Economy

(Reuters) -U.S. stock futures rose ahead of a curtailed trading session on Black Friday, with Wall Street’s main indexes set for monthly gains as the holiday shopping season kicked off, turning the spotlight on retail stocks.Investors will scrutinize the stocks of retailers expected to attract millions of shoppers with their deep Black Friday discounts, as customers start their year-end holiday shopping.The National Retail (NYSE:NNN) Federation, a U.S. trade group, expects roughly 85.6 million shoppers to visit stores this year, up from 76 million on Black Friday in 2023.Shares of Target (NYSE:TGT) rose 0.7%, TJX (NYSE:TJX) climbed 0.5%, Walmart (NYSE:WMT) edged up 0.2% and Nike (NYSE:NKE) added 0.5% in premarket trading.”This mega promotional event is a mixed blessing for retailers. It provokes such shopping mania in the quest for a good deal that around three quarters of people will actually put off spending in the run-up to the event,” said Susannah Streeter, head of money and markets at Hargreaves (LON:HRGV) Lansdown.”During the promotional period, it also means selling at a discount… (which) means a smaller profit margin at a time when they are being squeezed by rising staff costs.”At 07:06 a.m., Dow E-minis were up 172 points, or 0.38%, S&P 500 E-minis were up 17.75 points, or 0.30%, and Nasdaq 100 E-minis were up 69.25 points, or 0.33%.Futures tracking the small-cap Russell 2000 index rose 1%.Wall Street’s main indexes closed lower on Wednesday, the eve of the Thanksgiving Holiday, after data showed signs of sticky inflation, bolstering bets the U.S. Federal Reserve could stay cautious on interest-rate cuts in 2025. The three main indexes were on track for monthly gains, with the benchmark S&P set for its biggest one-month rise since February. An index tracking small-cap companies hit a record high earlier in the week and was poised for its steepest monthly rise so far this year.President-elect Donald Trump’s victory in the U.S. presidential election earlier this month, along with his Republican Party winning the majority in both houses of Congress, provided the latest boost for equities.Investors were pricing in expectations Trump’s policies on tax cuts, tariffs and deregulation could spur economic growth and corporate performance. However, concerns remained that the policies could also stoke upside price pressures, slow the pace of the Fed’s policy easing and weigh on global growth prevail.Traders expect the central bank to lower borrowing costs by 25 basis points at its December meeting, but see it pausing rate cuts in January and March, according to the CME Group’s (NASDAQ:CME) FedWatch.Speaking about Trump’s plan to impose tariffs on the country’s top trade partners, President Joe Biden said he hopes the president-elect will rethink his plan, saying it could “screw up” the United States’ relationships with close allies.Crypto stocks were up as bitcoin climbed 2.3%, trading at about $97,000. MicroStrategyO > rose 4.7%, MARA Holdings added 1.9%, and Bit Digital advanced 3.8%.Applied Therapeutics (NASDAQ:APLT) plunged 72% after the U.S. Food and Drug Administration declined to approve its drug for the treatment of a rare genetic metabolic disease.Analysts expect stock moves to be impacted by thin volumes after Thursday’s Thanksgiving holiday. More

