United States
American stocks staged an impressive turnaround to close out what had been a particularly volatile week for risk assets. The S&P 500 rallied 1 per cent with about 450 of its constituents advancing, whilst the Dow Jones climbed 1.1 per cent to 46,245 points. The tech-heavy Nasdaq managed a 0.9 per cent gain despite earlier weakness.
The catalyst for the late recovery came from New York Fed President John Williams, who suggested there’s still room to ease monetary policy in the near term as labour market conditions soften. His comments sent traders scrambling to recalibrate their expectations, pushing the probability of a December rate cut up to around 71.5 per cent from just 39.1 per cent earlier.
Nvidia, the poster child of the artificial intelligence boom, recovered from an early 4 per cent plunge to finish down just 1 per cent. The semiconductor giant caught a bid after Bloomberg reported that US officials are considering allowing the company to sell its H200 AI chips to China, potentially opening up a significant revenue stream.
Despite Friday’s bounce, the S&P 500 remains on track for its worst monthly performance since March – quite remarkable given November is traditionally one of the strongest months for equities. The volatility was amplified by a massive US$3.1 trillion in notional options expiring on Friday, adding to the day’s wild swings.
Goldman Sachs’ Tony Pasquariello noted signs of “capitulation” in US equities, suggesting the market might need more selling before finding stability. However, Barclays’ Equities Timing Indicator dropped below -7 for the first time since early August, a level that’s historically signalled near-term advances.
Europe
European markets struggled to find direction on Friday, with the Stoxx 600 closing down 0.3 per cent as defensive sectors outperformed whilst growth-oriented names came under pressure. The technology sector endured its worst week since April, weighed down by concerns about stretched valuations and uncertainty around monetary policy.
ASML and Siemens Energy bore the brunt of the selling, falling 6.3 per cent and 10.1 per cent respectively, as investors took profits in some of the year’s biggest winners. The defence sector also came under significant pressure, with Rheinmetall tumbling 7.2 per cent and Rolls-Royce dropping 3.8 per cent amid reports that Kyiv and European allies rejected key elements of a US-Russian peace plan.
Bright spots emerged in consumer staples, with the food and beverage sector advancing 1.8 per cent. Nestlé, Diageo, and AB InBev all posted solid gains as investors sought safer havens. Personal care stocks also outperformed, booking their best day in three months.
CTS Eventim provided a rare success story, surging 11.7 per cent after its Live Entertainment division delivered an earnings beat, helping lift the broader media sector by 2.1 per cent.
Australia
The ASX 200 is set for a strong start to the week, with futures pointing to a 92-point jump at the open, suggesting a rise of 1.1 per cent to around 8,519. This follows Friday’s sharp selloff that wiped nearly $40 billion from the local market after stronger-than-expected US jobs data dampened rate cut hopes.
Corporate news should provide additional momentum, with Pro Medicus announcing three new US contracts worth a combined minimum of $29 million. The medical imaging company continues to expand its cloud-based footprint across American healthcare segments, with all contracts scheduled to go live within six months.
In a major development for the resources sector, BHP has reportedly made a fresh takeover approach to Anglo American, attempting to disrupt the London-listed miner’s planned combination with Canada’s Teck Resources. The proposal reportedly involves a mix of cash and stock, with Anglo’s market value sitting at about £31.9 billion.
Several stocks will trade ex-dividend today including EZZ and IFM, whilst broker moves include Accent Group being downgraded across multiple houses and Deep Yellow receiving an upgrade to overweight at JPMorgan.
Commodities and currencies
The Australian dollar gained 0.3 per cent to US64.56 cents, whilst the Kiwi dollar jumped 0.5 per cent as traders positioned for this week’s Reserve Bank of New Zealand rate decision. Analysts suggest the Aussie-Kiwi cross may have peaked near decade highs around 1.15, with expectations the RBNZ will signal an end to its easing cycle after one more cut.
Gold drifted lower to US$4,065 an ounce as uncertainty around Fed policy weighed on the precious metal, though it pared losses after Williams’ dovish comments. Oil markets remained under pressure, with Brent crude falling 1.4 per cent to US$62.48 a barrel as traders assessed the prospect of a Ukraine-Russia peace deal that could add supply to an already saturated market.
Bitcoin experienced significant volatility, tumbling as much as 7.6 per cent to US$80,553 before recovering to around US$85,120. The cryptocurrency is on track for its worst month since the 2022 Terra and FTX collapses, with options-fuelled selling adding to the turbulence as key support levels were breached.
Economic Calendar
US:
- Dallas Fed Manufacturing Activity Nov 02:30
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
