On Tuesday (December 3rd Beijing time), spot gold rose slightly by%, trading near 2639.52, as Hezbollah and Israel engaged in a firefight, further testing the fragile ceasefire agreement supporting gold prices; US crude oil traded around $68.12 per barrel, with strong demand and geopolitical tensions in the Middle East limiting the decline in oil prices. Federal Reserve Governor Waller said he is inclined to cut interest rates in December unless the data is unexpected. The policy interest rate is already restrictive enough, so even if a rate cut is made in December, there is ample room to slow down the pace of rate cuts as needed in the future

The Dow Jones Industrial Average fell 0.29% to 44782.00 points on Monday, the S&P 500 Index rose 0.24% to 6047.15 points, and the Nasdaq Composite Index rose 0.97% to 19403.95 points.

Key focus for the day: job vacancies in JOLTs in the United States in October, annual CPI rate in Switzerland in November, current account of Australia in the third quarter, and inquiries from party representatives in Japan.

equity market

The Nasdaq and S&P 500 indexes hit record closing highs on Monday, boosted by technology stocks, and the market rose strongly in November. Investors are waiting for this week's economic data, including the key monthly employment report to be released on Friday. The Dow Jones Industrial Average closed down. The Dow Jones Industrial Average and the S&P 500 Index both recorded their largest monthly percentage gains in a year on Friday.

On Monday, the technology, communication services, and non essential consumer goods sectors each rose by about 1%, while other sectors of the S&P 500 index fell. Tesla's stock price rose by 3.5%, and Stifel raised its target price for the stock. Rick Meckler, a partner at Cherry Lane Investments, a family investment firm based in New Vernon, New Jersey, said, "We are seeing a market that is in a period of seasonal strength gradually rising. Now is a difficult time for people to exit, but equally, I don't think there will be an explosive ending this year. There is too much uncertainty about our future, and no one is very clear about what the new government's economic plan is.

Former US President Trump returned to the White House in last month's election, and his Republican Party swept through both houses of Congress, boosting the stock market in November. Strategists believe that Trump's potential tax cuts and deregulation plans are positive for the stock market, but tariffs are negative.

Investors also digested comments from Federal Reserve Governor Waller that due to the still restrictive nature of monetary policy, he is inclined to lower the benchmark interest rate at the meeting on December 17-18.

Investors have been expecting the Federal Reserve to cut interest rates by 25 percentage points in December, but recent inflation data has raised concerns that the progress of the rate cut may have stalled. The Federal Reserve began cutting interest rates by 50 basis points in September, followed by a 25 basis point cut in November.

Earlier on Monday, the Institute for Supply Management (ISM) reported that manufacturing activity in the United States improved in November. In addition to Friday's highly anticipated employment report, investors will also see private sector employment growth data, ISM service sector report, and weekly initial jobless claims this week.

gold market

Gold prices fell on Monday, ending a four-day streak of gains as investors waited for key economic data and clues on the Federal Reserve's interest rate trend as the US dollar rebounded sharply.

Spot gold was reported at $2636.54 per ounce, down 0.6%, after a drop of 1% earlier in the day. US futures closed 0.8% lower at $2658.50. Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, stated that part of the reason for the strengthening of the US dollar is due to President elect Trump's statement that BRICS countries should avoid attempting to replace the dollar, which has put pressure on gold prices. Concerns have intensified that US interest rates will remain high for a longer period of time. This concern has triggered a 3% decline in non yield gold in November, the largest monthly drop since September 2023.

The US dollar index surged 0.7%, hitting its strongest single day performance in nearly four weeks. For buyers using other currencies, the cost of gold priced in US dollars is higher, putting pressure on gold.

This week's major US economic events include the release of job vacancy data, ADP employment report, and non farm payroll data. The speeches of Federal Reserve officials, including Chairman Powell, will also attract attention.

After cutting interest rates by 25 basis points to 4.50% -4.75% last month, the market currently believes that the probability of another interest rate cut in December is 64%, which is consistent with the expectations of major securities firms.

In other aspects, spot silver fell 0.6% to $30.41 per ounce; Platinum rose slightly by 0.1% to $946.25; Palladium rose 0.6% to $984.75.

Oil market

Oil prices remained relatively stable on Monday, as hopes for strong demand were largely offset by concerns that the Federal Reserve would not cut interest rates again at its December meeting. Brent crude oil futures closed down 1 cent, at $71.83 per barrel. US crude oil rose 10 cents to $68.10. A private sector survey shows that factory activity in China expanded at the fastest pace in five months in November, boosting optimism among businesses. Meanwhile, the ceasefire between Israel and Lebanon that came into effect last Wednesday seems increasingly fragile. The Israeli military stated on Monday that it is currently striking "terrorist" targets within Lebanon. Israel and the Lebanese armed group Hezbollah accuse each other of violating the ceasefire agreement.

Dennis Kissler, Senior Vice President of Trading at BOK Financial, said: Geopolitical risks continue to increase, and although a ceasefire is underway in Israel, it seems clear that there are some misunderstandings about whether the ceasefire is correct.