U.S. President-elect Donald Trump’s pledge to impose steep tariffs on Canada, Mexico and China has jolted markets and upended interest rate and inflation forecasts.Here’s what to look out for in the week ahead, from Kevin Buckland in Tokyo, Ira Iosebashvili in New York and Dhara Ranasinghe, Karin Strohecker and Amanda Cooper in London.1/ HOLDING ON?Traders got a taste of what the months ahead may look like. Trump’s pledge to slap tariffs on some of the United States’ major trading partners has juiced up the dollar even more.The greenback rose more than 1.5% against the Canadian and Mexican currencies, highlighting sensitivity to Trump-related headlines and uncertainty over his policies. So, November ends with the biggest monthly fall in the euro since early 2022, the steepest drop in German bond yields this year, the biggest bitcoin surge since February and one of the biggest monthly jumps in U.S. stocks this year. Now for a volatile December. Trump aside, U.S. and euro area rates are tipped to fall, Japan’s could rise. Geopolitics may bring relief (Middle East) and fear (Russia/Ukraine) as well as add political turbulence (France, Germany).2/ IMPASSETensions escalated in France over Prime Minister Michel Barnier’s proposed budget, which contains 60 billion euros in painful tax rises and spending cuts. Far-right National Rally leader, and coalition partner, Marine Le Pen has threatened to topple the government over it and speculation is rising that this could happen by Christmas. French bonds haven’t sold off too hard, but they’ve lagged the market so badly the premium France must pay to borrow over 10 years relative to Germany is back to 2012 crisis-era highs. The government will try to push through the social security budget on Monday and failure to do so would trigger a no-confidence motion.3/ TARIFF FEAR, STIMULUS FAITH Trump’s threat of new tariffs on Mexico, China and Canada hit Asian markets hard, but mainland shares have mostly shrugged off talk of a 10% levy on all Chinese imports, partly because it was lower than the 60% he campaigned on. But analysts think Beijing could produce whatever new stimulus is needed to counter the economic drag of a trade war, and several say the ultimate result will be an acceleration of China’s high-tech self-sufficiency drive. The biggest loser has been staunch U.S. ally Japan, with the Nikkei down about 1.4% since Trump’s Truth Social post, mostly led by auto stocks. Yet Honda (NYSE:HMC) is the top-ranking automaker after Tesla (NASDAQ:TSLA) on Cars.com’s “Made in America” list, with Toyota (NYSE:TM)’s Camry sedan and Highlander SUV also rating highly. Mexican factories remain a vulnerability for everyone, particularly for high-margin, top-selling pickup trucks.4/ PRICED FOR PERFECTIONAs U.S. stocks hover near record highs, investors await next Friday’s jobs report for a clearer picture of how the economy is faring ahead of the Federal Reserve’s December meeting. Robust U.S growth has helped power stocks higher all year, even as it raises concerns of an inflationary rebound that can undo the Fed’s progress in taming consumer prices.But another blowout jobs report, such as the one that shocked markets in October, could derail expectations for how much the Fed will be able to cut in the months ahead, potentially shaking an important pillar of the stocks rally.Indeed, minutes of the last policy meeting showed Fed officials aren’t unanimous on how much more rates should fall.Economists polled by Reuters expect the U.S. to have created 183,000 new jobs last month.5/ AFRICAN FIRSTSouth Africa takes over the G20 presidency on Sunday, the first African country to lead the group that represents 85% of the world’s economy, 75% of its trade and 67% of its population.President Cyril Ramaphosa wants to focus on climate change, inclusive growth, food security and artificial intelligence. But his agenda might be bumping up against the reality of trade wars and diplomatic tensions as Trump moves into the White House.South Africa is the fourth emerging market in a row to assume the chair after Indonesia, India and Brazil, and will hand the baton to the U.S. in December 2025. (This story has been corrected to say that the government will try to push through the social security budget on Monday, not that the Senate will debate the bill on Monday, in paragraph 11) More

TOKYO/LONDON (Reuters) – The yen jumped more than 1% against the U.S. dollar to a six-week high on Friday after faster-than-expected inflation in Tokyo supported bets for a Bank of Japan interest rate hike next month.The dollar dipped slightly against its peers in trading thinned by the U.S. Thanksgiving holiday.”The yen is turning into the latest momentum trade … with little friction to prevent it rising in thin holiday trade,” said Matt Simpson, senior market analyst at City Index.The dollar was down 1% to 150.03 yen , and earlier dipped to 149.53 yen for the first time since Oct. 21.The dollar index, which measures the currency against major peers, fell to a two-week low of 105.61 and was last down 0.11% at 105.95.The dollar remains on track for a 2% rise in November, fuelled by Donald Trump’s clear-cut election victory on Nov. 5, which pumped up expectations of big fiscal spending, higher tariffs and tighter borders – all regarded by economists as inflationary.Yet the U.S. currency has dropped in recent days. The yen has been the star of the week, set for gains of more than 3%, which would be its best week since July.A fall in U.S. Treasury bond yields has exacerbated the dollar’s declines, while Japan’s currency has been boosted by safe-haven flows amid Trump’s threats of broad tariffs, and by growing bets on BOJ hikes.Traders currently lay about 60% odds for a quarter-point increase on Dec. 19, and just over half of economists in a Reuters poll predicted the same.Potentially adding to the case for an increase, Tokyo’s core consumer price index (CPI), which excludes volatile fresh food costs, rose 2.2% year-on-year in November from a year earlier, up from 1.8% last month and beating forecasts for a 2.1% gain.However, Mizuho (NYSE:MFG) Securities strategist Shoki Omori expects the BOJ to keep policy settings steady next month. “Markets are overreacting to Tokyo CPI results,” he said. “Looks like algos kicked in and took this ‘headline opportunity’ to short dollar-yen,” Omori said, referring to computer-driven trading against the U.S. currency.The euro was very slightly higher at $1.056. Sterling climbed 0.1% to $1.2698, after earlier hitting a two-week high at $1.275.Nicholas Rees, FX market analyst at Monex Europe, said the rally in currencies against the dollar this week was partly technical. U.S. stocks, bonds and the dollar have risen in November, so some investors need to sell at month-end to make sure they’re not above their target allocations to U.S. assets.”We got a big run-up in the dollar this month, so portfolios have to be rebalanced,” Rees said.A reading of euro-area inflation is due at 1000 GMT (1100 CET) and could give hints on the pace of European Central Bank rate cuts, while investors are alert to France’s budget wrangling.ECB policymaker Francois Villeroy de Galhau said on Thursday that the central bank should keep its options open for a bigger rate cut next month, countering hawkish comments from peer Isabel Schnabel the previous day. The euro has tumbled about 3% in November as the dollar has rallied, putting it on course for its worst month since May of last year, though it has jumped 1.45% this week.Bitcoin climbed about 2.5% to $97,480, trying to claw its way back to the record high of $99,830 from a week ago.This month, the leading cryptocurrency is set to book a 40% jump – its best performance since February – on bets for a more favourable regulatory environment under Trump. More

