Weekly market commentary

Market review

Global markets extended their rally into early December, buoyed by growing expectations of monetary easing and resilient consumer data. US, European and Asian equity markets gained, while the VIX index, which measures the market’s expectation of 30-day volatility in the S&P 500 index, dropped to the lowest since October. Investor sentiment was further lifted by strong Black Friday sales in the US, signalling continued consumer strength.

The key driver remains speculation around the Federal Reserve’s next move. Futures markets now price over 90% probability of a 25bps rate cut at the December meeting, following commentary from Fed speakers. This dovish tilt supported risk assets and steepened yield curves, with long-dated US Treasury yields edging higher as markets anticipate a gradual policy shift. Lower short-term rates often steepen the curve because investors expect stronger growth and inflation later, which pushes long-term yields higher.

In Europe, flash estimates show Eurozone inflation holding close to the target 2%, reinforcing expectations that the ECB will maintain its current stance for now. While price pressures have eased significantly from last year’s highs, policymakers remain cautious about declaring victory over inflation.

COP30 was held on the edge of the Amazon Rainforest this year. Whilst the meeting of governments showed that multilateralism is still alive despite a year of rising geopolitical tensions, a failure to agree a roadmap to phase out fossil fuels, or advance rules to enable carbon markets, means the meeting is unlikely to have an immediate impact on markets.

A notable event at the end of last week was the temporary outage at CME Group’s data centre, caused by a cooling system failure. The disruption halted futures and FX trading for several hours, impacting liquidity during the Black Friday session. While operations resumed later in the day, the incident highlighted the vulnerability of critical market infrastructure and briefly unsettled trading activity.

Outlook

Markets remain sensitive to shifting economic data and geopolitical risks, with volatility clustering around key announcements. Diverging inflation paths and uneven growth are driving increasingly asymmetric central bank policies, while fiscal dynamics and liquidity conditions add complexity. This backdrop sets the stage for greater dispersion across assets and regions in the months ahead.

Movers table