The OPEC+, consisting of the Organization of the Petroleum Exporting Countries and its allies, has postponed its next meeting to December 5th. OPEC+sources told Reuters last week that the meeting will discuss delaying the oil production increase plan originally scheduled to begin in January.

Another factor putting pressure on oil prices is Atlanta Fed President Bostic, who stated that he is open to whether to cut interest rates again at the Fed's December meeting, and the upcoming employment data will have a significant impact on this decision. High interest rates will increase borrowing costs, thereby slowing down economic activity and suppressing demand for oil.

foreign exchange market

The US dollar rose against a basket of currencies on Monday and recorded its first weekly decline since November 2023 last Friday. The euro fell against the strong US dollar on Monday due to growing concerns about the possible collapse of the French government, which would halt plans to curb the surge in budget deficits.

At the same time, the US dollar continued to rise after the release of strong US manufacturing data by the Institute for Supply Management (ISM) and S&P Global. However, despite the generally positive data, Federal Reserve Governor Waller stated on Monday that he is inclined to lower the benchmark interest rate at the meeting on December 17-18 due to the still restrictive nature of monetary policy.

In Europe, investors demanded a jump in the risk premium of holding French debt rather than benchmark German debt. Earlier, Baldera, the president of the French far right National Union, said that unless there was a "miracle at the last moment", the party might support a no confidence motion in the next few days.

National Union leader Le Pen has demanded that French Prime Minister Barnier meet the party's budget requirements by Monday. The euro fell 1% to $1.0469, marking its largest daily decline since early November.

Kyle Chapman, a foreign exchange market analyst at Ballinger Group, wrote in an email comment that the collapse of political confidence in France and the once again higher than expected economic activity data in the United States have brought a bad start to December for the euro. As expected, the interim government is now facing a vote of no confidence and is likely to fail, and new elections will not be held until the summer, so there is no clear way to reduce the deficit in the short term.

The yield difference between French and German 10-year bonds (a measure of the premium investors require to hold French debt) rose 7.6 basis points to 87.3 basis points, reaching 90 basis points last week, the highest level since the euro zone sovereign debt crisis in 2012.

Monday's data once again showed the resilience of the US economy, with manufacturing activity improving in November, orders increasing for the first time in eight months, and factories facing a significant drop in input prices.

The Purchasing Managers' Index for Manufacturing by the American Institute for Supply Management rose to 48.4 last month and 46.5 in October, the lowest level since July 2023. The final value of the S&P Global Manufacturing Purchasing Managers' Index also rose from the initial estimate of 48.8 to 49.7.

Juan Perez, the head of trading at Monex USA, said that due to the stable economic situation in the United States, it is reasonable for the US dollar to continue to rise as other economies across the ocean face more headwinds. Positive data will only lead to an increase in US bond yields and even lower expectations for the Federal Reserve to implement loose monetary policy.

However, Federal Reserve Governor Waller pointed out on Monday that "policy still has sufficient constraints, so we will not significantly change the stance of monetary policy by cutting interest rates again at the next meeting, and will leave enough room to slow down the pace of interest rate cuts in the future if needed

After Waller's comments, according to CME's FedWatch, the market raised the probability of a 25 basis point rate cut this month from 66% late last Friday to 79%. At the same time, the probability of interest rate futures suspending the Federal Reserve has decreased from 34% last Friday to 21%.

Due to US President elect Trump's demand for BRICS member countries to commit not to creating a new currency or supporting another currency, this marks a change in his previous stance of advocating for a weaker US dollar, which had risen earlier. The Kremlin stated on Monday that any attempt by the United States to force countries to use the US dollar would be counterproductive.

The key to the interest rate outlook will be the November employment report released on Friday, with a median forecast showing an increase of 195000 jobs in November following reports of weather and strikes in October. The unemployment rate will rise from 4.1% to 4.2%.

USD/JPY fell 0.2% to 149.37, down 3.3% last week, the worst since July. Over the weekend, Bank of Japan Governor Kazuo Ueda stated that after Japan's inflation rate rose in October, "from the perspective of economic data getting on track, the next rate hike is approaching.

international news 

Federal Reserve Governor Waller: inclined to cut interest rates in December

Federal Reserve Governor Waller stated that he is inclined to cut interest rates in December unless the data is unexpected. The policy interest rate is already restrictive enough, so even if it is cut in December, there is ample room to slow down the pace of interest rate cuts as needed in the future. If the data shows inaccurate predictions of slowing inflation, he will support keeping interest rates unchanged in December.

Atlanta Fed President says options for December meeting remain open

Atlanta Fed President Raphael Bostic stated that he has not yet decided whether to cut interest rates this month, but still believes that officials should continue to lower rates in the coming months. He said, "The risks of achieving the committee's dual mission of maximizing employment and price stability have become roughly balanced. Therefore, we should also begin to shift monetary policy towards a stance that neither stimulates nor suppresses economic activity. Inflation is sustainably moving towards the Fed's 2% target. There are no signs of rapid deterioration in the labor market, but policymakers need to remain vigilant about the risks facing inflation and employment." Bostic said when discussing whether to support the Fed's December rate cut, "I will consider all options.

