Global markets mixed as investors eye Fed policy, weak economic data

Global markets showed a mixed performance on Wednesday as investors reacted to economic data, corporate updates, and shifting central bank expectations. In the US, stocks extended their recent recovery as sentiment turned toward the likelihood of easier Federal Reserve (Fed) policy. The Dow rose 0.90%, while the S&P 500 and Nasdaq added 0.40% and 0.20% respectively, with financials and defensive sectors leading gains. Momentum was further underpinned by an unexpected 32 000 drop in ADP private payrolls, reinforcing the view that a Fed rate cut is increasingly probable.

Across the Atlantic, European equities closed largely flat as investors navigated corporate news and contrasting monetary signals from the Fed and European Central Bank (ECB). The Eurozone’s STOXX 50 inched up 0.10% to 5 693 points, while the broader STOXX 600 gained 0.10% to 576. ECB President Christine Lagarde indicated that inflation is likely to remain near target, though Executive Board member Philip Lane warned of potential upside risks. Weak US labour data further strengthened expectations of a Fed cut, highlighting the growing divergence in policy outlooks between the US and Europe.

In Asia, Chinese markets fell as disappointing services-sector data fuelled concerns over the pace of economic growth. A private survey showed services activity slowing to a five-month low in November amid softer new business expansion. The Shanghai Composite dropped 0.51% to 3 878 points, and the Shenzhen Component fell 0.78% to 12 955. Investors are now focusing on the upcoming Central Economic Work Conference and December Politburo meeting for signals on Beijing’s policy direction and growth targets for next year.

Locally, South Africa’s rand slipped to R17.07 against the dollar as a PMI indicated ongoing weakness in business conditions. Private-sector activity contracted for a second straight month in November, with the PMI rising slightly to 49.0 but remaining below the 50.0 expansion threshold. Input costs surged at the fastest pace in over a year, driving the steepest rise in output charges since February. The data follow a week of softer economic indicators, including slower Q3 GDP growth, weak manufacturing figures, disappointing November vehicle sales, and a December fuel price hike. Attention now turns to today’s current account release and Friday’s foreign reserves figures. Despite the rand’s weakness, local markets were firmer, with the FTSE/JSE All Share Index up 0.57% and the 2035 government bond yield down 11.5 basis points to 8.31%.

Commodity markets reflected a similar divergence. Gold held steady at $4 202.06 an ounce, supported by the weak US payrolls data that reinforced expectations of a rate cut, while silver hit a fresh record high. Oil prices, meanwhile, declined for a second consecutive session as investors weighed the potential for increased supply if a peace deal emerges from Russia–Ukraine talks — Brent crude traded near $62.47 a barrel and West Texas Intermediate hovered around $58.67.