Futures Drop In First Trading Day Of Last Month As Powell "Fireside Chat" Looms

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by Tyler Durden
Friday, Dec 01, 2023 - 01:20 PM

US futures reversed some of Thursday's gains to start the final month of the year after a blowout performance in November, as European stocks gained, and Asia stuttered. US Treasuries and the dollar posted small moves before comments from Fed Chair Jerome Powell at 11am ET that may offer clues on the path of interest rates. Oil rebounded after OPEC+ promised further output cuts but was hazy on details. Israel resumed fighting against Hamas in the Gaza Strip after a weeklong truce ended: Israel’s army said Hamas violated the cease-fire terms by firing toward its territory. Bitcoin soared to its highest price so far this year. Base metals are rallying after the strong China Caixin Mfg. PMI results (50.7 s. 49.6 survey vs. 49.5 prior). Today, we get the November ISM-Mfg. at 10am ET (exp. 47.9, last 46.7) and hear from Powell at a "fireside chat" at Spelman College in Atlanta on Friday at 11am ET ahead of Fed’s blackout period. Focus for Powell events is whether he’ll back dovish comments earlier this week by Fed Governor Waller, which spurred a rally across front-end of the Treasuries curve.

In premarket trading, Pfizer dropped 3.5% after dropping development of its experimental weight-loss pill. Tesla slipped 2.1% as the electric-vehicle maker kicked off deliveries of its Cybertruck. RBC said the vehicle is priced at the higher end of expectations. Here are some other notable premarket movers:

  • Marvell Technology slipped 5% after the chipmaker’s fourth-quarter revenue forecast fell short of expectations.
  • PagerDuty rose 5% after the company reported third-quarter results that beat expectations and raised its full-year forecast.
  • Dell Technologies drops 5.4% after reporting revenue that declined more than expected, buffeted by continued sluggish corporate demand for personal computers.
  • Lemonade falls 3.2% after Oppenheimer downgraded the insurance company, noting the outlook for weather patterns to return to normal in 2024 after a relatively quiet 2023.
  • Samsara, a provider of GPS fleet tracking, gains 13% after boosting its profit and revenue guidance for the full year.
  • UiPath jumps 14% as analysts hike their targets after third-quarter results beat expectations at the robotic process automation software company.
  • Ulta Beauty gains 12% after the cosmetics retailer reported forecast-beating comparable sales growth in the third quarter.

After we predicted one month ago to brace for a face-ripping rally in November...

... that's precisely what happened, as US stocks posted their best month in close to a year-and-a-half and had their second-best November since 1980s, defying the skeptical calls and fueling hopes that more gains are to come, while the MSCI All Country World Index saw its third-largest monthly gain in the past decade. The Bloomberg Dollar Spot Index dropped by the most in a year, while US Treasury yields tumbled about 60 basis points in the month. This was mostly down to plunging bond yields amid mounting signs that the Federal Reserve is managing to tame inflation without breaking the economy. Money-market fund assets surged to a fresh all-time high and Cathie Wood got in on the action too, with her ARKK Innovation ETF racking up a 31% gain for the month.

“Almost everyone was offsides coming into November,” said Ryan Detrick, chief market strategist at Carson Group. Everyone except for our raders that is. “There’s still a big opportunity for traders to chase gains in December, too.”

This morning, investors were trying to assess if November’s scorching gains across asset classes can go further. Yesterday's core PCE data showed that the Fed's favorite measure of inflation eased in October, adding to the case for an end to the Fed’s tightening and bolstering the narrative that lifted markets globally last month. Some suggest optimistic market wagers on the timing of interest-rate cuts next year read too much into recent comments by Fed officials. Powell is set to speak at Spelman College in Atlanta on Friday.

"The market is wondering whether it has gone ahead of itself in expecting US rate cuts next year,” said Sébastien Barbé, head of emerging-market research and strategy at Credit Agricole. “From Powell’s point of view, it may be tempting to warn the market against excess optimism about possible rate cuts in order to keep monetary conditions tight enough to make sure disinflation is sustainable.”

