US Futures Rise on Fed Cut Bets; Dollar Rebounds: Markets Wrap

(Bloomberg) — American equity futures rose, tracking the rebound in Asian stocks after last week’s selloff, as subdued inflation data rekindled expectations of Federal Reserve rate cuts. The dollar advanced after a US government shutdown was averted.

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Contracts on the Nasdaq 100 added 0.7% and those on the S&P 500 rose 0.4% following gains on Wall Street on Friday after the so-called core personal consumption expenditures price index increased at the slowest pace since May.

Monday’s moves offer investors some respite after a stream of robust US economic data saw the Fed scale back the number of cuts it anticipates in 2025. Overall sentiment remains cautious as investors brace for the prospect of sweeping global tariffs imposed by US President-elect Donald Trump, and as China continues to see a lackluster economic recovery.

“Lower than expected US core PCE inflation data for November suggests that the Fed may have gotten too negative on inflation,” Shane Oliver, head of investment strategy and chief economist at AMP Ltd., wrote in a note to clients. “Our overall assessment remains that the trend in shares is still up, but expect a far more volatile and constrained ride over the year ahead.”

European stocks were little changed and bonds fell amid deepening pessimism about the region’s economic outlook.

The Stoxx Europe 600 benchmark hovered neat a four-month low. German 10-year bund yields rose three basis points and their French equivalents gained five basis points. The euro edged lower against the dollar.

The euro-area economy will pick up less momentum next year than previously foreseen and only expand slightly more strongly than in 2024, according to a Bloomberg survey. The predictions are more downbeat than those of the European Central Bank, which also lowered its outlook this month as it cut interest rates for the fourth time since June.

A Bloomberg gauge of the dollar rose after sliding 0.5% on Friday, and Treasury yields ticked higher. President Joe Biden signed funding legislation to keep the US government operating until mid-March, avoiding a year-end shutdown and kicking future spending decisions into Trump’s presidency.

A gauge of Asian equities snapped a six-day decline, with benchmarks in South Korea and Taiwan rising more than 1%. Asian stocks are set for their first quarterly loss since September 2023 while a gauge of the region’s currencies fell to its lowest in more than two years last week.

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