Hungarian Foreign Minister: Energy from Russia is crucial for ensuring Hungary's energy security

On December 2nd local time, Hungarian Foreign Minister Szijjardo visited Moscow, Russia. It is reported that after talks with Deputy Prime Minister Alexander Novak in charge of energy affairs and leaders of several large energy companies, Szijjardo stated that natural gas and oil from Russia are crucial to ensuring Hungary's energy security. Syyardo stated that the United States has included Gazprom in its sanctions list, putting Central and Southeast European countries that use Russian energy in a difficult situation.

French government enters' countdown to downfall ': opposition gathers enough votes to dismiss prime minister

Just a few weeks after the separation of the Scholz ruling coalition in Germany, the Barnier government in France seems to have seen the final outcome. Due to the collapse of fiscal negotiations with the far right "National Alliance", French Prime Minister Michel Barnier announced on Monday that he will use Article 49.3 of the Constitution to forcibly pass the budget. At the same time, both the French left-wing alliance "New People's Front" and the far right "National Alliance" have confirmed their support for a vote of no confidence in Barnier, and their alliance is enough to overthrow the Barnier government.

Hezbollah and Israel exchange fire further tests fragile ceasefire agreement

Hezbollah opened fire on northern Israel on Monday, marking the first time since the ceasefire agreement was reached last week, and Israel subsequently launched a round of airstrikes on Lebanon. Both sides accuse each other of violating the fragile ceasefire agreement. The New York Times reported that, at least for now, the ceasefire agreement is essentially effective. Both sides seem unwilling to return to the war. However, the retaliatory action of tit for tat has put Israel in a dilemma. Israeli officials hope that the ceasefire can continue so that they can refocus their energy on Gaza and the region's arch enemy Iran. At the same time, they are also concerned that Hezbollah may use the ceasefire agreement to slowly rebuild its forces near the Israeli border in violation of the agreement.

Russian financier: Russia is expected to reject Trump's proposed ceasefire between Russia and Ukraine

A conservative tycoon in Russia believes that the Russian government will reject the Ukrainian ceasefire plan mediated by US President elect Trump. Russian financier Konstantin? Malofeev stated that Moscow may disdain such an agreement in order to seek more concessions, including Kiev declaring neutrality in a legally binding manner. At the same time, he stated that the possibility of reaching a final agreement with Trump is "50-50".

US officials say they will provide a new batch of military aid worth 725 million US dollars to Ukraine

On December 2nd local time, according to two US officials, the United States will provide Ukraine with a new batch of military aid worth 725 million US dollars, including anti drone systems, anti personnel landmines, and high mobility rocket artillery ammunition. Previously, the current US President Biden prepared to provide Ukraine with a military aid package worth $725 million, including landmines and cluster bombs, before stepping down to show support for the Ukrainian government.

Russia's pipeline natural gas exports to Europe have increased by 15% in the past 11 months

According to data provided by Gazprom and the European Network of Gas Transmission System Operators (ENTSOG), TASS calculated that Russia's pipeline natural gas exports to Europe increased by nearly 15% from January to November, reaching 29.3 billion cubic meters, exceeding the total supply for the entire year last year

Domestic news

The relevant responsible person of the People's Bank of China answers questions about the revision of the narrow monetary (M1) statistical standard

The People's Bank of China has decided to adopt the newly revised narrow money (M1) statistical caliber starting from January 2025. The revised M1 includes: circulating currency (M0), corporate current deposits, personal current deposits, and non bank payment institution customer reserves. The revision of M1 statistical caliber this time is based on the current M1 and further includes personal current deposits and non bank payment institution customer reserves. Personal current deposits and non bank payment institution customer reserves are currently included in M2 and have not yet been included in M1. One is about personal current deposits. When M1 was established, there were no personal bank cards or mobile payment systems in China, and personal current deposits could not be used for instant transfer payments, so they were not included in M1. With the rapid development of payment methods, personal current deposits now have transfer payment functions, which can be used for payment at any time without withdrawing cash. They have the same liquidity as corporate current deposits and should be included in M1. Secondly, regarding the provision for non bank payment institution customers, which can be directly used for payments or transactions and has strong liquidity, it should also be included in M1. From an international perspective, the M1 statistical caliber of major economies mostly includes personal current deposits and other highly liquid payment instruments.

ETF Rise Index Fund Talent 'Great Leap'

Against the backdrop of the rise of ETFs, talent in index funds is becoming increasingly popular. Since the beginning of this year, with the continuous expansion of ETF new products and the adjustment of equity business strategies of some fund companies, fund companies have accelerated the promotion and recruitment of index fund managers from both internal and external sources, while also focusing on optimizing the construction of talent teams. They look forward to sharing the dividends of this wave of development as the ETF scale rapidly exceeds 3.6 trillion yuan and the number of products exceeds 1000.