Stocks Near Erasing November Losses, Dollar Drops: Markets Wrap

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Stocks Near Erasing November Losses, Dollar Drops: Markets Wrap.

stock :: 1day ago :: source - bloomberg

By Anand Krishnamoorthy

(Bloomberg) -- Global equities were close to erasing their November losses as rising bets for Federal Reserve interest-rate cuts revived markets after a selloff sparked by worries over frothy AI valuations.

The MSCI All Country World Index edged up for a fifth straight session on Thursday, cutting its November drop to just 0.5%. That follows seven consecutive months of gains. Asian stocks, which also enjoyed a similar run, rose 0.2% Thursday, trimming their losses to 2.2% so far in November. Futures contracts indicated a tepid open for European stocks, while the US is closed for Thanksgiving.

Ray Farris of Eastspring Investments says the Federal Reserve will probably cut rates in December. He discusses the state of the US economy on Bloomberg Television. Source: Bloomberg

Meanwhile, the release of the US central bank’s Beige Book showed US employment declined slightly and prices rose moderately, according to the survey of regional business contacts. Spending declined further, except among higher-end shoppers. Also, initial jobless claims fell slightly, defying expectations for a modest increase.

A rally in Treasuries stalled on Wednesday, with the 10-year yield at 4%, as fresh US labor market data came in stronger than expected.

The US data “reinforced the notion that there are crosscurrents and mixed performance in the real economy,” said Ian Lyngen at BMO Capital Markets. Still, there is nothing within the reports that will derail the Fed from cutting by 25 basis points on Dec. 10, he said.

Expectations for a rate cut have strengthened after it emerged that White House National Economic Council Director Kevin Hassett is the leading contender for the next Fed chair — a choice investors see aligning with President Donald Trump’s push for lower rates.

What Bloomberg strategists say...

The icing on the cake for dollar bears is that a Fed rate cut is looking increasingly like the base case scenario in December. Indeed, with Hassett as front runner to be the next Fed chair, investors will be looking for rate cuts to continue into 2026.

— Mark Cranfield, MLIV strategist. For full analysis, click here.

Investors are also paying attention to moves in the dollar, with the Bloomberg Dollar Spot Index headed for a third day of declines as investors bolstered bets on rate cuts.

“The bigger risks to the dollar are emerging labor market weakness, and renewed risks to Fed independence,” said Kaitlyn Buhariwalla, a strategist at Westpac Banking Corp.

The pound is also in focus after the UK budget Wednesday. Morgan Stanley closed its bullish pound recommendation, noting the currency is likely to have seen its last near-term positive catalyst.

While there’s scope for a quick rally following the budget, the gains are likely to fade, strategists including David Adams wrote in a note on Thursday. The pound-dollar pair’s appeal has taken a hit as its correlation to equity markets has fallen to zero and there’s a lack of positive local drivers on the horizon, they added.

Elsewhere, shares and dollar notes of China Vanke slid after it proposed delaying repayment on a local bond for the first time, while Hong Kong property group New World Development Co. received additional bondholder support in its debt swap plan, a filing showed.

The developer’s surprise move to seek a delay in repayment on local debt is another setback for the housing industry, which is still struggling to recover from years of sales declines and massive defaults by China Evergrande Group, Country Garden Holdings Co. and others. Vanke had long been considered one of the healthier property firms.

There were early signs of broader unease spreading. Other yet-to-default builders are also coming under pressure, with Longfor Group Holdings Ltd.’s dollar bond due in 2028 dropping.

In the commodities market, oil edged lower as investors tracked US-led efforts to end the war in Ukraine, while looking ahead to an OPEC+ gathering this weekend.

Corporate News:

Chinese sports apparel company Anta Sports Products Ltd. is among firms exploring a potential takeover of Puma SE, according to people familiar with the matter.
JPMorgan Chase plans to build a new three-million square feet tower in London that would serve as its principal UK headquarters and could contribute about $13 billion to the local economy over six years, it said in a statement.
The Pentagon concluded that Alibaba Group Holding Ltd., Baidu Inc. and BYD Co. should be added to a list of companies that aid the Chinese military, according to a letter to Congress sent roughly three weeks before Trump and Xi Jinping agreed to a broad trade truce.
A gauge of risk on Oracle Corp.’s debt reached a three-year high in November, and things are only going to get worse in 2026 unless the database giant is able to assuage investor anxiety about a massive AI spending spree, according to Morgan Stanley.
SoftBank Group Corp.’s credit-default swaps climbed to the highest level since April, as investors turned cautious on the tech behemoth’s debt-fueled growth at a time of intensifying global competition.

Some of the main moves in markets:

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