European stocks and US futures struggled for direction as political upheaval in the Middle East and South Korea tempered optimism over China’s monetary-policy shift and investors settled in to wait for central bank decisions in several key markets.
Europe’s Stoxx 600 benchmark all but erased an early gain, though sectors exposed to China, including miners and consumer products advanced. US equity futures turned lower.
US-listed Chinese shares rose, however, following on from a strong close for Hong Kong’s benchmark, while the offshore yuan erased losses to trade 0.1% stronger. The moves came after China’s top leaders announced they will embrace a “moderately loose” strategy next year, in a sign of greater easing ahead that will be hailed by investors hungry for more stimulus. Chinese corporate bond yields are on their longest declining streak ever.
All eyes are now on the Central Economic Work Conference due to start on Wednesday, for signals of more fiscal support.
“The somewhat looser monetary policy stance by the Politburo is welcome news, though it won’t materially change the situation for the Chinese economy,” said Joachim Klement, head of strategy, economics and ESG at Panmure Liberum. “What is needed is substantially more fiscal stimulus that is supported by a looser monetary policy.”
Later this week, European Central Bank policymakers will set interest rates for the first time since governments in Paris and Berlin both collapsed over budget talks. In addition to the ECB, the Bank of Canada and Swiss National Bank are expected to ease policy, while Australia’s central bank will likely keep its key interest rate on hold amid indications the nation’s economy is beginning to soften.
Crude oil rose after the toppling of President Bashar al-Assad’s regime unsettled an already restive Middle East. South Korea also risks prolonged political impasse, with opposition lawmakers pushing for another impeachment vote on President Yoon Suk Yeol. That saw Korean markets extending their declines, while the won fell about 1% against the dollar.
Among individual stock movers in Europe, Turkish construction-related stocks such as Oyak Cimento Fabrikalari AS and Cimsa Cimento Sanayi VE surged as investors bet the companies will play a role in Syria’s reconstruction. In US premarket trading, Super Micro Computer Inc. shares jumped after the company was given more time to become compliant with Nadaq listing rules. Shares in Apollo Global Management Inc. and Workday Inc. rallied as they are set to join the S&P 500 Index.
Later this week, investors will parse US inflation data that could determine whether the Federal Reserve will cut rates this month. Coming on the heels of a robust November payrolls print, inflation is expecte to stay elevated, a survey of economists shows.
Key events this week:
- Mexico CPI, Monday
- Australia rate decision, Tuesday
- Germany CPI, Tuesday
- Brazil CPI, Tuesday
- Japan PPI, Wednesday
- Chinese leaders expected to hold annual Central Economic Work Conference, beginning Wednesday through Dec. 12
- RBA Deputy Governor Andrew Hauser speaks, Wednesday
- US CPI, Wednesday
- Canada rate decision, Wednesday
- Brazil rate decision, Wednesday
- Australia unemployment, Thursday
- India CPI, Thursday
- Eurozone ECB rate decision, Thursday
- Switzerland rate decision, Thursday
- France CPI, Friday
- Eurozone industrial production, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 was little changed as of 10:19 a.m. London time
- S&P 500 futures were little changed
- Nasdaq 100 futures fell 0.2%
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia Pacific Index rose 0.4%
- The MSCI Emerging Markets Index rose 0.6%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro rose 0.1% to $1.0581
- The Japanese yen fell 0.3% to 150.38 per dollar
- The offshore yuan rose 0.2% to 7.2724 per dollar
- The British pound rose 0.3% to $1.2779
Cryptocurrencies
- Bitcoin fell 1.7% to $98,423.04
- Ether fell 2.9% to $3,877.68
Bonds
- The yield on 10-year Treasuries was little changed at 4.16%
- Germany’s 10-year yield was little changed at 2.10%
- Britain’s 10-year yield declined two basis points to 4.26%
Commodities
- Brent crude rose 1% to $71.83 a barrel
- Spot gold rose 0.9% to $2,657.66 an ounce