Meanwhile, oil prices steadied after the drop suffered yesterday following an OPEC+ meeting which sewed confusion among traders. The cartel promised further cuts to output but was hazy on the details, with the lack of a concluding press conference and final communiques leaving the market puzzled. Notably, the cuts agreed are voluntary, so whether the additional supply cuts that were announced will be delivered remains to be seen. Part of the rebound was driven by news Israel resumed fighting against Hamas in the Gaza Strip after a weeklong truce ended. Israel’s army said Hamas violated the cease-fire terms by firing toward its territory. Jets started striking Gaza soon after the deadline passed. Israel dropped leaflets telling people to leave some parts of southern Gaza. Qatar said truce negotiations continue

European stocks gain in early Friday trading, with the advance led by the Stoxx 600 Basic Resources index, as mining stocks outperform after broker upgrades, with the Automotive and Food, Beverage & Tobacco sectors the worst performing. Anglo American and Rio Tinto led gains in the Stoxx 600 Index after China’s manufacturing data beat estimates. The Euro Stoxx 50 rose 0.7% with the FTSE 100 outperforming regional peers. Here are the biggest movers Friday:

  • Mining shares outperform in Europe on Friday as Anglo American and Rio Tinto are upgraded to buy at UBS and Liberum, respectively, with Anglo American gaining as much as 7.6%, the most since September
  • Signify shares rise as much as 6.6% after the lighting maker announced a new divisional structure and said it will implement measures to reduce non-manufacturing costs by more than €200 million
  • Jenoptik rises as much as 5.8% after the optical systems technology firm upgraded its Ebitda margin target for 2025, citing better-than-expected organic development in its semiconductors and electronics businesses
  • Technogym gains as much as 11% after NIF Holding bought about 8.8 million ordinary shares of the fitness-equipment maker at €9.20 apiece in a reverse accelerated bookbuilding
  • Leonteq shares tumble as much as 18% to the lowest level since 2020 after the Swiss technology and service provider revised down its FY2023 forecast. ZKB flags that the dividend could be reduced
  • LVMH shares fall as much as 1.9% after the luxury goods maker is downgraded to equal-weight at Morgan Stanley given the likelihood of a further deterioration in demand for the industry in the fourth quarter
  • Viaplay shares plunge as much as 83%, the most on record, in early Friday trading. Analysts said shareholders can expect to see their holdings reduced to almost nothing under a new recapitalization plan
  • Ceres Power shares plunge as much as 27%, the most since 2012, after the UK-based energy generator and distributor said it hasn’t been able to conclude a new license partnership in this financial year
  • ITV shares fall as much as 2.9% after Deutsche Bank downgraded rating on the broadcaster to hold from buy, citing headwinds from a continued slump in advertising revenue
  • Swiss Re shares fall as much as 2% as investors focus on its new reserving allowance, which is expected to have a “negative impact” of approximately $500 million on profit after tax

Earlier in the session, Asian stocks fell as concerns about China’s economy persisted, with sentiment cautious ahead of comments from Federal Reserve Chair Jerome Powell later on Friday. The MSCI Asia Pacific Index dropped as much as 0.4%, led by technology shares, as some Fed officials remained wary of interest rate cuts next year. Tech-heavy markets such as South Korea and Taiwan also fell. Stocks in Japan gained as a stall in yen strength boosted exporters. Chinese shares declined, extending their recent underperformance versus global peers, with the CSI 300 Index set for its lowest close since 2019. Investors remained concerned about the weak economic recovery even as a private survey of China’s manufacturing activity unexpectedly expanded. The decline in home sales also accelerated in November despite more funding support for developers. Chinese's losses were almost erased, however, after the China Securities Journal reported that the "National Team" was back as an unidentified Chinese state institution bought exchange-traded funds whose underlying assets are A-shares issued by central state-owned enterprises in the domestic stock market Friday.

  • Hang Seng and Shanghai Comp were gradually pressured following the PBoC’s substantial net liquidity drain, whilst the latter eventually moved into the green amid reports China state-owned capital operating Co. reportedly bought ETFs on Friday, whilst the session also saw a surprise return to expansion territory for the Chinese Caixin Manufacturing PMI.
  • Japan's Nikkei 225 traded indecisively as encouraging data releases offset the headwinds from early currency strength.
  • Australia's ASX 200 was dragged lower by underperformance in tech and consumer-related sectors amid higher yields.