Infrastructure output, which makes up 40% of India’s industrial production and tracks activity across eight sectors, grew at a revised 2.4% in September. Last month, coal production increased 7.8% year-on-year compared to a 2.6% increase in September, while output of refinery products grew 5.2%, compared with a rise of 5.8% in September.Steel production grew 4.2%, against a revised 1.6% increase a month earlier. Cement output climbed 3.3% year-on-year, compared with September’s revised 7.2% increase, and fertiliser production rose 0.4%, against a 1.9% rise in the previous month.Electricity generation was up 0.6% from a revised 0.5% rise in the previous month.However, crude oil production decreased 4.8% compared with a 3.9% fall in September. Natural gas output fell 1.2% from a 1.3% decline a month ago. More

Investors pumped a substantial $12.19 billion into global equity funds, a jump of 32% compared with about $9.24 billion worth of net acquisitions in the week before, LSEG Lipper data showed. It marked the ninth consecutive weekly inflow.On Friday, global shares were on track for their best month since May, driven by optimism about strong U.S. growth and the artificial intelligence investment boom, despite concerns over political turmoil and economic slowdown in Europe.Last week, U.S. President-elect Donald Trump’s appointment of fiscal hawk Scott Bessent as U.S. Treasury Secretary raised market expectations of controlled debt levels in his second term, leading to a drop in Treasury yields.Investors picked a significant $12.78 billion worth of U.S. equity funds, extending net purchases into a fourth successive week. However, they withdrew $1.17 billion and $267 million out of Asian and European funds, respectively.The financial sector witnessed robust demand as it drew $2.65 billion in net purchases, the fifth weekly inflow in a row. Investors also snapped up consumer discretionary, tech and industrials sector funds totaling a hefty $1.01 billion, $807 million and $778 million, respectively.Global bond funds witnessed inflows for the 49th successive week. Investors poured $8.82 billion into these funds.Corporate bond funds received a net $2.16 billion, the biggest weekly inflow in four weeks. Government bond funds and loan participation funds also witnessed notable purchases, totaling a net $1.9 billion and $1.34 billion, respectively.At the same time, investors ditched $12.87 billion worth of money market funds in a second straight week of net sales.The gold and precious metals funds gained a net $538 million, marking a 14th weekly inflow in 16 weeks.Data covering 29,635 emerging market funds indicated that equity funds were out of favour for a fifth consecutive week with about $4.3 billion in net sales. Investors also divested bond funds to the tune of 2.58 billion, logging a sixth weekly net sales. More

India’s economy expanded by 5.4% in its second fiscal quarter ending September.
Economists polled by Reuters had forecast growth of 6.5% for the period, while the Reserve Bank of India expected an expansion of 7%.
Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis, said India’s economy will slow but not “collapse” in 2025.

Construction workers in Mumbai, India, on June 5, 2024. 
Bloomberg | Bloomberg | Getty Images

India’s economy expanded by just 5.4% in its second fiscal quarter ending September, well below estimates by economists and close to a two-year low.
The print follows 6.7% growth over the previous quarter and is the lowest reading since the last quarter of 2022. Economists polled by Reuters had forecast growth of 6.5% for the period, while the Reserve Bank of India expected an expansion of 7%.

