Market Update

US Markets Rally on Jobs Data and Consumer Optimism
US markets ended the week on a high note, buoyed by a stronger-than-expected November jobs report. The economy added 227,000 jobs, significantly surpassing forecasts and rebounding sharply from October's hurricane-disrupted figures. However, the unemployment rate ticked up to 4.2%, tempering some initial enthusiasm. Investors interpreted the data as a “Goldilocks” scenario: robust enough to reflect economic resilience, but not so strong as to dissuade the Federal Reserve from continuing its path toward potential rate cuts.
Consumer optimism also showed resilience, with the University of Michigan’s consumer sentiment index rising for the fifth consecutive month in December to 74, up from November's 71.8.
Attention now turns to the upcoming Consumer Price Index (CPI) report on December 11, which will likely shape discussions at the Fed's December 17–18 meeting. Inflation has been inconsistent, with October’s annual CPI climbing to 2.6% from 2.4% in September, still shy of the Fed’s 2% core target. Market expectations increasingly favor a 25-basis-point rate cut, with Fed Chair Jerome Powell stating that economic strength offers the flexibility to adjust policies cautiously.
European Equities Rise Amid Political and Economic Developments
European equities closed the week higher, despite political turbulence in France. Prime Minister Michel Barnier failed to pass a deficit-reduction budget, resulting in a no-confidence vote and his removal from office. However, French stocks surged on Friday, marking their largest single-day gain in three weeks.
Reassurance from President Emmanuel Macron, who pledged to form a “government of general interest” under a new prime minister, helped ease market concerns. Meanwhile, data revealed stronger eurozone economic growth in the third quarter, with GDP rising 0.4% compared to 0.2% in the previous quarter. Germany narrowly avoided recession, reporting 0.1% growth following a 0.3% contraction in the prior quarter.
In the UK, Bank of England Governor Andrew Bailey suggested the central bank might implement up to four rate cuts next year, contingent on economic developments. With inflation hovering around the 2% target and growth slowing, Bailey’s comments have sparked speculation about the BoE’s strategy to balance inflation control with economic stimulus.
Chinese Markets Gain on Stimulus Hopes
Chinese equities advanced as optimism grew around potential policy measures expected to be announced at the Central Economic Work Conference starting December 11. Hong Kong’s Hang Seng Index rose 1.44%, supported by improving manufacturing data. The official Purchasing Managers’ Index (PMI) climbed to 50.3 in November, signaling expansion and marking a positive sign for China’s economic recovery.
However, private-sector surveys revealed slower growth in non-manufacturing activity and services, painting a mixed picture of the broader recovery. Investors remain hopeful for targeted stimulus measures to bolster domestic demand and stabilize key sectors.
Oil Prices Steady as OPEC+ Awaits Policy Decisions
Oil prices held steady this week as markets awaited the OPEC+ meeting scheduled for December 5. The group's focus will likely center on production adjustments for 2024 amid revised forecasts for global demand growth.