Amongst economic data releases, ADP reported that private sector payrolls had dropped by 32,000 in November, while ISM’s manufacturing purchasing managers’ index remained in contraction for a ninth consecutive month. Friday saw the delayed release of the Fed’s preferred inflation gauge, the personal consumption expenditures index, ticking up 0.3% month-on-month in September and 2.8% year-on-year, in line with forecasts.
For the week the S&P 500 rose 0.3%, the Dow Jones Industrial Average gained 0.5% and the Nasdaq Composite added 0.9%, in their second week of gains. The S&P is now within 0.5% of its record closing high. Energy and technology sectors were the best performers of the week. On Thursday the Russell 2000 index hit its seventh record close of the year. While there was a slight pullback on Friday the index still logged a 0.8% rise for the week, with small caps seen as beneficiaries of lower rates. Meanwhile Treasury yields ticked higher, with the 10-year note ending at 4.14%, whilst the US dollar weakened.
European stocks also benefited from the ongoing optimism around the Fed cutting interest rates this week. The pan-European STOXX 600 gained 0.4% although regional performance was mixed. Amongst gainers, Germany’s DAX was up 0.8%, helped by a rally on Friday as Chancellor Friedrich Merz managed to secure an absolute majority in parliament for a pensions bill. In contrast, France’s CAC 40 and the UK FTSE 100 were down 0.1% and 0.6% respectively. Autos and parts were some of the best performers for the week, helped by the Trump administration moving to reverse rules on fuel economy standards, as were basic resources on stronger metal prices.
In Japan, the Nikkei 225 was up 0.5% for the week, however the broader Topix index declined 0.5%. This came on pressure from rising bond yields. The yield on the 10-year Japanese government bond (JGB) hit its highest level since 2007, while the 30-year JGB hit a record high. Yields have crept up on concerns around the country’s stimulus package, as well as expectations that the Bank of Japan will imminently hike interest rates. Chinese markets made gains for the week, with the Shanghai Composite up 0.4%. Gains in technology helped to offset weaker economic data.