In FX, US equity futures are steady, while the dollar was slightly down ahead of speeches by the Fed’s Powell and Goolsbee. US ISM manufacturing data is also due. DKK and EUR are the weakest performers in G-10 FX, NOK and SEK outperform.

In rates, Treasuries were slightly cheaper across the curve with losses led by long-end, moving inverted 2s10s spread back toward top of Thursday’s range. TSY yields are cheaper by up to 2bp across long-end of the curve with 2s10s spread wider by 0.5bp on the day; 10-year yields around 4.345% with bunds outperforming by 3.5bp in the sector, Italian 10-year by 5bp. Focus for Powell events is whether he’ll back dovish comments earlier this week by Fed Governor Waller, which spurred a rally across front-end of the Treasuries curve. Fed-dated OIS currently price in a 25bp rate cut in May and a total of 112bp cuts by the December FOMC meeting. US economic data includes November S&P Global manufacturing PMI (9:45am New York time), October construction spending and November ISM manufacturing (10am). In Europe, Italian bonds outperform following surprise drop in Italy’s manufacturing PMI for November; bund 10-year yields are down some 2 bps, outperforming comparable USTs and gilts. US session includes manufacturing data and two scheduled appearances by Fed Chair Powell.

In commodities, oil pared some post-OPEC+ losses. WTI trades within Thursday’s range, adding 0.3% to trade near $76.20. Spot gold was on track for a third weekly gain, rising roughly $8 to trade near $2,045/oz as it inches toward its all-time high after Israel resumed its war against Hamas; it was then summarily smacked down by some central bank amid fears a new all time high will lead to a surge in gold to $2500 and higher and destabilize the fiat system. Most base metals trade in the green after China's Caixin Mfg PMI unexpectedly entered expansion, rising to 50.7 from 49.5, and beating estimates of 49.8; LME tin rose 1.3%, outperforming peers.

To the day ahead now, and central bank speakers include Fed Chair Powell, the Fed’s Barr, Goolsbee and Cook, ECB President Lagarde, and the ECB’s Elderson and De Cos. Data releases include the global manufacturing PMIs, along with the ISM manufacturing reading from the US.

Market Snapshot

  • S&P 500 futures up 0.2% to 4,583.75
  • MXAP down 0.3% to 161.81
  • MXAPJ down 0.6% to 503.36
  • Nikkei down 0.2% to 33,431.51
  • Topix up 0.3% to 2,382.52
  • Hang Seng Index down 1.2% to 16,830.30
  • Shanghai Composite little changed at 3,031.64
  • Sensex up 0.7% to 67,464.96
  • Australia S&P/ASX 200 down 0.2% to 7,073.18
  • Kospi down 1.2% to 2,505.01
  • STOXX Europe 600 up 0.7% to 464.87
  • German 10Y yield little changed at 2.42%
  • Euro little changed at $1.0898
  • Brent Futures down 0.4% to $80.51/bbl
  • Gold spot up 0.6% to $2,048.93
  • U.S. Dollar Index down 0.17% to 103.32

