US Futures Slip; Dollar Up as French Turmoil Grows: Markets Wrap

(Bloomberg) — US stock futures signaled a modest pullback from Friday’s record S&P 500 close, while the dollar pushed higher as the crisis swirling around the French government deepened. 

Equities contracts slipped by about 0.2%, suggesting a pause in the rally that produced the S&P 500’s strongest month of the year. In Europe, Stellantis NV shares plunged more than 8% after Chief Executive Officer Carlos Tavares stepped down from the automaker following a dispute with the board. 

The Bloomberg dollar index climbed 0.4%, while the euro fell after France’s far-right party threatened to topple the government amid a stand-off over the nation’s budget. French bonds declined and the CAC 40 stock index dropped in Paris.

“There’s certainly a political instability and the securities, the French government bonds, are pricing that instability,” Ecaterina Bigos of AXA Investment Management told Bloomberg TV. “Political instability creates uncertainty, but what is more important is what is France going to do to bring that deficit down?”  

Meanwhile, Treasuries dipped as traders looked ahead to US data that may help shape Federal Reserve policy and assessed hawkish comments from the Bank of Japan. The dollar was further supported by Donald Trump’s comments that the BRICS nations shouldn’t create a currency to rival the greenback, another reminder of the US president-elect’s America-first agenda. 

“A Trump presidency is going to put upward pressure on the US dollar given some of the policy stance, the tariffs and others, that he’s been talking about,” said Jun Bei Liu, a portfolio manager at Tribeca Investment Partners Pty Ltd.

While the dollar has gained about 2% since the Nov. 5 election, December is typically a month that has punished the greenback. The dollar posted losses in eight of the last 10 Decembers, often a victim of year-end portfolio rebalancing flows and the so-called Santa Rally that emboldens traders to sell dollars for riskier assets like stocks. 

And the chances of sudden price swings are greater this time around with the risk of Trump’s social media posts roiling markets, unnerving traders in a month that also has nine major central bank policy meetings and a deluge of key economic data. 

Among global events in focus this week, Fed Chair Jerome Powell participates in a moderated discussion on Wednesday. Data due Friday will offer an assessment of the US jobs market.  

The euro dropped 0.6%. The single currency may be in for additional weakness after Governing Council member Martins Kazaks told a broadcaster that the European Central Bank should continue to cut borrowing costs. 

France’s budget drama dragged down banking stocks, with Societe Generale SA, Credit Agricole SA and BNP Paribas SA all lower. Oddo BHF strategist Thomas Zlowodzki said the government’s potential collapse isn’t priced into French assets. He suggested the CAC 40 could fall 5% and that the spread between French and German bond yields may widen further.  

In Asia Monday, stocks rose on signs of economic stabilization in China. Manufacturing activity in the world’s second-largest economy expanded for a second straight month in November, according to a private survey on Monday. Bank of Japan Governor Kazuo Ueda said rate hikes are “nearing” as economic trends develop in line with the central bank’s forecasts. 

The Chinese data also supported oil prices. The rallying greenback triggered a drop in the price of gold. 

Key events this week: 

• Eurozone Manufacturing PMI, unemployment, Monday
• UK S&P Global/CIPS UK Manufacturing PMI, Monday
• FT Global Banking Summit in London through Dec. 4, Tuesday;  BOE Governor Andrew Bailey will be a panelist
• China Caixin services PMI, Wednesday
• Eurozone S&P Global Eurozone Services PMI, PPI, Wednesday
• ECB President Christine Lagarde appears before European Parliament committees, Wednesday
• Fed Chair Jerome Powell speaks, Wednesday
• OECD publishes economic outlook, Wednesday
• Eurozone retail sales, Thursday
• Germany factory orders, Thursday
• OPEC and non-OPEC ministerial meeting, Thursday
• India rate decision, Friday
• Eurozone GDP, Friday
• US unemployment, nonfarm payrolls, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.2% as of 5:56 a.m. New York time
• Nasdaq 100 futures fell 0.2%
• Futures on the Dow Jones Industrial Average fell 0.1%
• The Stoxx Europe 600 rose 0.2%
• The MSCI World Index was little changed

Currencies

• The Bloomberg Dollar Spot Index rose 0.4%
• The euro fell 0.5% to $1.0522
• The British pound fell 0.2% to $1.2707
• The Japanese yen fell 0.3% to 150.21 per dollar

Cryptocurrencies

• Bitcoin fell 3% to $94,929.57
• Ether fell 3.5% to $3,577.87

Bonds

• The yield on 10-year Treasuries advanced four basis points to 4.21%
• Germany’s 10-year yield declined three basis points to 2.05%
• Britain’s 10-year yield was little changed at 4.24%

Commodities

• West Texas Intermediate crude rose 0.9% to $68.63 a barrel
• Spot gold fell 0.3% to $2,635.36 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Catherine Bosley.

©2024 Bloomberg L.P.