Market looks steady as global equities head towards big monthly gains

Oil futures remained stable in anticipation of the upcoming OPEC+ meeting scheduled for next week. The meeting may yield an agreement on production cuts for the year 2024.

Gold futures concluded on a positive note as the dollar index declined against a diverse range of currencies on Friday. Data, as indicated by Reuters report,  revealed that U.S. business activity remained stable in November, although there was a decline in private sector employment.

MSCI’s global shares index increased by 0.12%, poised for a monthly gain of 8.7%, as investor confidence grew in the belief that U.S. interest rates had reached their peak. The market narrative shifted toward speculation about the timing of potential rate cuts.

The Dow Jones Industrial Average climbed 117.12 points, or 0.33%, reaching 35,390.15. The S&P 500 saw a gain of 2.72 points, or 0.06%, closing at 4,559.34, while the Nasdaq Composite experienced a drop of 15.00 points, or 0.11%, ending at 14,250.86.

On Friday, the STOXX 600, Europe’s key benchmark, increased by 0.4%, marking a second consecutive week of gains. Meanwhile, Germany’s DAX saw a 0.2% rise in its closing figures. Investors closely examined data from Germany to glean insights into the country’s economic prospects.

In geopolitical developments, Israel and Hamas initiated a four-day ceasefire on Friday. Notably, during this period, militants released a group of hostages—the initial indication of a potential easing in the nearly seven-week-long conflict.

Since March 2022, the U.S. central bank has increased benchmark borrowing costs by over five percentage points as part of a broader global monetary tightening cycle. “Weaker (economic) data and weaker inflation in the U.S. has given markets hope you are going to start to see rate cuts. But the debate is whether we should be taking profits now,,” said Peter Doherty, investment management director at Arbuthnot Latham in London.

U.S. 10-year Treasury yields, a key determinant of global borrowing costs, climbed to 4.485% but remained comfortably below the recent milestone of 5% reached last month.

Minutes from the most recent Federal Reserve policy meeting indicated a reluctance to implement further interest rate hikes unless progress in curbing inflation showed signs of faltering.

S&P Global reported that its flash U.S. Composite PMI Output Index, monitoring both manufacturing and services sectors, held steady at 50.7. While there was a slight increase in services sector activity, it offset a contraction in manufacturing. A reading above 50 signifies expansion in the private sector.

Due to a lack of robust order growth, businesses reduced their workforce, leading to the survey’s employment index contracting for the first time since June 2020. A softening labor market is expected to support the Federal Reserve in its efforts to combat inflation.

Following apprehensions about a postponed OPEC+ meeting, oil prices remained stable after a decline of over 1%. Brent crude futures concluded with a 1.03% decrease, reaching $80.58 per barrel, while U.S. prices saw a 2.02% dip, settling at $75.54.

Meanwhile, gold futures experienced a 0.5% increase, closing at $2,003, and spot prices rose by 0.48% to $2,001.36 per ounce.

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Updated: 26 Nov 2023, 04:22 PM IST