Dollar Extends Decline, US Equity Futures Steady: Markets Wrap

(Bloomberg) — The dollar extended a decline, while US equity futures were steady after a three-week stock rally fueled by speculation the Federal Reserve is nearing the end of its rate-hike cycle.

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Contracts on the S&P 500 were little changed and those on the Nasdaq 100 dipped 0.1%. A gauge of the dollar fell for a third day to its lowest level since August. Treasury yields edged higher ahead of a US 20-year auction.

The Stoxx Europe 600 index was little changed at the open. Bayer AG slumped more than 10% after the German pharmaceutical stopped a key drug trial and suffered a defeat in a trial related to its Roundup weed killer. Ashtead Group Plc plunged after the UK equipment-rental company cut its revenue forecasts.

Traders are currently pricing in about a 30% chance of a first Fed rate cut in March after Vice Chair for Supervision Michael Barr said Friday officials are likely at or near the end of their tightening campaign. Traders are awaiting publication later this week of minutes of the last Fed rates meeting for insight into policy makers’ thinking.

“The dovish Fed narrative remains in place,” said Win Thin, global head of currency strategy at Brown Brothers Harriman & Co. “There is likely to be ongoing downward pressure on US yields and the dollar.”

Still, “does one month of somewhat favorable inflation data really warrant such a massive move in rates? We think not and yet here we are. We must respect this move while wholeheartedly disagreeing with it,” he wrote in a research note.

Moody’s Lifts Italy

Meanwhile, Italy’s yield premium over German bonds narrowed after Moody’s Investors Service lifted its outlook on the country’s debt to stable, removing the immediate threat of a downgrade to junk. Italy’s benchmark stock index edged higher.

European natural gas prices jumped after a vessel seized in the Red Sea by Iran-backed Houthi rebels renewed concerns that the Israel-Hamas war could affect vital waterways for the fuel. Benchmark futures increased as much as 6.9% on Monday, halting a four-day run of declines. The increase was also driven by colder weather forecasts and higher crude prices ahead of an OPEC+ meeting later this week.

A number of European Central Bank officials are set to speak Monday and may provide insights into their own rate-hike cycle.

The offshore yuan strengthened after the People’s Bank of China boosted its daily reference rate for the currency to the strongest since August. The nation’s commercial lenders on Monday kept their benchmark lending rates unchanged, in line with the central bank’s decision this month to maintain policy rates in favor of other means to support stimulus spending.

Japan’s Nikkei 225 Stock Average briefly surpassed its June intraday peak to reach the highest level since 1990, extending its gains this year to about 28%. The index has been boosted by recent yen weakness, solid company earnings, and corporate governance reforms.

In Argentina, libertarian candidate Javier Milei defeated Economy Minister Sergio Massa to win Sunday’s presidential runoff. A gauge of emerging-market currencies gained along with developing-nation stocks.

Key events this week:

  • European Central Bank governing council members Pablo Hernandez de Cos, Francois Villeroy de Galhau, Boris Vujcic speak at separate events, Monday

  • Bank of England Governor Andrew Bailey speaks, Monday

  • US Conference Board leading index, Monday

  • European Central Bank President Christine Lagarde speaks, Tuesday

  • Canada CPI, Tuesday

  • Federal Reserve Nov. policy meeting minutes, Tuesday

  • Nvidia earnings, Tuesday

  • Eurozone consumer confidence, Wednesday

  • US initial jobless claims, University of Michigan consumer sentiment, durable goods, Wednesday

  • Eurozone PMIs, Thursday

  • UK S&P Global/CIPS Manufacturing PMI, Thursday

  • European Central Bank publishes account of Oct. policy meeting, Thursday

  • Thanksgiving holiday in the US, Thursday

  • Japan CPI, Friday

  • Germany GDP, Friday

  • US manufacturing PMI, Friday

  • Black Friday sales begin, Friday

Some of the main moves in markets:


  • The Stoxx Europe 600 was little changed as of 8:17 a.m. London time

  • S&P 500 futures were little changed

  • Nasdaq 100 futures fell 0.1%

  • Futures on the Dow Jones Industrial Average were little changed

  • The MSCI Asia Pacific Index rose 0.5%

  • The MSCI Emerging Markets Index rose 0.7%


  • The Bloomberg Dollar Spot Index fell 0.3%

  • The euro was little changed at $1.0923

  • The Japanese yen rose 0.5% to 148.86 per dollar

  • The offshore yuan rose 0.5% to 7.1785 per dollar

  • The British pound rose 0.2% to $1.2487


  • Bitcoin rose 0.5% to $37,191

  • Ether rose 1.6% to $2,016.21


  • The yield on 10-year Treasuries advanced three basis points to 4.46%

  • Germany’s 10-year yield advanced two basis points to 2.60%

  • Britain’s 10-year yield advanced one basis point to 4.11%


  • Brent crude rose 0.7% to $81.21 a barrel

  • Spot gold fell 0.1% to $1,978.65 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Matthew Burgess and Qizi Sun.

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