US futures
Dow futures -0.3%, S&P futures -0.52% & Nasdaq futures -0.77%
In Europe
FTSE 0.02% & DAX -1%
- Stocks fall as risk sentiment slips
- Worries over the yen carry trade unwinding hit tech stocks
- Fed December rate cuts expectations are at 87%
- Oil rises, adding to last week’s gains
Stocks fall after gains last week
US stocks are set for a weaker open on the first trading day of December, tracking Europe lower amid a risk-off mood. Hawish comments from BoJ Ueda fuel concerns over the unwinding of the yen carry trade.
As traders returned from the Thanksgiving holiday, risk sentiment is taking a hit. The catalyst appears to be hawkish comments from Bank of Japan governor Ueda, who says the central bank will weigh the pros and cons of raising interest rates next week, prompting traders to increase rate-hike expectations sharply. This could mark a de-anchoring of the carry trade, in which traders borrow yen at low cost to invest in riskier assets. A higher rate in Japan could suck liquidity out of the markets. Tech stocks and crypto are particularly sensitive ro even the smallest shifts in liquidity.
These concerns are overshadowing expectations for a Fed rate cut, which have risen to 87% for a December cut, up from 30% two weeks ago. Federal Reserve Chair Jerome Powell is due to speak today. Any comments regarding monetary policy will be scrutinised.
Sticking with rates, White House economic advisor Kevin Hassett could be the frontrunner to replace Powell next year. He is dovish in his stance, so if selected, could support rate-cut expectations.
Attention will also be on the US ISM manufacturing PMI, which is expected to show that the sector contracted at a faster pace in November. ISM services, ADP payrolls, and on Friday, the US core PCE, the Fed’s preferred gauge for inflation.
Corporate news
Crypto stocks are in focus as Bitcoin drops 6% to 86k after failing to push above 92k. The selloff in crypto comes amid concerns over the unwinding of the carry trade. Strategy, Riot platforms, and Coinbase are set to open lower.
Eli Lilly is falling pre-market after it announced that it lowered the price of its popular obesity drug Zepbound. The price cuts come amid surging demand.
Airbus falls 5% after reports that the planemaker is confronting a quality issue on its A320 family jets, adding to pressure of a software recall affecting 6000 planes.
Nasdaq 100 forecast – technical analysis.
The Nasdaq‘s recovery from 23,800 tran into resistance at 25,500 and is easing lower, testing the 25,160 support – the October 8 high. A break below here and the 50 SMA opens the door to 24000. Should the support hold, buyers will look to rise towards 26k.
FX markets – USD falls, USD/JPY drops
The U.S. dollar is falling sharply amid a stronger yen and rising expectations of a Fed rate cut. The market sees an 87% probability OF A Fed rate hike.
USD/JPY is dropping sharply to 155 after hawkish comments from BoJ Governor Ueda, raising the prospect of a December rate hike. The market is pricing in a 53% chance of a December rate hike.
EUR/USD is rising amid a weaker USD and ahead of tomorrow's eurozone inflation data. Expectations are for CPI to remain close to the ECB’s 2% target, potentially confirming the end of the ECB’s rate-cutting cycle.
GBP/USD is rising amid a weaker USD and as the pound extends its Rachel rally following the Chancellor’s Budget last week. Getting past the budget sees the removal of some uncertainties, helping the pound to rise. The money markets are pricing in a 90% probability of the BoE cutting rates next month.
Oil rises on supply worries.
Oil prices are rising, adding to last week's gains amid near-term supply concerns after OPEC+ agreed to keep output unchanged. The Caspian Pipeline Consortium, which transports 1% of global oil, halted operations after a Ukrainian drone damaged its Russian terminal. The attack on this export terminal drove oil prices higher amid reduced export volumes. Ukraine also attacked two oil tankers, further raising supply concerns.
On Sunday, OPEC+ met virtually and agreed to leave production levels unchanged. January and the first quarter of 2026, slowing their drive to regain market share amid looming fears of a supply glut.
On the data front, China's factory activity unexpectedly contracted to 49.9 in November, missing analysts' expectations of 50.5. US manufacturing data is due later today.