Top overnight news

  • China’s Caixin manufacturing PMI for Nov came in ahead of plan at 50.7, up from 49.5 in Oct and above the Street’s 49.6 forecast (this follows the NBS PMIs Wed night falling short of expectations). RTRS
  • Europe’s final manufacturing PMI for Nov came in at 44.2, up from the flash reading of 43.8. BBG
  • Ukraine president Volodymyr Zelenskyy has pushed to “accelerate” the construction of military fortifications at key points along the frontline in the east of the country where Russian forces have stepped up attacks in recent weeks. FT
  • Israel resumed fighting against Hamas in the Gaza Strip after a weeklong truce ended. Israel’s army said Hamas violated the cease-fire terms by firing toward its territory. Jets started striking Gaza soon after the deadline passed. Israel dropped leaflets telling people to leave some parts of southern Gaza. Qatar said truce negotiations continue. BBG
  • Washington aims to slash Russia’s oil and gas revenue by 50% by the end of the decade to ensure Putin doesn’t have the funds to attack his neighbors. FT
  • Caracas has for over 200 years claimed rights over Essequibo, a vast swath of the territory of neighbouring Guyana. But only now has it opted to hold a referendum among Venezuelans on taking over the 160,000 sq km of land. FT
  • PFE announces a setback in its GLP1 anti-obesity ambitions. Its twice-daily danuglipron formulation will NOT advance into P3 studies.  The drug achieved weight reductions of 8-13% over 32 weeks and 5-9.5% at 26 weeks, less than the 14-15% many thought would be needed to compete in the market. More significantly (and negatively), there were high rates of adverse side effects (up to 73% nausea; up to 47% vomiting; up to 25% diarrhea) and high discontinuation rates (greater than 50%). RTRS
  • Apple and Paramount Global have discussed bundling their streaming services at a discount, the latest attempt by rival entertainment giants to team up as they look to make their offerings more affordable and attractive. WSJ
  • BPCE is exploring options for its $1.2 trillion Natixis asset management business, including selling a majority stake, people familiar said. BBG

A more detailed look at global markets courtesy of Newsquawk

APAC stocks began the new month with price action rangebound as markets paused following the November rally amid another busy day of economic releases, while the conflict in Gaza also resumed. ASX 200 was dragged lower by underperformance in tech and consumer-related sectors amid higher yields. Nikkei 225 traded indecisively as encouraging data releases offset the headwinds from early currency strength. Hang Seng and Shanghai Comp were gradually pressured following the PBoC’s substantial net liquidity drain, whilst the latter eventually moved into the green amid reports China state-owned capital operating Co. reportedly bought ETFs on Friday, whilst the session also saw a surprise return to expansion territory for the Chinese Caixin Manufacturing PMI.

Top Asian news

  • China state-owned capital operating Co. reportedly bought ETFs on Friday, according to Bloomberg.
  • US judge blocked the Montana state ban on Tiktok from taking effect, according to a court order.
  • US lawmakers seek a Biden administration investigation into Chinese drone maker Autel Robotics due to national security concerns.
  • Japan's largest trade union RENGO said it formally agreed on a 2024 pay hike demand of 5% or more, according to Reuters.

European equities, Eurostoxx50, +0.5%, are extending gains; FTSE100, +0.8%, which has been lifted by mining-related stocks. European sectors are mostly in the green, with significant outperformance in Basic Resources, being propped up by mining stocks following broker upgrades at Anglo American, +6.4%, and Antofagasta, +4.7%; Optimised Personal Care & Grocery is marginally hampered by a Tesco, -1.3%, downgrade. US Futures are trading on the front foot, albeit to a lesser extent in comparison to their European counterparts ahead of ISM & Powell; RTY, +0.3%, slightly outperforms.

Top European news

  • ECB's Nagel said recent inflation developments are encouraging but the ECB cannot be satisfied yet and inflation risks are still on the upside so a further rate hike cannot be ruled out. Nagel also stated that longer-term inflation expectations are still some way from 2% and that a leaner ECB balance sheet is desirable and the reduction can accelerate, while he added it is far too early to discuss rate cuts.
  • EU weighs concessions in the US steel feud amid concerns over a Trump return, according to Bloomberg sources.
  • German government spokesperson, re. budget talks, says they are aware of the urgency and there is a lot of momentum to solve this as soon as possible


  • Dollar drifts after month-end revival awaiting US manufacturing ISM for interim impetus before guidance from Fed Chair Powell; DXY dithering within 103.45-26 range.
  • Kiwi back in sight of 0.6200 vs Greenback after hawkish RBNZ rhetoric from Hawkesby.
  • Aussie encouraged by China's Caixin manufacturing PMI rebound to 50.0+ level as AUD/USD hold above 0.6600.
  • Loonie underpinned ahead of Canadian LFS with USD/CAD sub-1.3550.
  • Cable firm on 1.2600 handle after upward revision to final UK manufacturing PMI.
  • Euro tethered to 1.0900 vs Dollar amidst nearby option expiries and post-mostly better than flash or forecast Eurozone manufacturing PMIs.
  • PBoC set USD/CNY mid-point at 7.1104 vs exp. 7.1458 (prev. 7.1018).

