Sometimes, mathematical streaks hang by a thread. Take the US S&P 500 index, for example. Not a single monthly decline since May. That sequence remains intact, albeit by the narrowest of margins. The broad US index posted a monthly gain of just +0.13% in November, secured in the final session of the month - a half-day's trading in line with post-Thanksgiving tradition. Thus, the S&P 500 has now advanced for seven consecutive months, equalling the run from February to August 2021. It will require further effort to match the two longest streaks of the past 30 years: December 1994 to September 1995 and April 2017 to January 2018, each lasting 10 months. Wall Street rallied for five straight sessions to claw back early-November losses. The Nasdaq 100 staged a strong rebound as well, though not enough to end the month in positive territory. Its winning streak ends here, amid growing questions about the durability of the artificial intelligence ecosystem. For now, those doubts remain short term, given that AI investment currently offers the US economy momentum akin to that of a petrochemical boom.

The timing also coincides with the third anniversary of ChatGPT’s public debut: OpenAI launched its conversational AI on 30 November 2022. It began with cute requests about kitten jokes and crude sketches. Now, one can ruin a neighbour's reputation with a deepfake video, generate GIFs of Donald Trump piloting an F18 dropping excrement, or replace one's therapist with a bot that doesn’t nod off mid-session. AI can even input your ID codes into an app, pay for the junk you buy on Alipay, and identify targets via drone - to deliver packages in its mild form, or to eliminate them in the grimmer version.

This may seem like a departure from financial markets, but not quite: AI has been the engine behind a segment of the equity rally for several quarters now. The recent loss of momentum coincides with a soft patch in that narrative. Europe, less steeped in AI than the US, has fared reasonably well on equity markets regardless. The Stoxx Europe 600 stayed in positive territory all of last week, putting it within 2% of its 13 November record.

With AI losing some of its sheen, the focus has shifted back to Federal Reserve interest rate cuts. Markets are 90% convinced that the US central bank will begin easing policy on 10 December. Fed officials are doing little to dissuade this expectation. In any case, from 1 December onwards, they enter the customary blackout period preventing any public commentary ahead of the next monetary policy decision.

Key developments to start the week:

  • In China, official PMI indicators for both services and manufacturing remain in contraction territory. The privately compiled RatingDog manufacturing PMI also fell below the 50-point threshold, indicating economic shrinkage.

  • OPEC+ continues its pause on production increases and has introduced a new mechanism for assessing member quotas. The aim is to curb cheating on output levels, restore the cartel's credibility, and better manage global supply to support oil prices.

  • In Switzerland, voters rejected an inheritance tax proposal by a resounding 79%, according to estimates.

  • Donald Trump and Nicolás Maduro could meet this week. Separately, the US President has reportedly made his choice for the next Fed Chair. Market insiders believe his adviser Kevin Hassett has secured the nomination.

  • According to Adobe Analytics, consumers spent a record $11.8 billion online during Black Friday, up 9.1% from 2024.

  • The yen gained ground against the dollar after comments from the Bank of Japan Governor heightened expectations of a rate hike at the year’s final policy meeting.

  • On the US macroeconomic calendar: Monday sees the release of October construction spending data delayed by the recent government shutdown. Tuesday brings August job openings, followed by Wednesday's import-export prices. Thursday will reveal Q3 wage data and the October trade balance. On Friday, markets will digest September personal income and spending figures along with the University of Michigan's consumer sentiment index. In Europe, attention turns on Tuesday to November inflation figures for the eurozone.

  • On the corporate front, earnings reports are expected from tech firms Salesforce and CrowdStrike, and from fashion retailers Inditex and Fast Retailing.

In Asia-Pacific, the first trading session of December feels like a decompression chamber after the late-November rally. Japan shed 1.9%, Taiwan 1.2%, Australia 0.6%, and South Korea 0.3%. Mainland China, Hong Kong, and India managed to eke out modest gains. Wall Street futures are firmly in the red, suggesting a weak start for European markets.

Today's economic highlights:

On today's agenda: the PMIs from Japan, China, Switzerland, France, Germany, the Eurozone, and the United Kingdom; In the United States, the PMIs will be accompanied by construction spending and the ISM manufacturing index. See the full calendar here.

  • GBP / USD: US$1.32
  • Gold: US$4,235.88
  • Crude Oil (BRENT): US$63.44
  • United States 10 years: 4.04%
  • BITCOIN: US$86,000.6

In corporate news:

  • NatWest is negotiating the sale of its 85% stake in fintech firm Cushon.
  • HSBC has signed a multi-year agreement to implement Mistral AI models to boost automation and client services.
  • Moody's has raised the long-term credit rating of British Airways, a subsidiary of International Consolidated Airlines, from Baa3 to Baa2, revising the outlook from positive to stable.
  • Stellantis plans to cut car production in France by 11% from 2025 to 2028.
  • Tietoevry will sell Bekk Consulting to Axcel in Norway for 1.7 billion NOK (approximately 140 million euros).
  • Profilgruppen AB will cease operations in Poland and exit leased facilities by early January.
  • DUG Foodtech has secured a SEK 1.5 million loan from major shareholders amid potential Nasdaq delisting.
  • UnitedHealth Group has sold its final South American business, Banmedica, to Patria for $1 billion.
  • CyrusOne restored stable operations at their Chicago 1 data center after a cooling outage.
  • Treasury Wine Estates announced an impairment of its U.S. assets.

See more news from UK listed companies here

Analyst Recommendations:

  • Pagegroup Plc: Deutsche Bank maintains its buy recommendation and reduces the target price from GBX 450 to GBX 400.
  • Auction Technology Group Plc: Investec maintains its buy recommendation and raises the target price from GBX 400 to GBX 425.
  • Intertek Group Plc: Investec initiates a buy recommendation with a target price of GBX 5650.
  • Serica Energy Plc: Canaccord Genuity maintains its buy recommendation and raises the target price from GBX 235 to GBX 250.
  • Jupiter Fund Management Plc: Deutsche Bank maintains its hold recommendation and raises the target price from GBX 150 to GBX 160.
  • Unite Group Plc: Oddo BHF maintains its outperform recommendation and reduces the target price from GBP 7 to GBP 6.80.
  • Compass Group Plc: RBC Capital upgrades to outperform from sector perform with a price target raised from GBX 2700 to GBX 2775.
  • Bunzl Plc: RBC Capital maintains its sector perform recommendation and reduces the target price from GBX 2350 to GBX 2200.
  • Entain Plc: BNP Paribas maintains its neutral recommendation and reduces the target price from GBX 1050 to GBX 860.
  • Flutter Entertainment Plc: BNP Paribas maintains its outperform recommendation and reduces the target price from GBX 25900 to GBX 22000.