Market digests rate cut expectations; European stocks open slightly higher, US stock index futures decline, gold and silver both rise, cryptocurrencies retreat.
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The dovish signals from the Federal Reserve and the optimism released from the China-US presidential call are gradually being digested and priced in by the market, and the short-term upward momentum for risk assets has marginally weakened.
On November 25th, US stock index futures fell collectively, most European stock indexes rose, and Asian stocks followed the overnight rise of US stocks. US Treasuries were basically flat, the US dollar index fluctuated narrowly above the 100 mark. Gold and silver both rose, oil declined, and cryptocurrencies surged and then pulled back.
Traders generally believe the market correction is approaching its end, and risk appetite is gradually recovering. Currently, the market’s focus has shifted to the November survey’s initial weekly jobless claims data to be released Wednesday. In the absence of November nonfarm payrolls, this data has become a key reference for the Fed to judge economic fundamentals and calibrate its policy path. Chris Murphy, Co-Head of Derivatives Strategy at Susquehanna International Group, said:
"The previous reset in stock market valuations and the rising probability of December rate cuts have resonated together, becoming not just the core driving factor for the recent stock gains, but also fueling upward momentum in the year-end market."
Key market moves are as follows:
US stock index futures collectively fell: S&P 500 futures down 0.13%, Nasdaq 100 futures down over 0.2%, Dow Jones futures down 0.15%.Euro Stoxx 50 opened up 0.2%, the German DAX opened flat, the UK FTSE 100 opened flat, the French CAC 40 rose 0.25%.Nikkei 225 closed up 0.1% at 48,659.52 points; Japanese TOPIX closed down 0.2% at 3,290.89 points; Korea's KOSPI closed up 0.3% at 3,857.78 points.US 10-year Treasury yield at 4.036%.US dollar index fell 0.03% to 100.15; Japanese yen fell 0.18% against the dollar to 156.6.Spot gold rose 0.02% to $4,135/oz; spot silver rose 0.14% to $51.4/oz; Brent crude fell over 0.5% to $58.52/barrel.Bitcoin fell over 0.6% to $87,692/coin.
US stock index futures fell collectively; as rate cut expectations are gradually priced in, the market is showing a game between "policy optimism and data uncertainty."
Recently, several key Fed officials have intensively issued dovish signals, continuously reinforcing market expectations for rate cuts. Fed Governor Waller and San Francisco Fed President Daly both publicly supported a December rate cut on Monday, and New York Fed President Williams last Friday also clearly stated that "a rate cut in the near future is possible." These multiple signals of policy easing have significantly boosted risk appetite in the market.
Currently, the market's focus has locked onto the Federal Reserve's December rate meeting, but delays in economic data releases caused by the US government shutdown have left investors lacking timely and effective fundamental references, relying only on considerably lagged historical data—this further increases market uncertainty in judging economic fundamentals.
James Egelhof, Chief US Economist at BNP Paribas, stated:
"The divergence in interpretation caused by lagged data makes it difficult for the market to accurately anchor the true state of the economy, thereby amplifying short-term volatility risks."
According to market pricing, the currency market currently implies a probability of over 70% for a Fed rate cut in December, but it should be noted that, affected by growing internal policy maker disagreements and missing key economic data, this probability has shown significant fluctuations in recent weeks. The pricing of rate cut expectations is not yet fully solidified.
Boosted by the tech sector, Asian stock markets collectively rebounded following the overnight rally in US stocks. The market holds an optimistic attitude toward Google’s launch of a new AI model; plus, reports of the company planning to develop its own AI chips have boosted investor confidence in the tech sector.
Spot gold slightly rose to $4,135/oz.
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