Fixed Income

  • Debt futures back on a firmer footing, on balance, after steep month end retracement.
  • Bunds bounce further from sub-132.00 towards 133.00 again.
  • Gilts towards top of 96.80-25 range, but still lagging in run up to Fitch UK rating review.
  • T-note hovering around 110-00 within 110-04/109-27+ confines awaiting US manufacturing ISM and Fed speakers headlined by Chair Powell twice.


  • WTI and Brent are modestly firmer intraday in the aftermath of the OPEC+ confab on Thursday which ultimately underwhelmed the market given that output cuts are voluntary; as it stands, benchmarks are holding incrementally above the unchanged mark in narrow ranges around the prior session's trough.
  • Spot gold holds an upward bias as the Dollar remains subdued; Base metals are firmer across the board amid upbeat Chinese data overnight, and upward bias in risk sentiment in Europe.
  • OPEC Secretariat announced several OPEC+ countries will conduct additional voluntary cuts to the total of 2.2mln BPD (exp. 2.0mln). It was confirmed that Brazil will join OPEC+ from January 2024.
  • Saudi Arabia will extend its voluntary cut of 1mln BPD to the end of Q1 2024 with its production to be approx. 9mln BPD and Russia is also to extend its voluntary cut in oil supplies until the end of Q1 2024 with its voluntary supply cut to reach 500k BPD. Kuwait is to make a further 135k BPD OPEC+ oil output cut, while the UAE is to make an additional 160k BPD OPEC+ output cut and Iraq is said to cut its production by 220k BPD in Q1. Conversely, Angola rejected its OPEC quota for 1.11mln BPD and said it will produce 1.18mln BPD, according to Bloomberg. Click here for the detailed headline.
  • US is purchasing 2.73mln bbls of oil for the strategic reserve, according to a document cited by Reuters.
  • US aims to halve Russia's energy revenue by 2030, while Assistant Secretary of State for Energy Resources Pyatt said Western sanctions will continue for years to come to curb Moscow's war machine, according to FT.
  • US President Biden and Angola's President welcomed the launch of a US-Angola energy security dialogue in 2024 during a meeting on Thursday, according to the White House
  • US State Department said the US reiterated its pledge to ‘reconsider’ the steps it took to ease sanctions on Venezuela if the latter fails to comply with certain commitments by the end-November deadline, while it added that Venezuela must define steps for lifting bans on opposition candidates and begin the release of Venezuelan political prisoners and wrongfully detained Americans. It was later reported that banned Venezuelan candidates would be allowed to take their cases to a tribunal.
  • Morgan Stanley says commitment to new OPEC+ cuts appears to be uncertain, expect compliance to only be partial, Foresees Saudi Arabia ultimately extending the cuts to Q2-2024. Maintain Brent forecast at USD 85/bb and flat throughout 2024. Lowered OPEC+ production forecast for Q1-2024 by 0.6mln BPD, still see the oil market turning into a small surplus again in Q2 & Q3.
  • Russia's Kremlin says OPEC+ contributes to stabilisation of energy markets and creation of conditions for supporting energy prices at a balanced level; Russia is interested in continuing working with OPEC+.
  • First Quantum is suspending production guidance for Cobre Panama for the current year


