US markets surged on Monday, with major indices reaching record highs as investors embraced optimism about the economic outlook and corporate performance. The Dow Jones Industrial Average soared 440 points to close at a historic level, while the S&P 500 and Russell 2000 also notched fresh milestones. Broad-based buying across sectors reflected strong market sentiment, with small-cap stocks leading the charge. Tech sector performance was mixed, as gains in major players like Amazon were offset by declines in Nvidia and Netflix. As markets prepare for a holiday-shortened week, attention turns to upcoming inflation data and Federal Reserve signals, which could shape expectations for the year-end rally.

Key Takeaways:

  • Dow Soars to Record Close: The Dow Jones Industrial Average surged 440.06 points, or 0.99%, to end at a historic high of 44,736.57. Nearly all 30 Dow components traded higher, signalling investor confidence in the economic outlook under the incoming administration.
  • S&P 500 and Russell 2000 Hit New Highs: The S&P 500 gained 0.3%, closing at a record 5,987.37, while the Russell 2000 outpaced with a robust 1.47% gain to achieve an all-time high, surpassing its previous peak from 2021. The strong performance of small-cap stocks highlights growing optimism about domestic economic growth and potential tax reforms. Over 75% of S&P 500 components posted gains, indicating a broadly supportive environment across sectors.
  • Nasdaq Rises as Tech Shows Mixed Results: The Nasdaq Composite edged higher by 0.27%, finishing at 19,054.84. Gains from tech giants such as Amazon and Alphabet contributed positively, but weakness in Nvidia and Netflix limited broader tech sector performance. Despite this, the index remained buoyed by overall investor enthusiasm.
  • European Markets Close Higher Despite Banking Sector Turbulence: European markets ended the day on a positive note, with the Stoxx 600 rising 0.14%. Gains were led by household goods and mining stocks, each up 1.21%. The FTSE 100 climbed 0.36% to close at 8,291.68, while France’s CAC 40 added 0.63%, and Germany’s DAX rose 0.4% to close at 19,405. However, the banking sector was volatile. UniCredit’s €10 billion bid for Banco BPM lifted Banco BPM shares by 5.5%, but UniCredit slid 4.8%. Commerzbank dropped 5% as UniCredit clarified that any bid for the German lender would follow the integration of Banco BPM. Meanwhile, Germany’s Ifo business climate index fell to 85.7 in November, down from October’s 86.5, reflecting persistent economic challenges.
  • Asian Markets Shine as Australia Hits Record Highs: Asia-Pacific markets kicked off the week strongly, driven by regional optimism and robust data expectations. South Korea’s Kospi rose 1.32% to 2,534.34, while the Kosdaq outperformed with a 2.93% surge to 696.83. Australia’s S&P/ASX 200 set new milestones, climbing 0.28% to close at 8,417.6, marking an all-time closing high, with an intraday peak of 8,462.1. Japan’s Nikkei 225 advanced 1.3%, closing at 38,780.14, while the broader Topix gained 0.71% to 2,715.6. In contrast, China’s CSI 300 slipped 0.46% to 3,848.09, and Hong Kong’s Hang Seng dropped 0.3%. Singapore’s headline inflation rate for October fell to 1.4%, its lowest level since March 2021, surprising economists who had expected 1.8%.
  • Oil Prices Decline Amid Ceasefire Reports: Oil markets retreated sharply, with Brent crude falling 2.87%, or $2.16, to settle at $73.01 per barrel. West Texas Intermediate dropped $2.30, or 3.23%, to close at $68.94 per barrel. The declines came after reports indicated progress toward a ceasefire agreement between Israel and Hezbollah, easing fears of prolonged Middle East conflict. Despite last week’s gains following heightened geopolitical tensions, the potential ceasefire and expectations of steady production cuts at OPEC+’s upcoming meeting weighed on prices.

FX Today:

