Stocks decline on long-term growth prospects

Stocks fell and gold climbed to a six-month high as data showed a sharp slowdown in China’s industrial profits, which reinforced investor concerns about its sluggish economy.

The Stoxx 600 index fell 0.3% and Nasdaq futures retreated 0.2%. Treasury 10-year yields climbed as much as five basis points to 4.51%, the highest in more than a week. Gold climbed to the highest since May, while the dollar was little changed.  

A slowdown in China’s industrial profit growth added to concern about deflation in the world’s second-largest economy. Fresh economic data this week will help traders gauge whether the gains for stocks and bonds seen so far this month can extend into December. Statistics include euro-zone inflation figures, China PMIs and US personal consumption numbers on Thursday, and US and euro-area PMIs on Friday.

“There’s not much fundamental reason for high market optimism,” said Ulrich Leuchtmann, head of currency strategy at Commerzbank AG. “A lot of clients I am talking to are getting more pessimistic about long-term growth prospects.”

The cautious start comes despite the VIX index, known as Wall Street’s “fear gauge,” falling last week to its lowest level since January 2020. Markets have been buoyed by a growing assumption that further interest-rate hikes from the Federal Reserve and European Central Bank are unlikely. 

In earnings due this week, Crowdstrike Holdings Inc. will underscore how businesses are prioritizing cybersecurity after recent high-profile corporate hacks, while Salesforce Inc. and Dell Technologies Inc. are expected to post slower sales growth as overall corporate expenditure tightens.

Gold’s Gains

Gold closed above $2,000 an ounce on Friday, capping a second weekly gain and bolstering confidence that higher prices are justified. The metal has been lifted in the second half of November by weaker US economic data that added to expectations for early rate cuts by the Fed next year.

Oil fell for a fourth day as traders looked ahead to this week’s delayed OPEC+ meeting. 

Key events this week: 

• European Central Bank President Christine Lagarde appears in parliamentary committee, Monday
• Australia retail sales, Tuesday
• NATO foreign ministers meet, Tuesday
• US Conf. Board consumer confidence, Tuesday
• Fed Governor Chris Waller, Chicago Fed President Austan Goolsbee speak at different events, Tuesday
• Australia CPI, Wednesday
• Reserve Bank of New Zealand policy decision, Wednesday
• Eurozone economic confidence, consumer confidence, Wednesday
• Bank of England Governor Andrew Bailey speaks, Wednesday
• US wholesale inventories, GDP, Wednesday
• Fed releases its Beige Book of regional economic activity, Wednesday
• Cleveland Fed President Loretta Mester speaks, Wednesday
• China non-manufacturing and manufacturing PMIs, Thursday
• Eurozone CPI, Thursday
• US PCE deflator, Thursday
• OPEC+ meeting, focused on finalizing output levels for 2024, Thursday
• China Caixin manufacturing PMI, Friday
• Eurozone manufacturing PMI, Friday
• UK S&P Global/CIPS Manufacturing PMI, Friday
• US construction spending, ISM Manufacturing, light vehicle sales, Friday
• Fed Chair Jerome Powell, Chicago Fed President Austan Goolsbee speak at separate events, Friday

Some key moves in markets: 

Stocks

• The Stoxx Europe 600 fell 0.3% as of 10:09 a.m. London time
• S&P 500 futures fell 0.2%
• Nasdaq 100 futures fell 0.2%
• Futures on the Dow Jones Industrial Average fell 0.3%
• The MSCI Asia Pacific Index fell 0.3%
• The MSCI Emerging Markets Index fell 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0949
• The Japanese yen was little changed at 149.30 per dollar
• The offshore yuan fell 0.2% to 7.1645 per dollar
• The British pound was little changed at $1.2602

Cryptocurrencies

• Bitcoin fell 0.7% to $37,352.38
• Ether fell 1.4% to $2,045.3

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.49%
• Germany’s 10-year yield was little changed at 2.65%
• Britain’s 10-year yield was little changed at 4.28%

Commodities

• Brent crude fell 1.2% to $79.65 a barrel
• Spot gold rose 0.6% to $2,013.31 an ounce