Stocks Waver as Geopolitics Temper China-Led Boost: Markets Wrap

(Bloomberg) — US equity futures struggled for direction, ceding brief gains sparked by China’s monetary-policy shift, as investors focused on an upsurge in geopolitical risk and the outlook for interest-rate cuts in the US and other major economies.

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Contracts on the Nasdaq 100 eased 0.2% and those on the S&P 500 slipped 0.1%, after rising earlier following China’s announcement that authorities will embrace a “moderately loose” strategy next year. More steps on the fiscal side could be unveiled at Wednesday’s Central Economic Work Conference. While Beijing’s pledge boosted Asian markets and supported US-listed Chinese shares in premarket trading, gains elsewhere were short-lived.

Europe’s Stoxx 600 benchmark also handed back a rise, though sectors exposed to China, including miners and consumer products, advanced.

“The somewhat looser monetary policy stance by the Politburo is welcome news, though it won’t materially change the situation for the Chinese economy,” said Joachim Klement, head of strategy, economics and ESG at Panmure Liberum. “What is needed is substantially more fiscal stimulus that is supported by a looser monetary policy.”

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Crude oil as well as gold prices rose after the toppling of Bashar al-Assad’s regime in Syria unsettled an already restive Middle East. South Korea also risks prolonged political impasse, with opposition lawmakers pushing for another impeachment vote on President Yoon Suk Yeol. That saw Korean markets extending declines, while the won fell about 1% against the dollar.

Absent further geopolitical escalation, investors will turn their attention to this week’s central bank meetings. The European Central Bank, meeting for the first time since the collapse of governments in Paris and Berlin, is expected to cut interest rates, as are the Bank of Canada and the Swiss National Bank. Australia’s central bank will likely keep rates on hold.

US inflation data will be another key event, potentially determining whether the Federal Reserve eases policy again at its Dec. 18 meeting. While the November jobs report indicated on Friday that the labor market is cooling enough to allow a rate cut, the inflation print could heighten uncertainty, should it show price pressures accelerating last month by more than the 0.3% forecast in a survey.

“Inflation remains too high regardless, which has been limiting the central bank’s ability to loosen monetary policy,” Daniela Sabin Hathorn, a senior market analyst at Capital.com. told clients in a note. “The current odds show an 87% chance of a 25-bps cut next week, but this could quickly change if the CPI data does not come in as expected.”

Among individual stock movers, Turkish construction-related stocks such as Oyak Cimento Fabrikalari AS and Cimsa Cimento Sanayi VE surged as investors bet the companies will play a role in Syria’s reconstruction.

US premarket gainers included Apollo Global Management Inc. and Workday Inc. which are both set to join the S&P 500 Index. Super Micro Computer Inc. shares jumped after the company was given more time to become compliant with Nasdaq listing rules. To the downside, Nvidia Corp. slipped premarket on news of a probe in China over suspicions the the AI chipmaker broke anti-monopoly laws.

Key events this week:

Mexico CPI, Monday
Australia rate decision, Tuesday
Germany CPI, Tuesday
Brazil CPI, Tuesday
Japan PPI, Wednesday
Chinese leaders expected to hold annual Central Economic Work Conference, beginning Wednesday through Dec. 12
RBA Deputy Governor Andrew Hauser speaks, Wednesday
US CPI, Wednesday
Canada rate decision, Wednesday
Brazil rate decision, Wednesday
Australia unemployment, Thursday
India CPI, Thursday
Eurozone ECB rate decision, Thursday
Switzerland rate decision, Thursday
France CPI, Friday
Eurozone industrial production, Friday

Some of the main moves in markets:

Stocks

The Stoxx Europe 600 was little changed as of 11:56 a.m. London time
S&P 500 futures were little changed
Nasdaq 100 futures fell 0.2%
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index rose 0.4%
The MSCI Emerging Markets Index rose 0.6%

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0569
The Japanese yen fell 0.3% to 150.45 per dollar
The offshore yuan rose 0.1% to 7.2735 per dollar
The British pound rose 0.2% to $1.2768

Cryptocurrencies

Bitcoin fell 2% to $98,129.36
Ether fell 3.5% to $3,855.33

Bonds

The yield on 10-year Treasuries advanced one basis point to 4.17%
Germany’s 10-year yield was little changed at 2.10%
Britain’s 10-year yield declined two basis points to 4.26%

Commodities

Brent crude rose 1.1% to $71.91 a barrel
Spot gold rose 0.8% to $2,655.53 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Michael Msika, Catherine Bosley and Henry Ren.