U.S. stock futures edged lower on Monday following a strong performance by the S&P 500 and Nasdaq Composite, produced three winning weeks in a row. This cautious start to the week comes ahead of key inflation data set to be released, which will provide crucial insight into the Federal Reserve’s upcoming policy decisions. The November jobs report, which showed stronger-than-expected growth, has already influenced market sentiment. With the Fed in a blackout period before its policy-setting meeting, investors are keenly awaiting the November consumer price index (CPI) data due on Wednesday. Economists surveyed by Dow Jones anticipate a slight increase in pricing pressures, with expected monthly and yearly rises of 0.3% and 2.7%, respectively, up from the previous month’s 0.2% and 2.6%.

European markets opened the week with mixed results as investors navigated ongoing geopolitical turmoil. Major regional bourses pared back most of their earlier gains, though European luxury stocks saw a boost, with Gucci-owner Kering rising as much as 4% at one point. The market’s attention was also focused on the Middle East, where the recent ousting of Syrian President Bashar al-Assad by rebel forces has created uncertainty. Western leaders have responded cautiously to the overthrow, concerned about the potential for a power vacuum and increased instability in the region.

China’s recent announcement of “more proactive” fiscal measures and “moderately” looser monetary policy aimed at boosting domestic consumption had mixed effects on regional markets. Before the news, mainland China’s CSI 300 index saw a slight decline of 0.17%, while Hong Kong’s Hang Seng index surged nearly 3%. In South Korea, political turmoil following President Yoon Suk Yeol’s survival of an impeachment vote and the aftermath of his brief martial law declaration led to significant market drops. The Kospi index fell by 2.78%, and the small-cap Kosdaq plummeted 5.19% to 627.01 as investors remained cautious. Meanwhile, Japan’s Nikkei 225 experienced a modest increase of 0.18%, and Australia’s S&P/ASX 200 ended the day with marginal gains.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday before the bell include MOMO. After the bell reports include BRZE, AI, CASY, MDB, ORCL, PHR, MTN, TOL, YEXT.

News & Technicals’

Since Donald Trump became president-elect, nearly $10 billion has flowed into U.S. exchange-traded funds (ETFs) that invest directly in Bitcoin. This surge, totaling about $9.9 billion in net inflows, reflects investor optimism that Trump’s favorable stance on the crypto sector will drive market growth. Major issuers like BlackRock Inc. and Fidelity Investments have been key beneficiaries of this trend. Additionally, Trump’s recent appointments of a digital-asset supporter as the head of the U.S. securities regulator and the first-ever White House czar for artificial intelligence and crypto have further fueled expectations of a booming crypto market.

On Monday, the 10-year U.S. Treasury yield inched up by approximately 1 basis point to 4.17%, as investors evaluated the potential impact of recent jobs data on the Federal Reserve’s upcoming interest rate decision. Similarly, the 2-year Treasury yield rose by 1 basis point to 4.11%. This slight increase comes after a dip last week. Investors are now turning their attention to key economic indicators due later this week, including fresh inflation data on Wednesday and the latest producer price index on Thursday. Additionally, business confidence and mortgage data releases are expected, although no major data points are scheduled for Monday.

President-elect Donald Trump has stated that he does not intend to replace Federal Reserve Chair Jerome Powell, whose term extends until May 2026. In an interview at Trump Tower, Trump responded to a question about Powell’s potential replacement by saying, “No, I don’t think so. I don’t see it.” He added that while Powell might comply if directly told to step down, he would likely resist if merely asked. This exchange highlights the ongoing dialogue about the Federal Reserve’s leadership as Trump prepares to take office.

Over the weekend, significant political upheavals occurred globally: Syria’s President Bashar Al-Assad reportedly fled to Russia, ending 50 years of Assad family rule; South Korea’s president survived an impeachment vote after declaring martial law for the first time in over 40 years; and France’s government collapsed following a no-confidence vote, a first in over 60 years. These events could cast a shadow over the typical year-end market rally, which usually sees markets climb. The full impact of these political developments remains uncertain, contributing to market volatility. However, positive U.S. economic data supports the case for a market rise. Traders are optimistic that the U.S. Federal Reserve will act as the market’s “Santa Claus” this year, with an 85% chance of a 25 basis points rate cut next week, according to the CME FedWatch tool, which is likely to boost markets.

Trade Wisely,

Doug