and silver increased.

Before the U.S. September PCE release, European and American stocks rose, Japanese stocks fell, the yen strengthened, copper hit a new high, and gold and silver increased.

Overnight unemployment data did not affect expectations of U.S. interest rate cuts. Ahead of the delayed release of the U.S. September PCE inflation data, European and U.S. stocks rose, and the dollar came under pressure. Meanwhile, expectations for the Bank of Japan to raise interest rates heated up, putting pressure on Japanese stocks and strengthening the yen.

On December 5, U.S. stock index futures rose collectively, while Asian stocks were mixed. U.S. Treasuries were flat; Japanese bonds diverged with 30-year yields falling and 10-year yields rising. The dollar edged lower, the yen strengthened, and the Indian rupee surged then retreated. Gold, silver, and copper prices increased, while oil prices were under pressure. Cryptocurrencies showed mixed performance: Bitcoin fell, while Ethereum rose.

Over the past two weeks, the MSCI global stock index has continued to rebound, now just 0.5% below its all-time high at the end of October. This is due to easing concerns about the high valuation of technology stocks and rising expectations of a year-end Federal Reserve rate cut. Barclays Bank strategists wrote in a report:

“The stock market has recovered most of November’s losses and has almost fully priced in expectations for a rate cut at next week’s Federal Reserve meeting.Typically, the last two weeks of the year are the best performing period for the stock market, so investors’ ‘fear of missing out’ sentiment is rising again.”

Key market movements are as follows:

U.S. stock index futures all rose: S&P 500 futures were up over 0.2%, Nasdaq 100 futures up nearly 0.4%, and Dow Jones futures up 0.07%.European stocks opened slightly higher: Stoxx 600 index opened up 0.1%. FTSE 100 index up 0.15%. CAC 40 index up 0.16%. DAX index up 0.15%.Nikkei 225 index closed down 1.1% at 50,491.87 points. TOPIX closed down 1% at 3,362.56 points. Korea Seoul Composite Index closed up 1.8% at 4,100.05 points.10-year U.S. Treasury yield was basically flat at 4.10%. Japanese 10-year government bond yield rose by 1 basis point to 1.945%.Dollar index fell 0.1%, yen rose 0.3% against the U.S. dollar to 154.61, rupee softened after rising, now quoted at 90 rupees per dollar.Spot gold rose 0.4% to $4,224.97 per ounce; spot silver rose nearly 2% to $58.21 per ounce; London copper futures rose 2% to $11,679.5 per ton; WTI crude oil fell nearly 0.2% to $59.57 per barrel.Bitcoin fell 0.2% to $92,005.39,Ethereum rose 1.3% to $3,163.44.

The market is closely watching the U.S. PCE inflation data to be released tonight. Ahead of this, U.S. stock futures are rising, Treasury yields are stable, and the dollar is slightly pressured.

Wall Street predicts that the Federal Reserve’s preferred core PCE price index will rise 2.8% year-on-year in September, possibly hitting the highest level since April 2024, highlighting sticky inflation. Nevertheless, based on the huge pressure from weakening employment, the market still expects an 87% chance of a 25-basis-point rate cut by the Federal Reserve next week. Analysts believe, if PCE inflation meets expectations, rate cut expectations will be strengthened and the year-end Christmas rally could continue.

Data released overnight showed resilience in the U.S. labor market. Last week, initial jobless claims dropped to a more than three-year low, indicating that employers overall still prefer to retain staff despite layoff news. Meanwhile, Challenger, Gray & Christmas data shows that layoffs announced by U.S. companies last month fell from the surge in October, but were still the highest level for the same period in three years.

It is worth noting that, due to the previous U.S. government shutdown, the non-farm payrolls report scheduled for December 5 has been postponed to December 16. This means Federal Reserve policymakers meeting next week will not have access to this key data and will rely more on inflation indicators and existing labor market signals. Nevertheless, the market’s expectations for a Federal Reserve rate cut remain unchanged.

Due to expectations of an imminent rate hike by the Bank of Japan, Japanese stocks came under pressure and fell, while the yen strengthened. The market widely expects the Bank of Japan to act this month. According to sources, central bank officials are considering raising the benchmark rate by 25 basis points to 0.75% at the two-day policy meeting ending on December 19. If decided, Japan’s policy rate will reach its highest level since 1995.

According to Wallstreetcn, the Reserve Bank of India cut rates by 25 basis points for the first time in six months and announced a trillion-rupee bond purchase plan. Following the news release, the rupee surged against the dollar, but then retreated. Weak trade and capital flows, coupled with stringent U.S. trade tariffs, have led to rupee weakness, now quoted at 90 rupees per dollar. India’s 10-year benchmark government bond yield fell 6 basis points to 6.45%, the largest drop since August 28.

London copper futures rose more than 2% to $11,683.5 per ton, hitting a record high. Citi issued a bullish price outlook. According to Wallstreetcn, copper stocks cancellation at the London Metal Exchange (LME) on Wednesday ignited market sentiment, sending copper prices soaring. Analysts believe, this event is a direct response to intensifying structural tension in the global copper market. Behind this is the persistent ‘pull’ effect from the U.S. market for refined copper, leading to a supply shortage in other regions and forcing them to seek spot resources from the LME.

Spot silver reversed its decline, rising 2% to $58.25 per ounce. In the morning session, silver extended its pullback and once broke below the $57 level. According to Wallstreetcn, although London silver shortages have recently eased, China’s inventory is near a ten-year low and the market is facing a fifth consecutive year of structural supply shortfall. The Federal Reserve’s expected rate cut next week further supports this non-yielding asset.

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