US Stock Optimism Builds Ahead of Rate Decisions: Markets Wrap

US equity futures shrugged off downbeat performances in other key markets as traders prepared for a slate of interest-rate decisions by major central banks due later this week. Bitcoin hit a fresh record.

Nasdaq 100 contracts rose 0.3%, pointing toward further gains after the index closed at an all-time high on Friday. MicroStrategy Inc. advanced more than 6% in premarket trading, fueled by its pending inclusion in the tech-heavy gauge following the software maker’s transformation into a leveraged bet on Bitcoin. S&P 500 futures gained 0.2%.

Monday’s US stock performance stands in contrast with losses in Asia and Europe as weaker-than-expected retail data in China weighed on sentiment. A contraction in the euro-area’s private sector also dragged on European equities.

An expected quarter-point rate cut from the Federal Reserve on Wednesday could add fresh support and extend US stocks’ outperformance. The S&P 500 has rallied 27% so far in 2024, with strategist expecting the rally to build further steam in anticipation of favorable economic policies under President-elect Donald Trump and strong earnings.

“Central banks have been helpful in 2024 as they start cutting interest rates when the economy was still strong,” Marija Veitmane, senior multi-asset strategist at State Street Global Equities, told Bloomberg TV. Going forward, “what we need to rely on is earnings and where they can grow the fastest. In the US, we can still see solid growth.”

Wednesday’s Fed decision will be followed by peers in Japan, the Nordics and the UK over the following day. Swaps traders are now pricing in around three quarter-point rate cuts by the Fed over the next 12 months, whereas they’d seen better than 50/50 odds of a fourth one a week ago.

Meanwhile, Bloomberg’s dollar index was little changed after six days of gains. Wall Street is starting to sour on the dollar as President-elect Donald Trump’s policies and the Fed’s interest-rate cuts will likely put pressure on the greenback in the latter portion of 2025.

Roughly a half dozen sell-side strategists are now forecasting the world’s reserve currency will peak as early as mid next year before starting to decline.

In China, retail sales increased 3% in November from a year ago, falling short of forecasts for 5% growth by economists surveyed by Bloomberg. The data builds on traders’ disappointment last week when Beijing pledged to boost consumption but failed to offer details on fiscal stimulus.

The retail-sales data “is a reflection of the dire situation there and how the stimulus efforts have prioritized optics over delivering meaningful economic improvements,” said Charu Chanana, chief investment strategist at Saxo Markets in Singapore. “Even for a tactical recovery, we need more after a series of false starts and the risk of tariffs ahead.”

French bonds lagged peers after Moody’s Ratings cut the country’s credit rating, putting more pressure on officials after far-right leader Marine Le Pen toppled the previous prime minister over a budget dispute.

Germany Chancellor Olaf Scholz is expected to lose a confidence vote in a move that would trigger fresh elections at a time when Europe’s biggest economy faces a path of decline. Meanwhile, euro-area private-sector activity shrank less than anticipated thanks to a bigger-than-expected contribution from services.

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