📊 Market Report.
🇨🇳 China’s manufacturing activity expanded for a second consecutive month in November, according to the official purchasing managers’ index (PMI). The PMI rose to 50.3, a seven-month high, indicating government stimulus measures improving sentiment. However, the outlook remains uncertain due to potential US tariffs under Trump, posing a major growth risk for China’s export-oriented economy. The central economic working conference in December may provide more clarity on China’s policy outlook.
🏦 Bank of Japan Governor Kazuo Ueda has said that interest rate hikes are nearing due to economic data being on track. He is monitoring the momentum of the fiscal 2025 shunto (spring wage negotiation) and is considering avoiding rushing to rate hikes as President-elect Donald Trump takes office in January. The BOJ will scrutinize its policy at its Dec. 18-19 meeting, where some analysts expect it to hike rates from the current 0.25%.
🇩🇪 Nine Volkswagen plants in Germany have gone on strike due to a labor dispute with IG Metall, a powerful workers’ union. The strike is a result of Volkswagen’s efforts to cut costs and transition to electric vehicles, causing tensions over job security and working conditions. IG Metall demands an 8% pay increase and no forced layoffs until 2029.
🇺🇸 Friday US Jobs expectations: The projection ranges from 160,000 to 270,000, suggesting an upside surprise. However, US jobs are expected to recover by 195,000 in November, with payrolls increasing by over 90,000 since hurricanes and strikes ended. The unemployment rate is expected to slightly increase to 4.2%, closer to the Fed’s dot plot of 4.4%, potentially allowing for a December easing.
🇪🇺 In Europe, the market suggests that there is a 21% possibility of a 50 basis point decrease, with a 25 basis point drop on December 12 being the ECB’s absolute minimum. The ECB’s floor rate is 1.6%, while the Fed’s is 3.75%, according to investor pricing.
📈 Based on Bloomberg estimations, Trump’s tariff plan involves three waves of levies on China, with China’s levies tripling by the end of 2026. The combined impact would be a tripling of average US tariffs to almost 8%, leading to a drop in US imports and exports from 21% to 18%, including a plunge in US-China trade.
📉 Market View:
📈 We start the week with US futures at near all-time highs. The mini S&P 500 is currently at 6,035 points, having reached a new high of 6,060 points on Friday. The Nasdaq 100, meanwhile, continues to lag and has yet to consolidate above the 21,000 point level it reached on Friday. In the case of the Nasdaq, it is still more than 300 points away from its all-time highs.
💵 The dollar starts the week strongly, rising again. The dollar index (DXY) has risen in recent hours to 106.25 points, possibly boosted by Trump’s recent comments that he would impose 100% tariffs on countries that do not support the US currency. EUR/USD, meanwhile, trades below 1.06, the level it approached last Friday, currently at 1.0520.
🇪🇺 In Europe, futures open lower. The DAX 40 is down after Friday’s spectacular rally to 19,700 points. It is now trading at 19,628 points, which is surprising given the political instability in both Germany and France. The Eurostoxx 50 also started with declines, currently trading at 4,765 points.
🛢️ Crude oil prices are back down again, with Brent crude oil trading around 72.40 dollars per barrel. Paradoxically, despite the global instability of the last few days, gold is once again testing downwards the support at 2,650 dollars, the level at which it is currently trading.
💰 Finally, Bitcoin is close to 96,000 dollars, although it seems to be forming, in an increasingly definite way, a resistance in the 97,500 dollar area, around which it has been moving sideways.
🌍 Geopolitics.
🇺🇸 Trump has demanded that BRICS member countries commit to not creating a new currency or supporting another to replace the US dollar, or face 100% tariffs. He stated that there is no chance that the BRICS will replace the US dollar in international trade, and any country that tries should wave goodbye to America. Trump’s demands are aimed at preserving the US economy.
🇺🇦 In order to begin their mandate, European Council President Antonio Costa, the bloc’s top diplomat Kaja Kallas, and newly appointed Enlargement Commissioner Marta Kos travelled to Kyiv. Costa informed us that Ukraine is his top concern.
🇫🇷 The French National Front (RN) has intensified its pressure on the government due to budgetary demands, increasing the possibility of a budgetary motion that could undermine Prime Minister Michel Barnier’s government. RN leader Marine Le Pen has given Barnier a deadline to meet the party’s demands, including increasing pensions and reimbursements in pharmaceutical reembols. However, Le Pen claims the government has “put fin to discussions” and is preparing for a possible budgetary motion. This could lead to a reduction in pensions and increased taxes for 17 million people. French Finance Minister: ‘France will not accept blackmail on its budgets’.
🇬🇪 The EU continues to support protesters who refuse to recognise the elections in Georgia. Protests turn violent, mirroring the Western-backed protests in Ukraine that led to a civil war in Ukraine.
