November 26 Financial News: Stock market reverses, MOVE and VIX both decline, gold price continues to fall

Tuesday( November 26, 2023) Global markets showed a mixed trend. The major US stock indices reversed their intraday declines by the close, while gold continued its downward trend, reflecting a reassessment of the market’s expectations for Fed rate cuts. Latest economic data indicate signs of a softening labor market, fueling bets on a December rate cut, with risk sentiment clearly recovering.

US Stocks Experience V-Shaped Rebound, Tech Stocks Diverge

US stocks, which were under pressure during the session, ultimately turned around. The S&P 500 rose 0.91%, the Dow Jones Industrial Average gained 1.43%, and the Nasdaq, heavily weighted in tech stocks, increased by 0.67%. During the session, the S&P 500 briefly fell 0.67%, and the Nasdaq declined as much as 1.25%.

Popular tech stocks showed divergence; Meta surged over 3%, Google and Amazon rose more than 1%. Conversely, weaker performers included Nvidia and Netflix, which fell over 2%, with AMD dropping more than 4%. In the healthcare sector, Merck rose over 5% against the trend.

Nvidia briefly plummeted 7.1% intraday, mainly due to reports that Meta is negotiating with Alphabet to purchase Google AI chips, sparking concerns over AI competition dynamics. Nvidia quickly responded, emphasizing that its GPU technology remains a leader by a generation and claiming to be the only universal platform capable of running all AI models.

Risk Asset Sentiment Improves, Bond and Currency Markets Signal

The MOVE index and the VIX fear gauge both declined, reflecting a recovery in market risk sentiment. The US 10-year Treasury yield fell to around 4.00%, down 3 bps from the previous trading day, approaching the 4% level.

The US dollar index dropped 0.39% to 99.79, with USD/JPY weakening 0.54%; EUR/USD rose 0.42%. Gold spot prices declined 0.1% to $4,130 per ounce, continuing recent declines, indicating that the downward pressure from falling US bond yields on gold has eased but not yet attracted buying.

WTI crude oil rose 1.32% to $58.11 per barrel, showing relative strength in the oil market.

Cryptocurrency Market Remains Calm

Bitcoin fell 1.07 over 24 hours, currently trading at $87.87 (based on latest data); Ethereum increased 0.12% to $2.95, with overall crypto market volatility remaining moderate.

Soft Economic Data Fuels Rate Cut Expectations

New US economic data generally underperformed, reinforcing market expectations for the Fed to accelerate rate cuts. US private sector weekly layoffs averaged 13,500, far above the previously revised 2,500, highlighting pressure in the labor market.

US September retail sales increased 0.2% month-over-month, well below the expected 0.4%, and down from 0.6% previously; core retail sales, excluding autos and gasoline, declined 0.1% MoM, indicating slowing consumer momentum. US September PPI rose 0.3% MoM, in line with expectations; YoY, it increased 2.7%, also in line with forecasts.

November consumer confidence saw its largest seven-month decline, dropping 6.8 points to 88.7, below economists’ estimates. Concerns over tariffs, inflation, and the labor market continue to rise among consumers.

Fed Policy Outlook: Calls for Rate Cuts Grow

Fed Governor Mester stated that the current economic situation warrants significant rate cuts, with rising unemployment reflecting overly tight monetary policy. She believes the Fed should soon reach a neutral interest rate level. However, analysts note that Mester was appointed due to her dovish stance aligned with Trump’s preference for rate cuts, so her comments may have limited market impact.

White House National Economic Council Chair Kasnett is considered a top candidate to succeed Powell as Fed Chair. As an ally of Trump, Kasnett is familiar with Trump’s inclination for rate cuts, and if appointed, could enable Trump to install allies within the Fed’s independent institutions. However, sources caution that Trump often makes unexpected personnel decisions, and the official nomination remains uncertain.

Global Political Dynamics: Peace Negotiations and US-China Relations

President Trump stated that a peace agreement with Ukraine is very close to being reached. The 28-point peace plan drafted by the US has been refined with further participation from Ukraine and Russia, with only minor disagreements remaining. Trump has directed envoy Wittekov to Moscow for talks with Putin, and US Secretary of the Army, D’Riscoll, will meet with Ukraine officials. Ukrainian President Zelensky has expressed readiness to advance the US-supported peace deal and is prepared to meet Trump on Thursday.

Regarding US-China relations, US Treasury Secretary Yellen said that Trump and Xi Jinping could hold four meetings in the coming year. Trump has accepted Xi’s invitation to visit China in April next year, and has invited Xi to visit the US later in the year. China is proceeding with US soybean purchases, planning to buy 87.5 million tons over the next three and a half years.

Commodities Market: Copper Prices Rise Amid Supply Concerns

Chile’s state copper company Codelco has significantly increased its annual refined copper premium to Chinese customers to $350/ton (some buyers at $335/ton), well above the $89/ton agreed earlier this year. This reflects concerns over global copper supply shortages and potential tariff impacts.

A series of mine shutdowns and smelter closures have intensified supply pressures, causing copper prices on the London Metal Exchange to surge above $11,000/ton in late October, reaching historic highs.

Corporate Developments: Tech and Energy Sector Adjustments

Dell reported Q3 adjusted EPS of $2.59, beating expectations of $2.47; quarterly revenue was $27.01 billion, slightly below the expected $27.13 billion. The company raised its AI server shipment forecast from $20 billion to $25 billion and increased its full-year revenue outlook from $107 billion to $111.7 billion.

Redwood Materials, a battery recycling company founded by Tesla co-founder JB Straubel, recently laid off 5%-6% of its staff. The company will refocus on grid-scale battery storage demand and allocate resources to critical minerals and energy storage sectors.

European Stocks Rise Broadly

European markets generally advanced, with Germany’s DAX 30 up 0.97%, France’s CAC 40 up 0.83%, and the UK’s FTSE 100 up 0.78%, reflecting relatively optimistic investor sentiment across Europe.

Key Events Today

Important data releases include New Zealand’s RBNZ rate decision, Switzerland’s November ZEW investor confidence index, UK fiscal budget plan, US initial jobless claims, US durable goods orders, US November Chicago PMI, and US September new home sales. Investors should monitor these closely.