Stock Market Update

Equity futures point to a higher opening to kick off the last full trading week of the year. 

Stocks had an eventful previous week, with the FOMC's decision to lower the federal funds rate by 25 basis points and a generally optimistic tone from both Fed speakers and their projections driving some rotational gains into cyclical sectors. 

However, the AI trade pulled back as Broadcom (AVGO 361.79, +1.86, +0.5%) and Oracle (ORCL 188.20, -1.77, -0.9%) faced double-digit retreats in response to solid earnings reports, reigniting valuation concerns and sending many of the market's largest names lower. 

Mega-cap tech is modestly higher for the most part this morning, suggesting some buy-the-dip action could be in play. 

This week promises to be eventful on the data front, with market participants set to receive the November Employment Report on Tuesday, November Retail Sales on Wednesday, and the November Consumer Price Index on Thursday. 

In corporate news:

• The House Republican healthcare plan will expand association health plans, impose new transparency measures on pharmacy benefit managers, and fund cost-sharing reduction programs. The House will vote on this bill next week along with an amendment to extend Affordable Care Act subsidies. The amendment is expected to fail, according to Axios. 
• Coca-Cola (KO 70.55, +0.03, +0.0%) is in discussions to save the proposed sale of Costa Coffee, according to Financial Times. 
• Intel (INTC 38.34, +0.53, +1.4%) is in talks to acquire SambaNova, according to Bloomberg.
• Paramount Skydance (PSKY 13.79, +0.05, +0.4%) secured investors from the Middle East for Warner Bros. Discovery (WBD 29.92, -0.06, -0.2%) bid, according to The New York Post. 

Reviewing overnight developments:

Equity indices in the Asia-Pacific region began the week on a lower note. Japan's Nikkei: -1.3%, Hong Kong's Hang Seng: -1.3%, China's Shanghai Composite: -0.6%, India's Sensex: -0.1%, South Korea's Kospi: -1.8%, Australia's ASX All Ordinaries: -0.7%.

In news:

• China reported underwhelming growth figures for November with Retail Sales growth (1.3%) slowing to its worst pace since late 2022 while house prices fell again. The Unemployment Rate stayed at 5.1%, making for a small silver lining.
• China added roughly 300 steel products to its list of items that require an export license.
• Reserve Bank of New Zealand Governor Breman said that financial conditions have tightened more than expected since the central bank's November meeting.

In economic data:

• China's November Industrial Production 4.8% yr/yr (expected 5.0%; last 4.9%), November Retail Sales 1.3% yr/yr (expected 3.0%; last 2.9%), and November Fixed Asset Investment -2.6% yr/yr (expected -2.4%; last -1.7%). November Unemployment Rate 5.1%, as expected (last 5.1%) and November House Prices -2.4% yr/yr (last -2.2%)
• Japan's Q4 Tankan Large Manufacturers Index 15, as expected (last 14) and Large Non-Manufacturers Index 28, as expected (last 28). Tankan All Big Industry Capex 12.6% (expected 12.0%; last 12.5%). Tankan Q4 Small Manufacturing Index 6 (expected 2; last 1). October Tertiary Industry Activity Index -0.70 (last 4.70)
• South Korea's November trade surplus $9.74 bln (last surplus of $9.74 bln). November Imports 1.1% yr/yr (last 1.2%) and Exports 8.4% yr/yr (last 8.4%)
• India's November trade deficit $24.53 bln (last deficit of $41.68 bln). November WPI Inflation -0.32% yr/yr (expected -0.60%; last -1.21%)
• Hong Kong's Q3 PPI 7.7% (last 4.0%)
• New Zealand's November Performance of Services Index 46.9 (last 48.4)

Major European indices trade in the green. STOXX Europe 600: +0.9% Germany's DAX: +0.3% U.K.'s FTSE 100: +1.0% France's CAC 40: +1.1% Italy's FTSE MIB: +1.4% Spain's IBEX 35: +1.1%.

In news:

• U.S. envoy Witkoff met with Ukraine's President Zelensky over the weekend and they are expected to continue their search for an acceptable peace deal today.
• Switzerland's SECO raised its domestic growth forecast for 2026 to 1.1% from 0.9% while the CPI outlook for 2026 was lowered to 0.2% from 0.5%.
• Meanwhile, KOF also raised its domestic growth forecast for 2026 to 1.1% from 0.9% while the CPI outlook was cut to 0.3% from 0.5%.

In economic data:

• Eurozone's October Industrial Production 0.8% m/m (last 0.2%); 2.0% yr/yr (last 1.2%)
• Germany's November WPI 0.3% m/m (last 0.3%); 1.5% yr/yr (last 1.1%)
• Swiss November PPI -0.5% m/m (last -0.3%); -1.6% yr/yr (last -1.7%)