  • Israel's military said that Hamas violated the truce and fired towards Israeli territory, while it has resumed combat against Hamas in Gaza
  • Initial reports suggested Israel and Hamas agreed to extend the truce for an eighth day, according to Egyptian officials cited by WSJ. However, there was no official statement made by Israel, Hamas or mediator Qatar.
  • Rocket sirens sounded in Israeli areas near the Gaza border and the Israeli military said one launch was detected from Gaza which was intercepted, while Hamas-affiliated media reported that explosions and gunfire were heard in the northern Gaza Strip. Furthermore, Israeli planes were reportedly flying over Gaza and Israeli army vehicles are firing in the northwest of the Gaza Strip, according to a correspondent cited by Al Jazeera.
  • The Israeli army raises the alert on the border with Lebanon, according to Al Arabiya
  • Qatari and Egyptian mediators have been in contact with Hamas and Israel since fighting resumed in Gaza on Friday, according to Reuters citing sources; negotiations between both sides is continuing
  • Senior Hezbollah member says Lebanon remain ready to confront any danger from Israel, adds Gaza developments can still affect the Lebanon situation
  • US Treasury Department issued new North Korean sanctions targeting 8 individuals and the hacking group Kimsuky, while South Korea imposed sanctions on 11 North Korean individuals, according to the Foreign Ministry.

US Event Calendar

  • 09:45: Nov. S&P Global US Manufacturing PM, est. 49.5, prior 49.4
  • 10:00: Oct. Construction Spending MoM, est. 0.3%, prior 0.4%
  • 10:00: Nov. ISM Employment, est. 47.2, prior 46.8
  • 10:00: Nov. ISM New Orders, est. 46.7, prior 45.5
  • 10:00: Nov. ISM Prices Paid, est. 45.9, prior 45.1
  • 10:00: Nov. ISM Manufacturing, est. 47.8, prior 46.7

Central Banks

  • 03:00: Fed’s Barr Speaks on Bank Supervision and Regulation
  • 10:00: Fed’s Goolsbee Participates in Moderated Discussion
  • 11:00: Fed’s Powell Speaks in Fireside Chat
  • 14:00: Fed’s Powell, Cook Participate in Roundtable Discussion

DB's Jim Reid concludes the overnight wrap

Happy December. My wife is organizing Santa's Grotto at the kids' school tomorrow and until yesterday was missing one key thing. A Santa! A call over the last few weeks for a volunteer amongst all parents and grandparents had fallen upon deaf ears so my wife rung a couple of agencies and found the cheapest Santa was £600 for 90mins work. So that's a great business to get into, although I accept the work might have a seasonal bias!

Since it’s the start of December this morning, we’ll shortly be releasing our monthly performance review for November. Overall, it was a great month for markets after a run of three fairly weak ones, which has led to a big turnaround in some of the YTD numbers for 2023. In fact, it was the best month for global bonds since December 2008, the best month for US bonds since May 1985, as well as the strongest month for the S&P 500 this year. The full report will be in your inboxes shortly.

Whether the trends of November continue into Xmas might in part depend on Powell’s speech later today (4pm GMT), just before the FOMC blackout. Market moves have been so great since he suggested that tight financial conditions were doing some of the Fed's job for them (November 1st) that you have to think he will address the subsequent moves and either push back or endorse. On balance I think he may take a similar tone to Williams yesterday and push back a little while acknowledging the progress that has seemingly been made .

On that theme, NY Fed President Williams' remarks yesterday helped the month end on a soggier tone, especially for bonds. He said he expects “it will be appropriate to maintain a restrictive stance for quite some time to fully restore balance and to bring inflation back to our 2% longer-run goal on a sustained basis .” Separately, San Francisco President Daly said that “I’m not thinking about rate cuts at all right now”.

Those developments had a notable impact on sovereign bonds, which pared back some of their recent gains on both sides of the Atlantic. For instance, the 10yr Treasury yield bounced back +7.1bps to 4.33%. Over in Europe there were slightly smaller moves for 10yr bunds (+1.5bps), OATs (+2.3bps) and BTPs (+5.5bps), while Gilts underperformed (+8.0bps) .

This came even as the data generally pointed in a dovish direction. In particular, we had the latest PCE inflation data for October yesterday, which is the measure the Fed officially targets. That showed headline PCE at a monthly 0.0% (vs. +0.1% expected), which brought the year-on-year number down to +3.0%, and the lowest since March 2021. It also brings us closer to the sort of numbers where the Fed has historically pivoted towards rate cuts in the past. Core PCE was still a bit higher at +3.5%, but to be fair, the more recent figures have been better, and if you just look at the last 6 months alone, core PCE is now down to an annualised +2.5% .

