A mixed reading on U.S. employment failed to move the needle on the Fed's interest rate outlook, leaving investors waiting for new signals on its next moves.
Although job growth rebounded more than expected in November after its biggest drop in nearly five years in October, the unemployment rate rose to 4.6%, the highest in more than four years.
"Even so, job creation is better than expected, with the private sector adding 69,000 in November and 52,000 in October, which means that market estimates for future interest rate cuts remain largely unchanged," Renta 4 analysts said in a note to clients.
Last week, the Federal Reserve cut rates, as expected, but signaled that borrowing costs are unlikely to continue falling in the short term, projecting only one more rate cut in 2026. However, markets are expecting two rate cuts next year, although they are unlikely to occur in January.
Outside the United States, investors are watching this week's monetary policy decisions by the Bank of England (BoE), the European Central Bank (ECB), and the Bank of Japan (BoJ). The BoE is expected to cut rates, while investors are betting that the ECB will hold steady and the BoJ will raise rates.
On the macroeconomic front, markets will be watching for the final consumer inflation data for the eurozone (1000 GMT) and the German IFO business confidence index (0900 GMT), as well as mortgage applications in the United States (1200 GMT).
However, the main focus this week—after the US employment data—will be on the eagerly awaited US CPI for November, due on Thursday, and the personal consumption expenditure index, the Federal Reserve's preferred inflation indicator, on Friday.
"Flat opening in European markets (Eurostoxx futures +0.2%, S&P futures 0%), awaiting new macro references (US CPI tomorrow), central bank meetings (ECB and BoE tomorrow and BoJ on Friday) and with news of interest in the technology sector and on the geopolitical front," added Renta 4.
"These days we have been—and will continue to be for a little while longer—caught between two stools, with doubts forcing backdowns that are not worrying, but which are creating a weak market context that is most convenient for making levels somewhat more accessible for positioning ourselves for 2026," said Bankinter analysts.
At 0813 GMT on Wednesday, the Spanish IBEX 35 stock market index was up 60.10 points, or 0.36%, to 16,982.00 points, while the FTSE Eurofirst 300 index of large European stocks was up 0.28%.
In the banking sector, Santander rose 1.14%, BBVA gained 0.34%, Caixabank advanced 0.98%, Sabadell gained 0.99%, Bankinter rose 0.32%, and Unicaja Banco rose 1.18%.
Among the large non-financial stocks, Telefónica fell 0.64%, Inditex advanced 0.40%, Iberdrola fell 0.14%, Cellnex remained unchanged, and oil company Repsol rose 0.85%.
(Information from Benjamín Mejías Valencia; edited by Jorge Ollero Castela)
