US stocks rallied amid tech strength and Fed rate cut bets - Newsquawk Asia-Pac Market Open

• US stocks rallied in which the SPX reclaimed 6,700 and posted broad-based gains, while the Nasdaq was the outperformer as AI names clawed back some recent losses. Communications jumped 4%, led by Alphabet after more upbeat commentary on its latest AI updates, while tech and consumer discretionary gained about 2.5% (led by Broadcom, AVGO +11%) and 2.0%, respectively. Support also came from firmer expectations of a December rate cut after Fed Governor Waller reaffirmed backing for a 25bps move, and Daly (2027 voter) also endorsed such a reduction. As such, money markets priced a December cut at a 76% probability, which was up from the 56% chance seen on Friday after dovish remarks from Fed's Williams.
• USD softened as rate cut expectations were supported by Fed rhetoric, including from Waller who reiterated the case for a December cut, while Daly said she'd back a rate cut as she sees a sudden deterioration in the job market as both more likely and harder to manage than an inflation flare-up. Attention was also on the Ukraine peace plan, which the Washington Post reported was now a 19-point plan, down from 28, with talks expected to continue, while it was also announced that US President Trump and Chinese President Xi held a phone call, which was said to be productive in which the leaders discussed many topics including trade.
• Looking ahead, highlights include Singapore GDP, Thai Trade Data, Supply from Australia.

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LOOKING AHEAD

• Highlights include Singapore GDP, Thai Trade Data, Supply from Australia.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks rallied in which the SPX reclaimed 6,700 and posted broad-based gains, while the Nasdaq was the outperformer as AI names clawed back some recent losses. Communications jumped 4%, led by Alphabet after more upbeat commentary on its latest AI updates, while tech and consumer discretionary gained about 2.5% (led by Broadcom, AVGO +11%) and 2.0%, respectively. Support also came from firmer expectations of a December rate cut after Fed Governor Waller reaffirmed backing for a 25bps move, and Daly (2027 voter) also endorsed such a reduction. As such, money markets priced a December cut at a 76% probability, which was up from the 56% chance seen on Friday after dovish remarks from Fed's Williams.
• SPX +1.55% at 6,705, NDX +2.62% at 24,874, DJI +0.44% at 46,448, RUT +1.89% at 2,414.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump posted that he had a very good telephone call with Chinese President Xi and that they discussed many topics, including Ukraine/Russia, fentanyl, soybeans and other farm products, etc. Trump added that they have done a good and very important deal for farmers, and it will only get better, as well as noted that the relationship with China is extremely strong. Furthermore, he said that President Xi invited him to visit Beijing in April, which he accepted and reciprocated, with Xi to be Trump’s guest for a state visit to the US later in the year.
• White House Press Secretary said US President Trump and Chinese President Xi's phone call lasted an hour, while trade was discussed, and the call was productive.
• Chinese President Xi said to US President Trump that relations between the nations need to continue the positive momentum, while he suggested opening new space for cooperation and that they will strive for more bilateral progress.
• US Commerce Secretary Lutnick said US-EU trade negotiations include rules on big tech and that the EU wants changes in the area of steel and the US on digital rules. Lutnick said talks with China will work their way through, while he said regarding the Saudi chip deal that he is confident that the best US chips won't fall into the wrong hands. Furthermore, Lutnick said decisions like the one on NVIDIA (NVDA) chips and China are on Trump’s desk, and if the court strikes down tariffs, new actions are very quick.
• EU Trade Commissioner Sefcovic said there have been productive talks with US Commerce Secretary Lutnick and USTR Greer in the last two days, while he added that there is more work to be done on steel talks with the US. Sefcovic said they will discuss critical and raw materials with the US, as well as noted regarding EU-India trade, that he hopes to travel to India again soon. Furthermore, Sefcovic said the trade team is set to go to Washington to tackle various issues, including steel and critical materials, while he stated that conditions are in place to begin negotiations on US steel tariffs.
• EU reportedly dismissed the US demand to relax tech regulations in exchange for lower steel tariffs, according to sources.
• EU is asking the US to reduce tariffs on the bloc's exports of weapons below the 15% tariff ceiling, according to Bloomberg citing sources.
• US Agriculture Secretary said they will have an announcement on farmer aid in the next week or two, and that they will be inking the deal this week or next regarding China's soybean purchases.
• Trade talks between the US and Canada remain stalled, and there's an emerging belief in both governments that key issues will be rolled into next year's broader review of the North America trade deal, according to sources via Bloomberg.

NOTABLE HEADLINES

• Fed's Waller (voter) said since the last Fed meeting, available data suggests not much change, and inflation is not a big problem with the labour market weak, according to a Fox Business interview. Waller is advocating for a rate cut at the December meeting and said that January will be tricky with a flood of data coming to indicate whether another cut is appropriate, while they need a meeting-by-meeting approach. Furthermore, Waller said the September jobs number is likely to be revised down, and the fact that it was concentrated is not a good sign, while inflation has ticked up, but he thinks it is going to start coming down.
• Fed's Daly (2027 voter) backs a December rate cut, citing a vulnerable labour market, while she supports lowering rates at the December meeting because she sees a sudden deterioration in the job market as both more likely and harder to manage than an inflation flare-up.
• White House expects to announce a healthcare framework that includes a two-year extension of Obamacare subsidies, and new income caps for enrollees to qualify for ACA tax credits, alongside minimum premium payments. However, it was later reported that the White House is said to delay the healthcare proposal, according to MS Now.