The country’s statistics agency noted sluggish growth in manufacturing and the mining sector.
The yield on the country’s 10-year sovereign bond quickly sank to 6.74% after the release, from around 6.8%.
The weak GDP reading could potentially affect the country’s interest rate trajectory, with the RBI’s Monetary Policy Committee scheduled to meet between Dec. 6-8. Markets watchers had been expecting an eleventh consecutive pause by the RBI, with the repo rate currently at 6.5%.
Harry Chambers, an assistant economist at Capital Economics, said the Friday reading showed that weakness was “broad based.” His firm expects economic activity “to struggle over the coming quarters.”
“That bolsters the case for policy loosening, but the recent jump in inflation means the RBI won’t feel comfortable cutting interest rates for a few more months yet,” he said in research note.

Speaking to CNBC “Squawk Box Asia” before the GDP release, Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis, forecast that India’s economy will slow but not “collapse” in 2025.
She said that Natixis has a 2025 growth forecast of 6.4% for India — without clarifying whether this refers to the fiscal or calendar year — but added that the print could also come in as low as 6%, which she qualified as “not a bit problem, but it’s not welcome.”
Separately, the RBI projected that GDP growth for the 2024 fiscal year ending in March 2025 will reach a higher 7.2%.
Asked how India’s economy will fare under President-elect Donald Trump’s second presidency, Herrero said the country is “not really at the center of the reshuffling of the value chain that China has been conducting.”
“If I were the Trump administration, I would start [looking at tariffs for] Vietnam. That’s a much more obvious case,” she noted.
She said that China could make products in India for Indian consumption instead of exporting products globally — and as such, New Delhi could avoid getting hit by tariffs. More

Annual euro zone inflation rose to 2.3% in November, statistics agency Eurostat said Friday.
While it takes price rises back above the European Central Bank’s 2% target, the increase was expected and primarily down to effects from the energy market.

The stalls at the 590th Dresden Striezelmarkt are brightly lit at the opening.
Sebastian Kahnert | Picture Alliance | Getty Images

Annual euro zone inflation rose to 2.3% in November, statistics agency Eurostat said Friday, climbing back above the European Central Bank’s 2% target.
Economists polled by Reuters had expected the 2.3% annual rate for the month, up from 2% in October.

Price rises in the bloc have ticked higher for two straight months after dropping to 1.7% in September, as was expected due to the fading deflationary pull from energy prices.
Core inflation, excluding volatile energy, food, alcohol and tobacco prices, held at 2.7% for a third straight month in November.
The core rate is being propped up by the stickiness of services inflation, which only slid slightly to 3.9% in November from 4% during the previous month.

Markets have fully priced in a 25-basis-point interest rate cut from the ECB in December, which would mark the institution’s fourth trim of the year.
Speculation that the central bank could be pushed into a larger 50-basis-point cut has faded since last month, after slight improvements in the weak euro area growth outlook and a rebound in inflation.

Inflation came in slightly higher than forecast in October, while ECB policymakers, including executive board member Isabel Schnabel, have stressed the need for caution in monetary easing.
The ECB’s decision will largely be informed by the latest staff macroeconomic projections it will receive just ahead of its upcoming Dec. 12 meeting. The central bank will also be weighing the potential global impact of the recent election of Donald Trump as U.S. president, including whether he will follow through on his threats of universal trade tariffs and how such a step would impact European Union exports.

The euro was little-changed against the U.S. dollar and British pound following the data release.
Kyle Chapman, FX market analyst at Ballinger Group, said in an emailed note that the uptick in headline inflation was solely down to year-on-year energy price volatility, and that the ECB would look favorably on a 0.9 percentage point fall in month-on-month services inflation.  
“With the growth picture looking soft, there is still no doubt that inflation will fall to 2% on a sustainable basis next year,” Chapman said, adding that the market nonetheless appeared to have settled on a 25-basis-point move in December.
“The economy is not falling off a cliff just yet and there is uncertainty about where the neutral rate is, so there is no pressing need to start frontloading cuts,” he noted.
Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said the inflation figures, combined with recent data showing record low unemployment and higher negotiated wage growth in the third quarter, will prevent a 50-basis-point cut.
The final monetary policy decision will nevertheless remain a “close call,” with the more dovish members of the ECB pushing hard for a 50-basis-point trim, Debono said. If the central bank does stick with a 25-basis-point move, it will likely follow this step with cuts of the same size at both of its following meetings in January and March, she added. More

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