Rise and shine everyone.

US equities reached fresh record highs following stronger-than-expected November ISM Manufacturing PMI data, reflecting continued resilience in the economy. Prices paid also surprised to the downside.

The upbeat sentiment extended into Asia, where markets rallied. The Nikkei climbed 2.3%, and the Kospi gained 1.6%, with all major indices in the region closing higher. The USD strengthened, and USD/JPY retook the 150 level, supported by speculation of a Bank of Japan rate hike totaling 25 basis points by January, with market probabilities increasing to 87% from 83.5% last week. The next BOJ decision is are scheduled for December 19th.

In Australia, the Q3 current account posted its lowest figure since 2018, marking the sixth consecutive quarterly deficit. Falling export prices for iron ore and coal continued to weigh on the country’s terms of trade amid softer global demand. Meanwhile, South Korea’s November CPI fell more than expected. However, the Bank of Korea anticipates CPI will edge back toward 2% in the coming months due to base effects.

China introduced export bans on critical materials, including germanium, gallium, antimony, and superhard materials, effective today. The Ministry of Commerce also announced stricter graphite export reviews. These materials are essential for semiconductors, EV batteries, and solar technology, areas where China dominates global production. The move escalates tensions with the US as competition in strategic industries intensifies.

In Europe, political uncertainty in France reached new levels. Prime Minister Barnier invoked a constitutional provision to bypass parliament and push through portions of the budget, triggering outrage from opposition parties. Reports suggest far-right leader Marine Le Pen has secured enough support for a no-confidence vote, scheduled for December 4th. If successful, President Macron would need to appoint a caretaker prime minister while forming a new cabinet, as snap elections cannot be held before mid-2025. Analysts suggest Le Pen could continue disrupting governance to pressure Macron into stepping aside.

Fed futures adjusted slightly, pricing a higher likelihood of a 25-basis-point rate cut this month after dovish remarks from Fed officials Waller and Williams. All eyes are now on Fed Chair Powell’s interview at the DealBook Summit on December 4th.

In the US, the focus this week shifts to labor market data, with October JOLTS due today, leading into November Non-Farm Payrolls on Friday.

In terms of JOLTS, today’s estimate is for a marginal increase from last month. However, there is no doubt that the job market has been coming into better balance. Job Openings have been firmly trending lower, even though we still remain above pre-pandemic levels. The estimate for Friday’s NFP data is a whopping 200k job additions, which is far higher than last month’s 12k and the 6-month average of about 132k.

Chart of the Day

The US continues to lead the way… even in terms of earnings growth estimates.

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)