  • EUR/USD Dips Amid Dollar Strength: The EUR/USD pair traded lower, hovering around 1.0493 as bearish momentum continued to dominate. The euro’s struggles were exacerbated by weak Eurozone economic data, including a decline in Germany’s Ifo business climate index to 85.7 in November from October’s 86.5. The pair remains below key moving averages, with the 50-period SMA at 1.0531 acting as resistance. A break below immediate support at 1.0450 could pave the way for parity (1.0000) in the coming weeks. On the upside, a move above 1.0531 could signal a temporary recovery, targeting the 100-period SMA at 1.0647. For now, the broader outlook remains bearish, fuelled by a strong dollar and weak Eurozone fundamentals.
  • GBP/USD Pressured by USD Strength and UK Concerns: GBP/USD struggled to maintain momentum, trading near 1.2566 after repeated recovery attempts faltered. The pair is facing resistance at the 50-period SMA of 1.2634, with stronger barriers at the 100-period SMA of 1.2770. Persistent dollar strength and concerns over the UK’s economic outlook continue to weigh on the pound. A break below the critical 1.2500 support level could accelerate selling, targeting 1.2400 and 1.2300 in the near term. Bulls would need to reclaim 1.2634 to signal a potential recovery, with 1.2770 offering the next key target. However, the broader sentiment remains negative.
  • USD/JPY Consolidates Below 155.00 Resistance: USD/JPY held steady near 154.13, pausing after a strong rally that saw the pair test resistance at the psychological 155.00 level. The pair remains firmly above the 200-period SMA at 152.51, reinforcing the bullish trend. However, RSI levels indicate overbought conditions, suggesting the possibility of a short-term correction. A decisive break above 155.00 could target 156.50, while a move below 152.51 may signal a deeper retracement toward 150.00. For now, the pair remains in consolidation, with traders watching US economic data and Federal Reserve signals for further direction.
  • AUD/USD Struggles Near 0.6501 as Risk-Off Sentiment Dominates: AUD/USD remained under pressure, trading near 0.6501 after failing to break above key resistance at 0.6541, the 100-period SMA. The risk-sensitive Australian dollar has been weighed down by a strong USD and global risk-off sentiment. Immediate support is at 0.6450, with a breach potentially opening the door to 0.6300. On the upside, a recovery would need to surpass the 50-period SMA at 0.6494 and the 100-period SMA at 0.6541 to gain traction. For now, the bearish trend remains intact, with global risk sentiment and commodity market trends dictating the pair’s movement.
  • Gold Falls Below Key Support as Dollar Strengthens: Gold prices struggled to hold above critical levels, trading near $2,627 after failing to breach resistance at $2,650. The metal is now testing immediate support at $2,600, with a break below this psychological level potentially triggering a deeper decline toward $2,550. The 50-period SMA at $2,624 has flipped from support to resistance, highlighting the weakening bullish structure. The decline in gold coincides with rising Treasury yields and a strong US dollar, both of which have dampened demand for the non-yielding asset. To regain upward momentum, gold would need to reclaim $2,650 and sustain a move above the 100-period SMA at $2,654. For now, the risks remain tilted to the downside, with traders closely monitoring macroeconomic events for potential catalysts.

Market Movers:

  • Bath & Body Works Surges on Raised Guidance: Shares of Bath & Body Works soared over 16%, marking its best day since November 2022. The Ohio-based retailer boosted its full-year adjusted profit forecast and indicated a smaller-than-expected drop in annual sales. Strong demand for personal care products and new store offerings fuelled the optimism, driving the stock significantly higher.
  • Target Rises on Positive Analyst Outlook: Target shares jumped 4.4% after Oppenheimer named the stock a top pick, citing a favourable risk-to-reward ratio. The retailer, whose shares have declined about 12% year-to-date, also benefited from its 3.6% dividend yield, which Oppenheimer described as “very attractive.”
  • US Bancorp Upgraded to Buy: US Bancorp rose over 2% following an upgrade to buy from neutral by Citigroup. Analysts highlighted that the bank’s spending is “turning the corner,” signalling optimism about its financial trajectory and ability to navigate challenging economic conditions.
  • Arm Holdings Rises on AI Growth Prospects: Shares of British chip designer Arm Holdings climbed 3% after UBS initiated coverage with a buy rating. Analysts pointed to the company’s strong positioning in artificial intelligence-driven growth across data centres and other end markets.
  • Super Micro Computer Extends Gains: Super Micro Computer surged nearly 16%, building on last week’s 78% rally. The company announced the appointment of BDO as its new auditor and outlined plans to maintain its Nasdaq listing, boosting investor confidence in its governance and future growth prospects.
  • Scholar Rock Soars on Rival’s Drug Setback: Scholar Rock Holding’s shares skyrocketed over 26% after Biohaven’s T-alfa drug failed to meet statistical significance in treating spinal muscular atrophy. Analysts at Piper Sandler, Truist Securities, and Wedbush raised their price targets for Scholar Rock in response to the news, signalling optimism about the company’s competitive position.

As markets head into a holiday-shortened week, Monday’s rally underscored a renewed sense of investor confidence fuelled by optimism surrounding the incoming administration and key Treasury appointments. Record closes for the Dow, S&P 500, and Russell 2000 set a positive tone, while mixed performances in European and Asian markets highlighted regional divergences. Oil prices fell sharply on easing geopolitical tensions, while Treasury yields retreated as investors prepared for pivotal inflation data and Federal Reserve insights later this week. With light trading volume expected ahead of the Thanksgiving holiday, the focus will shift to Wednesday’s release of the October PCE price index and Fed meeting minutes, which could provide critical clues about the central bank’s next policy moves and the trajectory of the year-end rally.