Macro data and headlines

The US ISM Manufacturing PMI rose to 48.4 from 46.5 and above the 47.5 consensus. New orders returned to expansion, rising from 47.1 to 50.4 while production rose to 46.8 from 46.2, prices fell to 50.3 from 54.8 and employment rose to 48.1 from 44.4. It was a goldilocks report that boosted sentiment on the state of the US economy.

Fed’s Chris Waller stated he leans towards supporting a cut in December, although added that one could argue a case for skipping a rate cut and that he will be watching data closely to decide. Waller is an influential member and his dovish-leaning comments sparked market optimism. Other Fed members like John Williams and Raphael Bostic also hinted at a December Fed rate cut.

Marine Le Pen’s far-right party pledged to topple French PM Michel Barnier’s government after he used a constitutional tool to push through parts of his budget bill without a parliamentary vote. Reuters reported that a no-confidence vote may be likely Wednesday. If the no-confidence vote passes (and nothing is certain in French politics) Barnier would have to tender his resignation. However, Reuters reports that "Macron may ask him and his government to stay on in a caretaker role to handle day-to-day business while he seeks a new prime minister, which could well happen only next year."

China’s top leaders plan to start the annual closed-door Central Economic Work Conference next Wednesday to map out economic targets and stimulus plans for 2025.

Equities

US: The S&P 500 and Nasdaq 100 closed at record highs, up 0.24% and 0.97% respectively, driven by large-cap tech stocks such as Meta (+3.2%), Tesla (+3.5%), and Apple (+1%). Super Micro Computer soared 28.7% after its financial reports were validated by a special committee. Conversely, the Dow Jones declined by 0.29% as industrials underperformed.

Asia: Japanese equities surged, with the Nikkei 225 rising 1.6% and the TOPIX up 1.3%, supported by gains in technology and industrial stocks like Tokyo Electron (+4%). South Korea's KOSPI also climbed 1.6%, led by tech giants Samsung and SK Hynix. Meanwhile, Chinese stocks saw mixed performance, with mainland indices down slightly, weighed by new US export restrictions on Chinese chipmakers, while Hong Kong's Hang Seng rose modestly.

Europe: European markets closed higher, with the Stoxx 50 gaining 1% and the Stoxx 600 rising 0.5%. Novo Nordisk, LVMH, and SAP were among the top performers. However, Stellantis dropped 6.3% following the abrupt resignation of CEO Carlos Tavares, citing board conflicts amid a challenging US market.China’s top leaders plan to start the annual closed-door Central Economic Work Conference next Wednesday to map out economic targets and stimulus plans for 2025, according to people familiar with the matter.

Volatility

Fixed Income

Commodities

Gold found fresh demand on Monday after briefly dipping towards $2620 as the dollar strengthened following Trump’s warning to BRICS against supporting dollar alternatives. Silver meanwhile traded higher overnight and are now in a better position to respond to supportive news after speculators cut their net long to a 9-month low.

WTI crude oil futures stabilized at $68, driven by positive economic data from China, as traders looked ahead to Thursday’s OPEC+ meeting and after a survey showed the group increased production by 120kbd last month.

European natural gas futures rose to near €50/MWh due to colder weather forecasts and supply concerns with inventories being 85% full, down from 95% last year.

Arabica coffee slumped the most since 2021 on Monday, down 7% driven by profit taking and margin calls in the futures markets, after prices failed to break the 1977 record.

Currencies

The dollar index rallied on Monday, weakening most G10 currencies, not least the euro which fell 1.1% against the dollar amid France's political crisis.

The yen outperformed, while the Swedish krona and Norwegian krone, and euro were among the weakest.

GBPUSD traded mixed, falling against the dollar after house prices rose by the most since March 2022, while rallying versus the under-pressure euro.

USDJPY trades back above 150 after Monday’s drop as yen gains were seen as excessive.