DATA RECAP

• US Dallas Fed Mfg Bus Index (Nov) -10.4 (Prev. -5.0)
• US Conference Board Employment Trends Index (Sep) 106.84 (prev. 106.41, rev. 106.68)
• US Q3 GDP advance estimate has been cancelled, while the US PCE and Personal Income report for September was rescheduled for December 5th.

FX

• USD softened as rate cut expectations were supported by Fed rhetoric, including from Waller who reiterated the case for a December cut, while Daly said she'd back a rate cut as she sees a sudden deterioration in the job market as both more likely and harder to manage than an inflation flare-up. Attention was also on the Ukraine peace plan, which the Washington Post reported was now a 19-point plan, down from 28, with talks expected to continue, while it was also announced that US President Trump and Chinese President Xi held a phone call, which was said to be productive in which the leaders discussed many topics including trade.
• EUR mildly benefitted amid the softer buck and amid growing optimism on the conflict between Russia and Ukraine.
• GBP reverted to the 1.3100 territory following further updates ahead of the Budget announcement on Wednesday, which Chancellor Reeves said would include three priorities: the cost of living, NHS waiting lists and the cost of debt.
• JPY underperformed in which USD/JPY briefly climbed to the 157.00 territory, and with the recent weakness in the currency spurring expectations of potential looming BoJ intervention.

FIXED INCOME

• T-notes added to recent gains on more dovish Fed speak.

COMMODITIES

• Oil prices gained, albeit in choppy trade, amid the positive risk appetite and as Ukraine peace talks dominated the tape.
• ADNOC's Board is to increase its oil reserves by 7bln bbls to reach a total of 120bln and will raise gas reserves by 7tln cubic feet to 297tln cubic feet. ADNOC is to establish a new company to manage the Ghasha sour gas field, which is expected to produce 1.8bln standard cubic feet of gas and 150k barrels of oil and condensate daily.
• Russia's Tuapse Black Sea port resumed fuel exports on 21st November after a 2-week suspension following drone attacks on November 2nd, according to Reuters citing sources.

GEOPOLITICAL

RUSSIA-UKRAINE

• Ukrainian President Zelenskiy said Kyiv will continue to work with partners on compromises on peace proposals which strengthen, not weaken Ukraine. Zelensky also said that the aggressor (Russia) must pay for the war that they started, and decisions on Russian assets are crucial. Furthermore, he said the current peace proposals contain fewer than 28 points after joint work, and they will discuss the sensitive topics of the peace plan with US President Trump.
• Ukrainian parliamentary speaker announced a series of Ukraine's red lines in negotiations regarding the peace agreement between Russia and Ukraine. These include no formal recognition of occupation territories and no limit on Ukraine's defence forces, while there should be no restrictions on Ukraine's future alliances, and Ukraine's membership in the EU and NATO must be elements of Ukraine's security guarantees and peace plan.
• Ukrainian presidential aide said peace negotiations will continue over the next few days and talks are ongoing at a working level, while NATO membership is not entirely off the table, according to Bloomberg TV.
• US President Trump posted "Is it really possible that big progress is being made in Peace Talks between Russia and Ukraine??? Don’t believe it until you see it, but something good just may be happening. GOD BLESS AMERICA!"
• US White House Press Secretary Leavitt said US and Ukraine talks have been productive and there are just a couple of points of disagreement, while she added that President Trump is optimistic that a deal can be struck.
• Russian Kremlin aide Ushakov said many provisions of the US-drafted peace plan seem acceptable, but some details require further discussion. Furthermore, he said regarding the European counterproposals that on first glance, they are completely unconstructive and do not work for Russia.
• EU's von der Leyen reaffirmed that Ukraine's territory and sovereignty must be respected, while she stated the choice of Ukraine's destiny is in the hands of Ukraine.
• German Chancellor Merz said he doesn't expect a breakthrough in Ukraine talks this week.
• Polish PM Tusk said they are closer to a decision that would mean Russian funds are used to rebuild Ukraine, while he added that there is no agreement for limiting the number of soldiers Ukraine can have.

OTHER

• White House is exploring the possibility of direct talks with Maduro on Venezuela, according to Al Jazeera citing a US official.

ASIA-PAC

NOTABLE HEADLINES

• Japan is to require crypto exchanges to set aside liability reserves, according to Nikkei.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Reeves told Labour MPs “The Budget on Wednesday will be about three priorities: cutting the cost of living, cutting NHS waiting lists and cutting the cost of debt."
• UK Chancellor Reeves is reportedly to cut the annual cash ISA limit to GBP 12k (prev. GBP 20k) in the November Budget, according to FT citing sources.
• UK OBR will reportedly say that growth is lower in 2026 and every parliamentary year in the Budget, while Chancellor Reeves will argue that government decisions are not responsible and the Treasury hopes to surprise with bigger than expected headroom, according to Sky News.
• ECB's Nagel said the current level of the Euro at 1.16 is not cause for concern, while he added that food inflation remains stubborn. Nagel added that the ECB keeps an eye on strong price increases in services too, as well as noted that with December projections, they will see more clearly if the monetary policy stance remains appropriate.

DATA RECAP

• German Ifo Expectations New (Nov) 90.6 vs. Exp. 91.5 (Prev. 91.6)
• German Ifo Current Conditions New (Nov) 85.6 vs. Exp. 85.5 (Prev. 85.3)
• German Ifo Business Climate New (Nov) 88.1 vs. Exp. 88.5 (Prev. 88.4)