Risk aversion rises at the start of December; European stocks open lower, U.S. stock futures fall, yen rises, silver and copper hit new highs, Bitcoin plunges.

Risk aversion rises at the start of December; European stocks open lower, U.S. stock futures fall, yen rises, silver and copper hit new highs, Bitcoin plunges.

As investors prepare for this week’s key U.S. economic data and central bank actions, global stock markets and cryptocurrencies both tumbled on the first trading day of December, with risk-off sentiment on the rise. Although expectations for a Fed rate cut this month remain solid, short-term uncertainty is increasing.

On Monday, December 1, European stocks opened lower as a group. S&P 500 index futures once fell 0.8%, Nasdaq 100 index futures declined 1.1%. Japanese stocks dropped after Kazuo Ueda signaled the most clearly yet, boosting the yen. Prior to his speech, Japan’s two-year government bond yield had already risen to its highest level since 2008. Bitcoin plummeted 6% and fell below the $86,000 mark, while Ethereum lost over 7%. Silver and copper prices continued to climb after hitting new records last Friday.

This week will see a flood of U.S. economic data, as well as news that President Trump has decided on the next Federal Reserve chair. Jung In Yun, CEO of Fibonacci Asset Management Global, said, “Ahead of upcoming U.S. data and macro events, investors are being cautious about increasing risk,” and classified this as a “wait-and-see” approach.

S&P 500 futures down 0.7%, Nasdaq 100 futures down 0.9%.European stocks as a whole opened lower: Euro Stoxx 50 index opened down 0.3%, Germany’s DAX down 0.4%, UK’s FTSE 100 down 0.3%, France’s CAC 40 down 0.5%.Nikkei 225 closed down 1.9% at 49,303.28 points. Japan TOPIX closed down 1.2% at 3,338.33 points. South Korea’s KOSPI closed down 0.2% at 3,920.37 points.U.S. 10-year Treasury yield up 2.7 basis points at 4.046%. U.S. 30-year Treasury yield up 3.2 basis points at 4.703%.Japan’s 20-year government bond yield rose 5.5 basis points to 2.88%, the highest since June 1999. Japan’s 5-year government bond yield up 6.5 basis points at 1.375%. Japan’s 10-year yield up 7 basis points to 1.87%.India’s 5-year government bond yield up 5 basis points to 6.28%, the highest since September last year. The Indian rupee fell below 88.49 against the U.S. dollar, a new record low.The dollar fell 0.5% against the yen, at 155.39.Bitcoin fell 5.4% to $86,214.79. Ethereum down 6.5% at $2,825.97.Spot gold at $4,241 per ounce.Spot silver broke through $57 per ounce for the first time ever, up about 1% intraday.Comex copper up 1% at $532.55 per pound.Brent crude oil up over 2%, now at $63.80 per barrel; WTI crude up over 2%, now at $59.95 per barrel.

Data Test Ahead of Fed Decision

This week, the market’s focus will be on the U.S., as a series of soon-to-be-released data will provide key reference points for judging its economic momentum. As policymakers weigh the rate path into 2026, inflation and consumer demand data will shape expectations on whether the Fed will continue its easing cycle.

The market continues to bet the Fed will cut rates this month. Swap data shows that after New York Fed President John Williams said that, given the weak labor market, he sees room for another rate cut in the short term, traders have almost fully priced in a 25-basis-point cut.

However, Tom Essaye of Sevens Report wrote in a note:

“For now, the data supports a soft landing, which fueled the sustained rally in stocks before Thanksgiving. But there remain many economic unknowns, and there is a potential risk that the economy is not as strong as investors believe.”

This week’s data tests include “Cyber Monday” sales figures, November ADP private employment data, and ISM’s manufacturing and services surveys.

Spot gold at $4,241 per ounce.

Spot silver prices broke through $57 per ounce intraday for the first time ever, up about 1% for the day.

The Bank of Japan’s increasingly hawkish stance has also become the market’s focus. Governor Kazuo Ueda said in a speech to business leaders in Nagoya on Monday that the central bank will “weigh the pros and cons of raising policy rates and decide as appropriate,” while reviewing domestic and overseas economic, inflation, and financial market conditions.

This statement was interpreted by markets as clear guidance of a higher likelihood of rate hikes. According to overnight swap indexes, traders see about a 64% chance that the Bank of Japan will decide to hike rates at its policy meeting on December 19. By focusing attention on this specific policy meeting, Kazuo Ueda may be hinting at an increasing chance of action being taken then. In late December a year ago, he promised to carefully evaluate economic conditions at the next meeting—which ultimately resulted in a rise in borrowing costs.

Fed Leadership Change Adds Uncertainty

Adding another layer of uncertainty to markets is the leadership transition at the Fed. Trump said Sunday he has decided on the next chair of the Federal Reserve.

Sources told media that White House economic advisor Kevin Hassett is considered a possible successor to incumbent chairman Powell. Hassett refused to comment on whether he is a top candidate in a CBS show on Sunday, but suggested the market is ready for the new chair’s announcement.

Entering the pre-meeting “quiet period” this week, Fed Chairman Powell and Governor Michelle Bowman still have scheduled public remarks, but per rules are not allowed to comment on the economic outlook or policy.

Against a backdrop of overall risk aversion, major global assets performed differently. The MSCI All Country World Index, which tracks global equities, fell 0.1% in November after seven months of gains. This break in momentum came as optimism about AI stocks faded due to concerns about overvaluations and excessive spending plans.

As for the dollar, the U.S. dollar spot index edged higher on Monday after four consecutive days of declines. Commodities performed strongly, and after OPEC+ confirmed plans to keep first-quarter production increases on hold, WTI crude oil prices surged. Silver and copper continued to climb after setting new records last Friday.

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