Stocks Drop, Bitcoin Slides in Weak December Start: Markets Wrap
(Bloomberg) — Global stocks and bonds started December on the back foot as a renewed selloff in cryptocurrencies and hawkish comments from the Bank of Japan weighed on sentiment.
S&P 500 futures fell 0.5%. Bitcoin slid below $87,000, dragging major tokens lower and pulling crypto-linked stocks into the red. The Magnificent Seven also declined in premarket trading, led by a 1.1% drop in Meta Platforms Inc.
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Japan’s two-year bond yield rose to its highest level since 2008 after Governor Kazuo Ueda offered his clearest hint yet that the BOJ may be nearing an interest-rate hike. The move weighed on global bonds, lifting the rate on 10-year US Treasuries by three basis points to 4.04%. The yen led gains among major currencies against the dollar.
December begins with traders attuned to a series of economic indicators set to arrive before the Federal Reserve’s upcoming policy meeting. Markets are also preparing for a potential change at the top of the central bank, after President Donald Trump said that he has made his decision on the next Fed chair.
“The market is still hesitating a bit ahead of the upcoming macro data, and before the Christmas rally people typically expect,” said Andrea Tueni, head of sales trading at Saxo Banque France. “The drop in Bitcoin is weighing on sentiment and so are the comments from the BOJ.”
In commodities, oil rose as a key pipeline linking Kazakh fields to Russia’s Black Sea coast halted loading after one of its three moorings was damaged in an attack.
The incident followed after the OPEC+ producer-group led by Saudi Arabia reiterated a three-month plan to halt output hikes in the first quarter of next year. Brent traded above $63 a barrel. Silver and copper also climbed after hitting fresh records on Friday.
BOJ, Fed
The BOJ “will consider the pros and cons of raising the policy interest rate and make decisions as appropriate” by examining the economy, inflation and financial markets at home and abroad, Ueda said Monday in a speech to business leaders. Traders see about an 80% chance of a rate hike when the central bank concludes its next policy meeting on Dec. 19.
“Japan has typically been a liquidity provider for markets. People are realizing that with the ongoing normalization of its monetary policy, the carry trade is coming to an end,” said Alexandre Baradez, chief market analyst at IG in Paris. “It’s a structural change in global markets that investors need to adapt to.”
For the US, this week begins with fresh data on consumer spending. Fed officials will also review an outdated reading of their preferred inflation gauge ahead of the Dec. 9–10 policy meeting, where debate is expected to center on labor market conditions and the case for a third consecutive rate cut.
Other data due include ADP private employment figures for November, as well as Institute for Supply Management surveys of manufacturers and service providers.
Meanwhile, White House economic adviser Kevin Hassett signaled markets were ready for the announcement of a new Fed chair. People familiar with the matter last week said that Hassett was seen as the likely choice to succeed Powell. Speaking on CBS’ Face the Nation on Sunday, he declined to address whether he considers himself the front-runner.
While the Fed enters its pre-meeting blackout period, Powell and Governor Michelle Bowman are scheduled to speak, though they are barred from commenting on the economic outlook or policy.
“December could prove more challenging than many expected, especially for those who thought last month’s 5% dip was the long-awaited correction,” said Ipek Ozkardeskaya, a senior analyst at Swissquote. “With Fed funds futures pricing nearly a 90% chance of a 25bp cut, there isn’t much room left for additional dovish fuel.”
Corporate News
Airbus SE said the vast majority of the about 6,000 A320-family aircraft impacted by a software glitch have received the necessary modification over the weekend, helping the European planemaker sidestep a wider disruption in what has become the company’s largest recall to date. Banca Monte dei Paschi di Siena SpA shares fell for a third consecutive day as investors are digesting a sweeping investigation into its takeover of Mediobanca SpA. China Vanke Co., the distressed builder that surprised markets last week when it proposed an unspecified delay in paying a local bond, has now asked holders to wait a year to be made whole, as it faces mounting liquidity pressure amid waning state support. South Korean authorities are investigating a data leak at online retailer Coupang Inc. that exposed about 33.7 million accounts in what could be the widest hack for the country of 51.7 million people. Stocks
The Stoxx Europe 600 fell 0.4% as of 10:45 a.m. London time S&P 500 futures fell 0.5% Nasdaq 100 futures fell 0.6% Futures on the Dow Jones Industrial Average fell 0.4% The MSCI Asia Pacific Index fell 0.2% The MSCI Emerging Markets Index was little changed Currencies
The Bloomberg Dollar Spot Index was little changed The euro rose 0.2% to $1.1621 The Japanese yen rose 0.6% to 155.30 per dollar The offshore yuan was little changed at 7.0690 per dollar The British pound fell 0.1% to $1.3220 Cryptocurrencies
Bitcoin fell 5% to $86,641.81 Ether fell 5.9% to $2,843.25 Bonds
The yield on 10-year Treasuries advanced three basis points to 4.04% Germany’s 10-year yield advanced three basis points to 2.72% Britain’s 10-year yield advanced three basis points to 4.47% Commodities
Brent crude rose 1.6% to $63.36 a barrel Spot gold rose 0.4% to $4,255.02 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Shikhar Balwani and James Hirai.
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