The Monday Market Minute
- Global stocks slip lower on final trading day of a record-setting November, while the dollar hits a two-year low on spending and stimulus impact bets.
- Wall Street's November gains, propelled by vaccine breakthroughs and the pending administration of President Elect Joe Biden, are the best since 1928.
- Janet Yellen's expected appointment as Treasury Secretary, as well as the assumption of a split Congress, could compel the Federal Reserve into deeper monetary support in the coming year, pushing the dollar to the lowest levels since 2018.
- Black Friday traffic slump as pandemic keeps shoppers at home, but Cyber Monday is set to break records as retailers brace for a record wave of online purchases.
- Oil prices ease ahead of OPEC meeting, with reports suggesting Saudi Arabia favors extending existing production cuts into March of next year.
- Wall Street futures point to softer open ahead of Chicago PMI data at 9:45 am Eastern time and pending home sales for November at 10: am Eastern time.
U.S. equity futures slipped lower Monday, while the dollar slump to levels last seen in 2018, as investors pared gains from one of the best November performances on record and began to adjust to changes in spending and stimulus from the incoming administration of President Elect Joe Biden.
Stocks pared some of their earlier declines, however, following a positive coronavirus vaccine update from Moderna (MRNA) - Get Report and its plan to file for Emergency Use Authorization with the Food & Drug Administration later today.
The dollar index, which tracks the greenback against a basket of six global currencies, fell 0.16% in overnight trading to 91.639, the lowest in more than two years, as traders and investors bet that the selection of former Federal Reserve Chairwoman Janet Yellen as Treasury Secretary would trigger a more expansionist form of fiscal policy as the economy looks to pull out of its coronavirus malaise.
Similar assumptions -- as well as notable breakthroughs in vaccine development from Pfizer (PFE) - Get Report BioNTech (BNTX) - Get Report and Moderna-- have had the much the opposite effect on stocks, however, with world shares notching their strongest November gains on record and Wall Street seeing the best monthly advance since 1928.
With Fed Chair Jerome Powell set to testify before the House and Senate banking committees later this week, and a key reading of November payrolls set for Friday, investors will get a much better glimpse of both the economy's underlying fundamentals as well as the support objectives of its principal benefactor.
Those comments will be set against data showing a sharp decline in in-store traffic on Black Friday, which fell by more than 50% in some major cities, and what could be a record online haul for retailers over Cyber Monday, when analyst expect purchases of between $10.8 billion and $12.7 billion.
Futures contracts tied to the Dow Jones Industrial Average, which is up 12.86% for the month after breaching the 30,000 point barrier late last week, are priced for a modest 100 point opening bell decline to kick of the final trading day of the month. Those linked to the S&P 500, meanwhile, which is up 12.62% for the year, are set for a 7 point pullback.
Nasdaq Composite futures are also suggesting a weaker open, with the tech-focused benchmark looking to add around 35 points to its November advance of 10.9%.
Global oil prices were the more active asset class in overnight trading, however, as U.S. held near the $45 per barrel mark heading into today's meeting of OPEC ministers, as well as those from allies such as Russia, that will ostensibly decide the cartel's path on production over the first half of next year.
Reports suggest that Saudi Arabia, its de-facto leader, supports an extension of the current production cut agreement, which is taking 7.7 million barrels of oil from the market each day, until at least March, while a minority of members will push for a tapering of around 2.2 million barrels per day.
WTI crude futures contracts for January delivery, the new U.S. benchmark, traded 73 cents lower from their Friday close in New York and were changing hands at $44.80 per barrel in early European dealing, while Brent contracts for January delivery, the global benchmark, fell 96 cents to $47.22 per barrel.
European shares were little-change in the opening hours of trading in Frankfurt and London, although stocks pared gains from the best month on record amid concerns that Brexit trade talks could collapse in the coming days as both sides continue to struggle to find consensus on myriad issues heading into an end-December deadline.
The Stoxx 600 benchmark, the region's broadest measure of share prices, was marked 0.01% lower on the session, while London's FTSE 100 trading 0.25% to the upside even as the pound held at 1.3321 against the U.S. dollar. Germany's DAX performance index, which is sensitive to trade and economic data, was marked 0.32% higher following a stronger-than-expected reading of business and factory gate activity from China, which also showed a jump in November import orders.
The China PMI data failed to boost regional shares on the session, however, as the MSCI ex-Japan benchmark slipped 1.5% from its recent all-time high, thanks in part to declines in Hong Kong and South Korea, while Japan's Nikkei 225 ended its best November since 1994 with a modest 0.76% decline that pegged the index at 26,433.62 points.