Asian Pacific stock indices mixed

US markets get back to business and face the final month of the year today after last week’s Thanksgiving holiday. Stock index futures were a touch weaker across the board in early trade, following a storming end to November to conclude a volatile and unsettled month. There were decent gains across all the US majors on Friday’s shortened trading session, as traders shrugged off technical issues at exchange operator CME Group.

Instead, the focus was on the Federal Reserve’s FOMC meeting next week. The probabilities of a 25-basis point rate cut jumped to 88% from around 30% just over a week ago. This turnaround began the previous Friday after New York Fed President John Williams (with, it is thought, the implicit agreement of Fed Chair Jerome Powell) indicated that interest rates were too restrictive.

Then, speeches from FOMC members Michelle Bowman and Christopher Waller also favoured further rate reductions. Add in Stephen Miran, and there are now four (or possibly even five) members of the 12-person FOMC who look likely to vote for a rate cut next week. That’s quite a divergence considering that in times gone by, there was rarely more than a single dissenter over rate decisions. This increase in rate cut hopes saw all the US majors rally back sharply following a dismal market performance in November.

At the beginning of last month, Nvidia led a tech-based selloff after it was revealed that some high-profile investors had either flattened their exposure or gone short of Nvidia and other corporations linked to the Artificial General Intelligence (AGI) trade. There were fears concerning overvaluation, the circulatory nature of investment, the likely return on that investment, as well as issues over the depreciation of high-end chips, considering the speed of obsolescence.

This saw Nvidia drop sharply, from an all-time closing high of $210 at the end of October to a brief break of $170 last week, a fall of 19%. It has yet to recover significantly. In contrast, the Dow, S&P 500 and Russell 2000 bounced back to end the month little changed. The NASDAQ was down 1.5%.

Source: TN Trader

There are two main issues for equities heading into year-end. The first is next week’s Fed meeting, which will also see the release of the quarterly Summary of Economic Projections. This will show forecasts from individual FOMC members for future inflation, the Fed Funds rate, GDP and unemployment going into next year and beyond.

The second is the AGI trade. Nvidia may have sold off, but has that just blown some froth off the price? And, while Nvidia has pulled back from record levels, Alphabet, which is becoming a serious competitor due to its tensor processing units, rallied to all-time highs last week.

How will this trade pan out? Big tech stocks are lower across the board this morning. Could this be an early chapter in a twisted tale with a bad ending? Investors could have some big decisions to make ahead of the year-end.

European stock indices were lower in early trade on Monday. Investors followed the lead taken by US stock index futures as traders returned after last week’s Thanksgiving break. Tech-related stocks came under pressure as US big tech sold off. Concerns expressed last week by the European Central Bank, warning of stretched US tech valuations driven by FOMO, added another layer of caution.

Source: TN Trader

Silver miner and FTSE 100 constituent, Fresnillo, jumped over 5.5% in early trade, boosted by an ongoing rally in silver itself. Miners in general were strong this morning, offsetting losses across the defence sector as investors attempt to price in the odds of a Russian/Ukrainian peace deal.

Ukrainian and US officials, including Secretary of State Marco Rubio, met in Florida over the weekend and described discussions as “very productive,” although significant work remains. US special envoy Steve Witkoff is travelling to Moscow for high-level talks with President Putin and other senior Russian officials as part of efforts to advance a revised US–backed 19-point peace plan for Ukraine.

The US dollar was weaker against all the majors this morning. The spot Dollar Index dropped back below 99.00 to hit its lowest level in a fortnight. This comes after a period of relative strength, which saw the spot Dollar Index repeatedly bang up against significant resistance at 100.00. But it failed to break through this level, and it has now reversed sharply as traders factor in the growing probability of a 25-basis point rate cut next week from the Federal Reserve.

The selloff in the dollar has helped to lift the Japanese yen, as did some hawkish comments from Bank of Japan (BoJ) Governor Kazuo Ueda. The markets are now pricing in a 73% probability of a rate hike this month as Mr Ueda spoke about wage increases, a drop-off in risks from the Trump administration’s tariffs, along with concerns over a weak currency, as reasons to normalise monetary policy.

The USD/JPY fell back towards 155.00, to trade at its lowest level in two weeks. If the yen continues to strengthen from here, then that would negate the need for intervention from Japan’s policymakers to underpin the currency.

Source: TN Trader

Gold was firmer again overnight, building on last week’s gains. Gold has now tacked on around $200, or close to 5%, since the end of last week. The move has seen gold hit its best levels in around six weeks, back when it was dropping dramatically from the all-time highs hit in October.

Source: TN Trader

The prospect of another 25-basis-point rate cut before the year-end has boosted investor appetite, as has the related drop in the US dollar. A string of weaker US data releases and dovish remarks from Fed officials, including John Williams, Michelle Bowman and Christopher Waller, helped boost expectations for a rate cut to 88%.

In addition, White House economic adviser Kevin Hassett, and candidate for the role of Fed Chair, aligned with President Trump in suggesting rates “should be lower.” The daily MACD had also pulled back towards the ’neutral’ level, having been very overbought back in October. The rally in silver has been even more dramatic.

Silver hit a fresh record high this morning, coming within sight of $58 per ounce. That represented a gain of around 16% from its close of $50 just over a week ago. The move meant that the dreaded triple-top had been avoided. But it’s important to note that these gains came over a holiday period when liquidity was poor and followed an exchange shutdown due to a power outage affecting the CME Group. So, where it goes next is anyone’s guess.

Source: TN Trader

Oil rallied close to 2% as it reopened on Sunday night. Traders rushed to cover shorts and instigate fresh buys after OPEC+ confirmed it would maintain its plan to pause production hikes during the first quarter of 2026. The news had been anticipated. But it was enough to catalyse a move which drove out the weaker short players.

Source: TN Trader

Now it’s a question of seeing how traders continue to react to peace talks aimed at ending the war between Ukraine and Russia. To that end, supply was disrupted over the weekend due to a Ukrainian drone attack on a Russian oil terminal. Traders are also keeping an even closer eye on developments involving Venezuela.

On Saturday, President Trump upped the ante once again, saying that the airspace above Venezuela should be considered closed. Venezuela is understood to have the largest proven oil reserves on earth.

Natural gas prices pulled back from recent highs and resistance as traders took profit after last week’s sharp run-up. The pullback was modest relative to recent gains, but the reversal reflected a natural consolidation after momentum had carried the market quickly into overhead resistance.

Crypto markets faced heavy selling pressure as the new month began, mirroring the broader shift away from risk. Bitcoin fell around 5% to revisit $85,000, while Ether suffered even deeper losses on a percentage basis. The declines came after several sessions of resilience, underscoring how sensitive digital assets remain to changes in macro tone and risk appetite.

The VIX was up close to 3% from Friday’s close as fear and caution crept back into markets. While the index remains below the extremes seen earlier this year, the move higher reflects a clear cooling of sentiment as traders brace for a data-heavy week.

PMI readings, this afternoon’s ISM print, and Friday’s Core PCE data are all front-of-mind, alongside expectations that the Bank of Japan has a two-thirds chance of hiking on 19th December and the Fed currently has an 88% probability of cutting next week.

US stock index futures point to a downbeat start for the new month, even as historical seasonality leans heavily toward the bulls. December’s reputation as the market’s third-strongest month may clash with the reality of a jump in volatility, raising questions about whether the long-anticipated Santa Rally will materialise.

With precious metals back in focus, crypto under pressure, and rate-cut expectations dominating macro discussion, the path forward hinges on data and central-bank messaging. A Fed cut next week could provide the spark that bulls are looking for. But for how long?