US markets rally on speculation of Fed rate cut

Global equities ended the day mixed, with sentiment shaped largely by expectations of a potential US rate cut in December and easing geopolitical tensions. 

US equities reacted positively to the shifting interest-rate outlook with the S&P 500 closing 1.57% higher at 6 706.77. The Nasdaq gained 2.62% and the Dow Jones Industrial Average rose by 0.56%, while the US dollar index held above 100 on Monday, hovering near a six-month high as markets continued to assess the Federal Reserve’s policy outlook. FOMC Governor Christopher Waller reiterated that a December rate cut would be appropriate in light of rising unemployment, while New York Fed President John Williams noted that a near-term reduction remains possible. Rate futures now indicate that more than 75% of traders expect a cut next month, up from around 40% a week earlier.

The dollar also firmed slightly against the euro and the pound amid renewed concerns over Europe’s fiscal position. Meanwhile, US Treasury yields continued to ease, with the 10-year note falling to 4.05% — its lowest level in nearly a month.

European stocks recovered in afternoon trading on Monday, closing slightly higher and trimming losses from last week amid dovish signals from key FOMC officials. The Eurozone’s STOXX 50 rose 0.40% to 5 540, while the pan-European STOXX 600 added 0.30% to 564. Germany’s DAX trimmed gains but still closed 0.60% higher at 23 253, outperforming other European indices and recovering some of last week’s sharp losses.

Technology shares led the rally, benefitting from the positive sentiment spilling over from US markets. ASML advanced 3% and Infineon jumped 3.50%, while Siemens and Schneider Electric also closed higher. Risk-sensitive sectors were supported in favour of a rate cut next month. Banks generally performed well, with Nordea and BBVA up 1.50% each, though major Italian lenders UniCredit and Intesa Sanpaolo slipped following the detachment of dividends. On the downside, Novo Nordisk fell sharply by 6.50% after reporting that a pill version of Ozempic did not slow the progression of Alzheimer’s disease in a large trial. 

Meanwhile, the FTSE 100 pared early gains but still closed slightly higher for a third consecutive session as investors focused on Wednesday’s UK budget.

Asian markets closed mixed as investors weighed expectations of the US rate cut. Japan’s Nikkei 225 fell around 2.40%, pressured by weakness in technology and export‑sensitive stocks, while Hong Kong’s Hang Seng Index gained roughly 1.76%, supported by tech advances and a rebound in growth‑oriented shares. Shanghai ended slightly lower at 0.03%, reflecting caution, while other regional markets posted modest gains as sentiment remained generally positive.

South African equities closed mostly higher on Monday, with the All Share rising 0.34% to 110 015.43. The JSE Top 40 added 0.37%, while the JSE Resource 10 gained 2.23%. In contrast, the JSE Industrial and Financial 15 indices fell 0.60% and 0.24%, respectively. Investor sentiment is supported by the G20 summit, which could boost long-term investor confidence if reforms are regarded as credible and enduring.

In commodity markets, WTI crude oil rose to around $58.50 per barrel, rebounding after last week’s 3.40% drop as markets weighed the prospects of a Russia–Ukraine peace deal. While US-brokered talks have shown some progress, key disagreements over territory and sovereignty remain. Any agreement easing sanctions on Russian oil could add supply to an already surplus-prone market next year. WTI is down over 4% so far this month, on track for a fourth consecutive monthly decline — its longest losing streak since 2023. In the meantime, Brent crude edged up by 0.94% trading at $63.15 at SAST 20h11.

In precious metals, gold ticked up to around $4 099 per ounce after a modest weekly decline, while silver increased by 1.33% trading at around $50. Platinum recovered above $1 550 per ounce, rebounding from two-month lows, supported by safe-haven demand, tight supply and steady industrial use.