Highlights
U.S. equities rose during the first week of December, extending the prior week’s gains as investors grew more confident that the Federal Reserve may cut rates at its upcoming meeting. The Nasdaq Composite led the major benchmarks, climbing 1.01%, while the small-cap Russell 2000 added 0.84%. The S&P 500 posted a smaller weekly increase of 0.31% adding on to the prior week’s gains. The manufacturing sector shrank for a ninth straight month in November, with the ISM manufacturing PMI falling to 48.2%, from 48.7% in October. Conversely, the ISM services PMI ticked up to 52.6%, its strongest level since February. Meanwhile, ADP data showed private employers cut 32,000 jobs in November—the biggest monthly decline since March 2023—reversing October’s revised gain of 47,000 positions. ADP’s chief economist noted that hiring has been uneven amid cautious consumers and macro uncertainty, with small businesses driving much of the decline. Further, weekly jobless claims unexpectedly fell to 191,000 in the week ending November 29, the lowest figure since September 2022. Separately, the University of Michigan’s early December consumer sentiment report showed a 2.3-point increase to 53.3, driven mainly by improving personal-finance expectations. Despite the uptick, sentiment remains subdued due to persistent price pressures. One-year inflation expectations fell to 4.1% from 4.5%, the lowest level since January 2025 and the fourth straight monthly decline. In Europe, the pan-European Euro STOXX 600 rose 0.69% amid expectations of rate cuts in the U.S. and U.K. Preliminary data showed eurozone headline inflation increased to 2.2% in November from 2.1% in October—slightly above forecasts but still close to the ECB’s target. Rising services prices offset declining energy costs while core inflation held at 2.4%. Unemployment held steady at 6.4%. Retail sales were flat month over month but rose 1.5% year over year, beating expectations. Moreover, U.K. house prices remained stable even amid tax concerns and stamp-duty adjustments. Nationwide’s index showed a 0.3% monthly rise, surpassing expectations of zero growth and improving on October’s 0.2% increase. Moving on to Asia, Japanese equities were mixed: the Nikkei 225 advanced 0.47%, while the TOPIX slipped 0.47%. Rising global yields and a speech from BoJ Governor Kazuo Ueda—interpreted as hawkish—pushed Japanese government bond yields and the yen higher. Governor Ueda reiterated that the BoJ still sees the economy as steadily recovering, with broad-based price increases. He emphasized that if the bank’s projections materialize, rate hikes will continue. He also said confidence in this outlook is improving due to reduced uncertainty around U.S. growth and trade policy. In China, Mainland Chinese stocks rose despite signs of slowing growth, with investors favouring domestic tech and AI themes. The CSI 300 gained 1.28%, the Shanghai Composite edged up 0.37%. China’s official manufacturing PMI improved slightly to 49.2 in November but remained below the 50 threshold for the eighth consecutive month—a record-long downturn. The non-manufacturing PMI dipped to 49.5, marking its first contraction in nearly three years due to weakness in construction and consumer services. Despite the ongoing drag from property markets and deflationary pressures, most economists still expect China to achieve its roughly 5% growth target for the year.
Data Highlights
Canada unemployment, November jobs report added 54K jobs and unemployment rate fell to 6.5% (a 16-month low) versus expectations for a rise to 7.0%. Eurozone unemployment held at 6.4%, unchanged on the month and slightly above consensus, confirming a soft but not collapsing labour market. Eurozone inflation drifted up to 2.2% y/y, November CPI showed headline inflation rising from 2.1%, with core around 2.4%, above expectations and still just over the ECB’s 2% target. Switzerland unemployment, stayed at 2.9%, unchanged on the month. Australia GDP in Q3 slowed to 0.4% QoQ and about 2.1% y/y, below market expectations of ~0.7%.
Week Ahead
Australia Interest Rate Decision – Tuesday | China Inflation Rate, US Interest Rate Decision, Canada Interest Rate Decision – Wednesday | Swiss Interest Rate Decision, Australia Unemployment Rate – Thursday | U.K. GDP MoM – Friday
