European stocks slipped today, and US equity futures followed suit as investors weighed in on Donald Trump’s latest cabinet appointments and prepared for a wave of economic data expected to provide new insights into the US economy and the outlook for interest rates.
The Stoxx 600 index fell by 0.3% across Europe, reflecting investor caution as they digested the latest developments in the US political sphere. US S&P 500 futures were also down 0.2%, signaling a slightly negative sentiment as markets awaited crucial data. Treasury yields continued their downward trend, with the 10-year benchmark yield slipping four basis points to 4.27%.
A significant focus for investors was Trump’s recent appointments, particularly his selection of Jamieson Greer as the US Trade Representative and Kevin Hassett to lead the National Economic Council. Both Greer and Hassett have deep ties to Trump’s first-term economic and trade policies, with Greer being heavily involved in the administration’s tariff decisions. This has led to heightened concerns about the possibility of further tariff escalations.
“If we move closer to a scenario where across-the-board tariffs become a reality, it could trigger a major pullback in risk assets, equities, and credit,” said Wei Li, Global Chief Investment Strategist at BlackRock. “For now, the market is in a risk-on phase, but things could shift quickly depending on policy developments.”
Across the Atlantic, the euro strengthened, hitting its highest point of the day after European Central Bank (ECB) Executive Board member Isabel Schnabel cautioned against excessive interest rate cuts. Her remarks came amid ongoing market jitters in Europe, particularly in France, where political tensions over the national budget have caused concern about the stability of the government. The rising risk associated with French bonds is reminiscent of the uncertainty seen during the euro-area debt crisis.
Investor attention is now turning toward a slew of economic reports from the United States ahead of the Thanksgiving holiday. Key data expected to shape market sentiment includes the Federal Reserve’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index, initial jobless claims, and updates on US economic growth. Recent minutes from the Federal Reserve’s latest policy meeting suggested a careful approach to rate cuts, signaling that the central bank remains cautious as it assesses inflationary pressures and economic conditions.
On the geopolitical front, tensions in the Middle East appeared to ease after President Joe Biden announced that Israel and the Lebanese militant group Hezbollah had reached a cease-fire agreement. This development followed weeks of negotiations mediated by the US, helping to reduce some of the geopolitical risks that had been impacting global markets.
In the commodities market, oil prices steadied as reports indicated that OPEC+ is likely to delay plans to restore some of its output. This decision comes amidst the easing of geopolitical tensions following the cease-fire agreement, which helped stabilize oil prices in the short term.
As traders and investors prepare for the upcoming data releases and digest the political developments in both the US and Europe, markets remain in a state of cautious uncertainty. With potential tariff increases and ongoing political tensions in Europe, the outlook for the global economy remains highly fluid. Attention will remain on key economic indicators as traders await further guidance on the direction of US interest rates and the broader market outlook.
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