Over in the Euro Area, there was similarly good news from the flash CPI reading for November. It showed headline annual inflation was down to +2.4% (vs +2.7% expected) , the lowest since July 2021, and almost back at the ECB’s 2% target. This was partly down to a big negative impetus from energy prices, which are currently down -11.5% year-on-year. Core inflation remained more elevated at +3.6% but this also surprised clearly on the downside (+3.9% exp) with a marked slowdown in the past three months, down from +5.3% as recently as August.

Amidst the better news on inflation, the bigger concern came from the labour market, where the latest data showed things were continuing to soften. For example, US continuing jobless claims were up to their highest level in almost two years, at 1.927m (vs. 1.865m expected). Seasonals seem to be a little all over the place this year so some caution is required. Meanwhile in Germany, the r egistered unemployment rate climbed to a two-and-a-half year high of 5.9%, so this wasn’t just a US theme. As it happens, we’re now just a week away from the final US jobs report of the year, and it was last month that the unemployment rate hit its highest since January 2022. So if it does show any further softening, that’ll only ramp up the H1 2024 rate cut speculation as we get closer to the Fed’s December meeting just a few days later .

With the data softening, US equities continued their pretty flat performance this week. But a sizeable rally in the final 30 minutes of US trading, probably reflecting month-end flows, left the S&P 500 posting a decent rise (+0.38%). Bank stocks outperformed for the second day in a row (+1.03%), while a strong day for industrials led the Dow Jones index to a +1.47% gain. Tech stocks underperformed, with the NASDAQ (-0.23%) and the FANG+ index (-0.27%) dipping. Meanwhile in Europe, the STOXX 600 (+0.55%) continued its recent outperformance, closing at a two-month high .

This morning Asian equity markets are drifting lower at the start of the last month of the year despite the late-day rebound on Wall Street overnight. As I check my screens, the KOSPI (-1.03%) is the biggest underperformer across the region with the CSI (-0.91%), the Hang Seng (-0.69%) and the Shanghai Composite (-0.32%) also trading in the red amid mixed economic signals from China (more on this below). Elsewhere, the Nikkei (+0.03%) is flickering between gains and losses this morning. In overnight trading, US stock futures are indicating a negative start with those on the S&P 500 (-0.06%) just below flat while those on the NASDAQ 100 (-0.19%) inching lower.

Coming back to China, the Caixin PMI measure of the manufacturing sector unexpectedly expanded in November, hitting 50.7 (v/s 49.6 expected). That was the fastest expansion in three months and up from 49.5 in October. Of course, the Caixin PMI stands in contrast to the latest official PMI which dropped to 49.4, highlighting that mores stimulus will likely be required to reinvigorate growth in the world’s second biggest economy.

Elsewhere, Japan’s unemployment rate edged down to 2.5% in October (v/s 2.6% expected) while the job-to-application ratio slightly went up to 1.30 after having stayed at 1.29 in the preceding three months. In a separate report, capital spending in 3Q23 advanced +3.4% y/y as expected after a +4.5% gain in the previous quarter.

Elsewhere yesterday, oil prices gave up their earlier gains following the conclusion of the OPEC+ meeting. T he group agreed additional supply cuts totalling about 900kb/d on top of an existing reduction of 1,300kb/d by Saudi Arabia and Russia . However, the move was in the form of “voluntary cuts” by several OPEC+ countries rather than a more typical agreement on reduced production quotas, leaving questions over how disciplined the implementation of the supply curbs will be. WTI crude had been trading c. 2% higher on the day prior to the news but fell by more than 5% intra-day and was down -2.44% by the close at $75.96/bbl. Brent crude saw more modest swings, and was down -0.32% to $82.83/bbl yesterday. Overnight, Brent crude prices are under pressure, trading -2.61% lower to trade at $80.67/bbl on softer output cuts .

To the day ahead now, and central bank speakers include Fed Chair Powell, the Fed’s Barr, Goolsbee and Cook, ECB President Lagarde, and the ECB’s Elderson and De Cos. Data releases include the global manufacturing PMIs, along with the ISM manufacturing reading from the US.