Stock Rally Loses Steam, CME Futures Trading Halts: Markets Wrap

(Bloomberg) -- Stocks lost momentum on the last trading day of the month even as growing bets on an interest-rate cut by the Federal Reserve kept a global gauge of equities on track for its best week since June. Trading was impacted by a glitch at the Chicago Mercantile Exchange.

Trading of futures and options on the CME was halted on Friday due to technical issues, according to a Singapore-based spokesperson for CME Group. The glitch impacted, among others, trading of US Treasuries futures and S&P 500 index contracts. Forex trading on EBS platform was interrupted amid the CME halt, traders said.

Meanwhile, the MSCI All Country World Index was little changed as equities struggled for direction following the US Thanksgiving holiday. Even so, the gauge held on to a 3.1% gain for the week. Asian shares slipped 0.1% on Friday, putting them on course for their first monthly decline since March.

Stocks have rallied this week as investors firm up bets on Fed easing, with futures pricing in roughly an 80% chance of a quarter-point cut next month and leaning toward three more by the end of 2026. That momentum brought global equities to within touching distance of erasing all their November losses after concerns over frothy AI valuations triggered a selloff earlier in the month.

“Asian equities are taking a breather after a very strong run,” said Billy Leung, investment strategist at Global X Management. “A lot of the recent strength came from a sharp reversal in positioning — softer US data and relief that the AI unwind wasn’t turning into something more disorderly. Today feels more like a pause than a shift in trend.”

Regarding CME, the trading was halted due to a cooling issue at one of the data centers, the spokesperson said in an emailed statement.

“Liquidity is already thin, so even a brief halt can distort price discovery in Treasuries, FX and commodities,” said Charu Chanana, chief investment strategist at Saxo Markets in Singapore. “The main risk is a burst of catch-up volatility.”

Back to the equities market, Asian stocks and global equities have gained for seven consecutive months through October as investors bet on a boom in artificial intelligence. But with valuations soaring, Wall Street chief executives warned of a possible correction. 

Morgan Stanley CEO Ted Pick and Goldman Sachs Group Inc.’s David Solomon were among Wall Street executives who flagged at the start of the month a possibility of a significant selloff. Investors grew more conscious after the S&P 500 rallied more than 40% from lows in April, driven by tech megacap companies.

Those concerns eased, and a steady stream of Fed officials signaling the need for lower rates helped revive market sentiment later in November.

The stock rally is likely to broaden outside the US, said Goldman Sachs strategist Peter Oppenheimer. He anticipated further Fed easing, but added that there is limited upside for stocks overall “because valuations are reasonably high.”

Outside of stocks, attention was on the commodities market.

Silver traded near $54 an ounce, just below a record high set in October. The precious metal is on track for a seventh monthly gain, the longest such run since 1980.

Gold is on track for a fourth monthly gain, on heightened expectations for another rate cut in the US. Rate cuts typically lift the price of bullion, a non-yielding asset. Bullion has gained nearly every month this year, and is on track for its best annual performance since 1979.

Brent crude oil was steady above $63 a barrel, on course for a fourth monthly drop in November, the longest such streak since the period through May 2023. OPEC+ nations meet on Sunday and are expected to stick with a plan to pause output increases in early 2026.

In China, property firms were in focus after China Vanke Co. was rejected by at least two big local banks as it tried to secure a short-term loan to quell the default fears that have fueled a plunge in its bonds this week. Separately, JPMorgan Chase & Co. raised its recommendation on China to “overweight,” stating that the prospect of large advances next year outweighs the risk of significant losses.

Corporate News:

• Prosecutors searched the homes of a former Taiwan Semiconductor Manufacturing Co. executive suspected of leaking trade secrets to Intel Corp., signaling an escalation in the government’s criminal probe into the high-profile dispute.
• Deutsche Boerse AG is in exclusive talks to acquire European fund distribution platform Allfunds Group Plc in a €5.3 billion ($6.1 billion) cash and stock deal.
• Alibaba Group Holding Ltd. began sales of its first smart glasses powered by its Qwen AI models, marking a rare foray into consumer hardware.

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.1% as of 1:27 p.m. Tokyo time
• Japan’s Topix was little changed
• Australia’s S&P/ASX 200 was little changed
• Hong Kong’s Hang Seng fell 0.2%
• The Shanghai Composite rose 0.2%
• Euro Stoxx 50 futures were little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.1591
• The Japanese yen was little changed at 156.21 per dollar
• The offshore yuan was little changed at 7.0708 per dollar

Cryptocurrencies

• Bitcoin was little changed at $91,386.48
• Ether fell 0.6% to $3,015.42

Bonds

• The yield on 10-year Treasuries advanced one basis point to 4.01%
• Japan’s 10-year yield advanced three basis points to 1.825%
• Australia’s 10-year yield advanced four basis points to 4.53%

Commodities

• West Texas Intermediate crude rose 0.7% to $59.08 a barrel
• Spot gold rose 0.6% to $4,184.37 an ounce

This story was produced with the assistance of Bloomberg Automation.

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