Morning Wrap (01.12.2025)

The recent rebound on Wall Street is slowing down at the beginning of December, a seasonally favorable time for the stock market due to the so-called "Santa Claus Rally." The most significant losses are seen in contracts for Nasdaq 100 (US100: -0.9%) and small Russell 2000 companies (US2000: -0.8%), with slightly milder declines in US500 (-0.7%) and US30 (-0.5%). EU50 is down 0.4%, similar to DE40, which erased gains from the last two sessions.

Donald Trump stated that "he knows who he will choose [as the next Fed chair] and will be announcing." According to Trump's chief economic advisor and potential candidate Kevin Hassett, the new Fed chair could be announced before the end of the year.

OPEC+ has agreed to maintain oil production limits for the year 2026 and approved a mechanism for assessing the maximum production capacity of member states, which will be used to set quotas from 2027. Additionally, eight OPEC+ countries have essentially agreed to halt production increases for the first quarter of 2026.

The realization of recent record profits is motivating declines in the Asian session. Nikkei 225 is losing the most (JP225: -1.9%), further burdened by the speech of the Bank of Japan's president, who for the first time suggested a potential rate hike in December. The Chinese HSCEI (CHN.cash: -0.3%) and Australian ASX/S&P 200 (AU200.cash: -0.4%) are also in the red.

Bank of Japan President Kazuo Ueda announced that "the bank is considering the pros and cons of raising interest rates at the December meeting." This is the first serious signal of a potential return to interest rate hikes in Japan, especially significant in light of concerns about dovish pressures from the new prime minister. Ueda emphasized that real rates (adjusted for inflation) remain very low, and the bank will continue to tighten monetary policy if macroeconomic data align with forecasts. The swap market currently prices about a 60% chance of a hike in December and 90% in January.

Japan's manufacturing PMI rose below expectations (48.7; forecast 48.8; previously 48.2), indicating a decline in industrial activity for the fifth consecutive month. The Japanese industry is still struggling with weakened demand and a drop in new orders, although business confidence has reached its highest level in 10 months, and prices have risen.

In the forex market, there is primarily a rebound in the yen, which has been under pressure for weeks due to the expansive fiscal policy of the new prime minister and the general increase in risk appetite (USDJPY, EURJPY: -0.3%, GBPJPY: -0.4%). The dollar index is trading flat, where losses against the yen are balanced by gains against emerging currencies (USDINR: +0.4%, USDZAR: +0.2%). The weakest G10 currency is the pound. EURUSD is flat at 1.159.

Brent and WTI oil are rebounding about 1.9% following OPEC's decision on production limits for 2026. NATGAS is correcting 1.8% after the last three rising sessions.

Precious metals are entering December in the green: platinum and palladium are gaining the most (2.5% and 2.1%, respectively), gold adds 0.4% to 4240 USD per ounce, and silver hits another ATH at 57 USD per ounce (+0.9%).

Bitcoin is sliding 5.5% to 86,000 USD, and Ethereum 6.9% to 2830 USD.