London (AFP) – European and US stock markets turned lower Monday as investors awaited key US data that could play a role in Federal Reserve deliberations ahead of an expected cut to interest rates next week. Wall Street’s three main indices were lower in late morning trading, with the blue-chip Dow shedding 0.5 percent. Frankfurt led declines in Europe, ending the day down one percent.
Bitcoin extended its decline during European trading, slumping 7.6 percent to around $84,730 amid weaker risk appetite. The cryptocurrency remains well below its record high above $126,200 struck in early October. “Bitcoin tends to be a leading indicator for overall risk sentiment right now, and its slide does not bode well for stocks at the start of this month,” said Kathleen Brooks, research director at trading group XTB.
Expectations that the Federal Reserve would continue easing monetary policy into the new year have recently helped equities mitigate lingering concerns about an artificial intelligence-fuelled bubble. Markets see a nearly 90-percent chance of a third successive US rate cut on December 10, with traders closely watching this week’s American data on private jobs creation, services activity, and personal consumption expenditure — the Fed’s preferred gauge of inflation.
But Briefing.com analyst Patrick O’Hare pointed to the “bear steepening” situation in the market for US government bonds as being negative for stock markets. The situation where long-term rates on US Treasuries are rising faster than short-term rates, steepening the yield curve, is generally seen as bearish for equities, as higher long-term yields indicate investors expect inflation and future interest rate hikes from the Fed.
Bets on a rate cut surged in late November after several Fed policymakers expressed greater concern over a weakening labour market than stubbornly high inflation. Reports that US President Donald Trump’s top economic adviser Kevin Hassett — a proponent of rate cuts — is the frontrunner to take the helm at the Fed next year added to the upbeat mood.
After last week’s healthy gains and Wall Street’s strong Thanksgiving rally, Asian equities closed mixed on Monday. Hong Kong, Shanghai, Singapore, and Bangkok rose, but Sydney, Seoul, Wellington, Manila, Mumbai, and Taipei dipped. Tokyo sank 1.9 percent as the yen strengthened on expectations that the Bank of Japan (BoJ) will lift interest rates this month.
Oil prices climbed 1.3 percent after OPEC+ confirmed it would not hike output in the first three months of 2026, citing lower seasonal demand. While the move was anticipated, “it was enough to catalyse a move which drove out the weaker short players,” said Trade Nation analyst David Morrison. Traders who bet that oil prices might have dropped if OPEC+ prevaricated had to cover their positions, thus helping push up prices further.
The OPEC+ decision comes amid uncertainty over the outlook for crude as traders look for indications of progress in Ukraine peace talks, which could lead to the return of Russian crude to markets. Shares in plane manufacturer Airbus fell by more than 10 percent at one point after reports of a new problem affecting metal fuselage panels, although they later cut losses after the company said the problem had been contained.
– Key figures at around 1630 GMT –
New York – Dow: DOWN 0.5 percent at 47,492.42 points
New York – S&P 500: DOWN 0.3 percent at 6,825.82
New York – Nasdaq Composite: DOWN 0.4 percent at 23,266.88
London – FTSE 100: DOWN 0.2 percent at 9,702.53 (close)
Paris – CAC 40: DOWN 0.3 percent at 8,097.00 (close)
Frankfurt – DAX: DOWN 1.0 percent at 23,589.44 (close)
Tokyo – Nikkei 225: DOWN 1.9 percent at 49,303.28 (close)
Hong Kong – Hang Seng Index: UP 0.7 percent at 26,033.26 (close)
Shanghai – Composite: UP 0.7 percent at 3,914.01 (close)
Euro/dollar: UP at $1.1625 from $1.1604 on Friday
Pound/dollar: DOWN at $1.3226 from $1.3245
Dollar/yen: DOWN at 155.28 yen from 156.10 yen
Euro/pound: UP at 87.92 pence from 87.60 pence
Brent North Sea Crude: UP 1.3 percent at $63.17 per barrel
West Texas Intermediate: UP 1.3 percent at $59.31 per barrel
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© 2024 AFP
