Market snapshot: domestic issues in focus

Optimism leading into today’s Thanksgiving holiday lifted US stocks, as investors sought a glass half-full approach on impending monetary easing.

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There will also be a shortened US session tomorrow, but the limited action this week has lifted the main indices between 2% and 4%, with the earlier shakeout on AI investment and valuation concerns taking a back seat for now.

With the economic data which has been released of late having been dated due to the government shutdown, and therefore of little use in gauging the current backdrop, investors have turned to comments by Federal Reserve officials instead. These have for the most part been dovish, leading to a more than 80% likelihood of an interest rate cut by the Fed in December, with several more anticipated next year.

In the meantime, broad gains were led by AI player Oracle Corp (NYSE:ORCL), which rose by more than 4% after a broker upgrade, which in turn resulted in gains for the likes of NVIDIA Corp (NASDAQ:NVDA) and Microsoft Corp (NASDAQ:MSFT) after what has been a weak November for each, with losses of 6% and 9% respectively.

With December to see out the year and now in focus – a traditionally strong month for markets – investor sentiment is bullish in what would cap off a strong year despite the tribulations of AI challenges and tariffs fallout.

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Indeed, in the year to date gains of 11.5% for the Dow Jones, 15.8% for the S&P500 and 20.2% for the Nasdaq have underlined the more prevalent bullish outlook for prospects going into the new year.

Asian markets were mostly higher in recognition of the US strength, but there were also domestic issues in focus. For Japan, further speculation of currency intervention and a hike in interest rates did little to dampen the mood, with some recovering strength in tech stocks.

In China, markets also edged higher despite a reminder that the property sector remains in a parlous position, as developer Vanke sought to delay repayment of a bond. Lacklustre industrial numbers also limited the gains, with profits down by 1.9% so far this year, compared to 3.2% growth previously.

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The relief rally following a less harmful Budget than had been widely feared led to the more domestically focused FTSE250 building on yesterday’s gains. In contrast, the premier index was weighed down by the technical pressure of six stocks being marked ex-dividend, including the likes of Land Securities Group (LSE:LAND), LondonMetric Property (LSE:LMP) and Severn Trent (LSE:SVT).

Overnight weakness in the gold and oil prices provided little succour to the miners and oil majors, although defence shares saw some limited buying support. The marginal gain for the FTSE250 protected its rise in the year to date of 6.3%, while the FTSE100 remains ahead by 18.5% over that period. This leads to the ever-increasing possibility that this year could turn out to be transformational in changing global investor attitudes to the previously forsaken index.