Equity markets in Europe and the US continued to edge higher on Tuesday despite many now questioning whether investors are getting too carried away.

The rally appears to be based on the view that central banks from the Fed to the ECB and BoC will start cutting interest rates in March and then do so another three times over the rest of 2024. That's quite the difference from what policymakers have insisted on for many months but there has undoubtedly been a change in tone recently.

Whether that's been enough to warrant such optimism is what many are now questioning and what, I'm guessing policymakers will address at the December meeting. Regardless of whether they push back against the scale of cuts next year, it's clear now that there'll be quite a shift from central banks at their meetings this month, based on recent commentary.

Whether that will be enough to constitute the pivot that's been so talked about this year may well determine whether markets continue to price in a March cut as a u-turn of that magnitude will have to be clear from the meeting. The Fed in September indicated it expected to raise rates again, after all.

Services PMIs revised higher but outlook remains relatively unchanged

There were a lot of upward revisions to the PMI surveys from Europe and the US today and in the all-important services sector. While the revisions don't really change the outlook in any considerable way - euro area still facing a mild recession, UK flat growth, US resilient - it is encouraging that a soft landing is still attainable.

Oil prices bounce off lows after better PMI surveys

Oil prices are recovering a little from their recent lows today but Brent remains below $80 per barrel and under pressure. The OPEC+ deal did little to support prices and given the three days of declines that followed it, traders are clearly very unimpressed. The question now is whether we'll see new five-month lows amid dampened growth expectations next year. The PMIs today offer some hope and may have contributed to the rebound.

A major test for gold around $2,000 again

We're continuing to see profit-taking in gold after it started the week in remarkable fashion, smashing through record highs and bursting above $2,100. It didn't last though and already it's trading back close to $2,000 which will be a very interesting test of support after it took so long to significantly break and hold above it.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD extends recovery toward 1.0800 as USD retreats ahead of Fed

EUR/USD extends recovery toward 1.0800 as USD retreats ahead of Fed

EUR/USD continues to push higher toward 1.0800 on Thursday. The pair finds support from a broad US Dollar retreat, as traders unwind their Trump win-inspired USD longs ahead of the Federal Reserve's highly-anticipated policy announcements.

EUR/USD News
GBP/USD rebounds above 1.2950 after BoE policy announcements

GBP/USD rebounds above 1.2950 after BoE policy announcements

GBP/USD trades in positive territory above 1.2950 on Thursday. The Bank of England (BoE) lowered the policy rate by 25 basis points as expected but the upward revision to inflation projections helped the pair edge higher. Market focus now shifts to the Fed's policy decisions.

GBP/USD News
Gold rebounds above $2,680, awaits Fed rate decision

Gold rebounds above $2,680, awaits Fed rate decision

Gold recovers following Wednesday's sharp decline and trades above $2,680. The benchmark 10-year US Treasury bond yield edges lower after Trump-inspired upsurge, allowing XAU/USD to hold its ground ahead of the Fed policy decisions.

Gold News
Federal Reserve expected to deliver 25 bps interest-rate cut, shrugging off Trump victory

Federal Reserve expected to deliver 25 bps interest-rate cut, shrugging off Trump victory

The Federal Reserve is widely expected to lower the policy rate after Donald Trump won the US presidential election. Fed Chairman Powell’s remarks could provide important clues about the rate outlook.

Read more
Outlook for the markets under Trump 2.0

Outlook for the markets under Trump 2.0

On November 5, the United States held presidential elections. Republican and former president Donald Trump won the elections surprisingly clearly. The Electoral College, which in fact elects the president, will meet on December 17, while the inauguration is scheduled for January 20, 2025.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Majors

Cryptocurrencies

Signatures