Market snapshot: S&P 500 celebrates Thanksgiving near four-month high

Markets have continued to grind higher, consolidating what has been a positive November on hopes of monetary easing after an aggressive bout of central bank interest rate rises.

Global trading volumes will be much lighter today, with Wall Street closed for Thanksgiving and the Japanese market also enjoying a public holiday. Leading into this temporary break, Treasury yields also softened in the US, falling to levels last seen in September, and currently some way off the 5% mark hit in October.

Falling yields ease pressure on the equity market and indeed rates for consumer and company borrowing, but at higher levels had also been effectively helping the Federal Reserve’s push to quell inflation by tightening general market conditions.

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Even so, the rate hiking cycle is now considered to be over, with the market pricing out any rise in the December meeting and beginning to debate the timing of any potential rate cuts next year. The narrative of the market and the Fed remain at odds, with the central bank maintaining its insistence that it will remain data dependent, and stating in its recent minutes that policy will remain restrictive.

In the meantime, estimates of any possible recession have been pushed back to next year by investors, with the latest set of economic data suggesting ongoing resilience following releases on consumer sentiment, durable goods and jobless claims, despite softening of late.

The recent weakness in the oil price has left black gold down by 5.3% in the year to date, with OPEC delaying its latest meeting to discuss production cuts. The weakness has tended to follow questions over waning demand from major economies, although by the same token it provides other benefits. On the one hand, it removes some inflationary pressure, while the likes of airline and cruise stocks have also seen a recent bounce given lower fuel costs should improve overall profitability.

The November rally has left the main indices in a healthy position overall in the year to date, with the Dow Jones now ahead by 6.4% and the benchmark S&P500 up by 18.7%. The S&P closed last night at 4,556, the best finish to a session since the start of August. It's now up 11% since the October low less than a month ago.

But the star of the show remains the Nasdaq index, where prospects for levelling interest rates and the extraordinary outperformance of the “Magnificent Seven” tech stocks has propelled the index higher by 36.3% this year. However, despite this rally the index has yet to recover fully from last year’s bludgeoning, let alone the highs previously seen in November 2021.

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Asian markets were more subdued than usual given the public holiday in Japan, although China remains at the centre of investor focus. Chinese regulators have reportedly been moving to prop up an ailing property sector, propelling strong share price gains in the likes of Country Garden which could be among a list of companies eligible for financial support.

At the same time, fading hopes remain that further stimulus could be forthcoming to reverse weakening consumer sentiment and high youth unemployment, both of which have been additional headwinds for the economy.

In the UK, the aftermath of the Autumn Statement continues to be the source of some debate among investors. Some of the fiscal easing measures which were announced will inevitably be of help to beleaguered consumers, while there are also plans in place to boost the economy both in terms of various regions and industries.

However, the downgraded growth prospects and generally deteriorating economic sentiment have left their mark on an index which has recovered slightly of late, but remains down by 2% this year.

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The general preference of international investors to eschew UK investments has also underlined the country’s status as an island in both physical and market terms. The FTSE100 opened marginally higher Thursday, although gains were limited by the weakness in sector heavyweights such as Vodafone Group (LSE:VOD) and Imperial Brands (LSE:IMB). The small gains leave the index ahead by just 0.3% so far this year, with the any immediate positive catalysts remaining elusive.