Weekly house view

The week in review

Stock markets turned negative last week despite the Federal Reserve cutting interest rates, as disappointing results from two big US tech groups fuelled investor concerns about the Artificial Intelligence (AI) trade.

The Fed cut rates by 25 bps. The decision was divided, with two hawkish dissents (no change) and one dovish dissent (50 bps cut). Another key development was the announcement of Reserve Management Purchases (RMPs), with the Fed committing to buy USD 40 billion in Treasury bills monthly, starting 12 December. The purchases will add liquidity to the system by increasing banks’ reserves. This move, earlier and larger than expected, introduced a dovish element to the meeting. The Swiss National Bank held rates at 0% and is expected to stay on hold through 2026. The Reserve Bank of Australia also held.

The S&P 500 fell 0.6%¹ (in USD) on the week, dropping sharply on Friday as investors rotated out of AI-related tech stocks. Broadcom shares fell as its outlook let down investors, and Oracle Corp. slumped after it reported a jump in spending on AI data centres and other equipment, outlays that are taking longer to translate into cloud revenue than investors want.

Geopolitics

US President Donald Trump gave Volodymyr Zelenskyy, Ukraine’s president, ‘days’ to respond to a proposed peace deal requiring Ukraine to accept territorial losses in exchange for unspecified US security guarantees.

Key data

Sentiment among small US businesses improved in November on rising optimism about the sales outlook. US job openings surged to 7.658 million in September and rose again to 7.670 million in October.

German industrial production rose 1.8% month-on-month in October, far surpassing expectations.

Brazil’s November IPCA inflation was in line with expectations, at 4.46% year-on-year compared to 4.47% expected, and 0.18% month-on-month vs. 0.19% expected. This brings inflation back within the targeted range (1.5%–4.5%), helping pave the way for the start of an easing cycle.