Markets update: Black Friday ends a green week for US equities

Major US indices finished the week higher as investors shared a similar sentiment to
consumers seen in Friday’s release, writes Ian Slattery ( Head of Investments, Zurich).

Driven by optimism in the labour market, US consumer confidence rose to 111.7 in November,representing its highest level in over a year. The week has also started brightly, with markets rallying following the President-elect nomination of Scott Bessent as treasury secretary.

In economic data releases, core PCE inflation for October came in at 2.8%, higher than the 2.7%recorded in the month previous, and the highest reading since April. Although this met consensus estimates, the 10-year Treasury yield dropped to its lowest point since October last week.

The minutes from the FOMC meeting earlier in November were also released but provided little insight for economists regarding the Fed’s outlook.

In the Eurozone, CPI data recorded annual price growth at 2.3% in November, coming in above the ECB’s 2% target. European equities had a muted reaction to the announcement however, since the reading was in line with expectations.

On the currency front, the euro was propelled higher after ECB official Isabel Schnabel warned of limited room for rate cuts but slid again in reaction to worsening consumer confidence data in  Germany. In Japan, the Nikkei 225 ended the week in the red as economic releases added to the hawkish sentiment. Core CPI accelerated to 2.2% YoY in November, staying above the Bank of Japan’s 2% benchmark. The Japanese yen hit a six-week high against the dollar on Friday as expectations of a 25bps rate hike in December increased.

In China, the rally in 30-year sovereign bond prices continued, as yields fell below Japan’s for the first time.

Equities

Global stocks were down last week finishing at -0.3% in euro terms and 1.2% in local terms. Year-to-date global markets are up by 27.4% in euro terms and by 21.8% in local terms. The US market, the largest in the world, finished at -0.4% in euro terms and 1.2% local terms.

Fixed Income & FX

The US 10-year yield finished at 4.2% last week. The German equivalent finished at 2.1%. The Irish 10-year bond yield finished at 2.4%. The Euro/US Dollar exchange rate finished at 1.06, whilst Euro/GBP finished at 0.83.

Commodities

Oil finished the week at $68 per barrel and is down -0.9% year-to date in euro terms. Gold finished the week at $2,643 per troy ounce and is up 33.7% year-to-date in euro terms. Copper finished the week at $8,891 per tonne.

The week ahead

Monday 2nd December

China and US manufacturing PMI index are both published

Wednesday 4th December

China services PMI goes to print, and the Federal Reserve chair Jerome Powell speaks publicly.

Friday 6 th December

US non-farm payrolls are reported for November.