Inflation, interest rates and geopolitics: What are the risks for the markets until the end of the year?

U.S. stock futures rose on Thursday, with cash markets closed for the Thanksgiving holiday. As of 9 a.m. ET, S&P 500 futures were up 0.1 percent after the benchmark snapped a seven-day rally on Wednesday; The Nasdaq 100 advanced 0.2%.

US stocks were supported by enthusiasm around Donald Trump’s return to the White House, as well as the Federal Reserve cutting interest rates for the second consecutive meeting. This led to a rebound in the S&P’s performance for the year, once again surpassing the record results of 2021.

“Market activity after the election was remarkable, with trading volumes increasing and major indices reaching historic highs,” said Jeff O’Connor, head of market structure at Liquidnet. “However, as we approach the end of the year, we expect this momentum to weaken, with the focus shifting to upcoming macroeconomic data.”

One looming gray cloud: inflation is starting to rise rapidly again. As CMC Markets analyst Jochen Stanzl said, the outlook for the Federal Reserve’s monetary policy has “darkened in recent days” after the central bank’s preferred indicator, the core PCE, accelerated in October, rising 2.8% year-on-year, the biggest increase since April.

“If prices continue to rise, Jerome Powell will quickly find himself under double pressure,” Stanzl said. “From the growing accusations that he made a mistake in monetary policy and from the pressure already being exerted on him by US President Donald Trump, who would prefer to fire him altogether.”

Earlier, news leaked that the Biden administration was considering additional restrictions on semiconductor equipment and AI memory chips for China, which would escalate the crackdown on Beijing’s technological ambitions, but would refrain from the tougher measures that were considered earlier.

Shares of chip companies in Asia and Europe jumped on the news, with ASML Holding NV, ASM International NV and Nvidia Corp. suppliers ISC and TSE also rising. When trading in New York resumes, companies such as Lam Research Corp., Applied Materials Inc. and KLA Corp. will be the ones to watch.

While the U.S. is closed, the rest of the world is open, albeit more subdued, and European stocks recovered from two days of declines, led by technology stocks. The Stoxx 600 index rose 0.5%, while U.S. stock futures also rose slightly.

In open bond markets, French government bonds outperformed, narrowing the gap with Germany after Finance Minister Armand said he was ready to make concessions on the budget bill to avoid the government falling to opposition parties in the coming weeks. French 10-year bond yields fell 2 basis points to 3.01%.

In currency markets, the euro weakened by 0.2% after showing almost no reaction to inflation data in Spain and Germany, as well as after ECB Governing Council member Villeroy expressed full support for lowering interest rates to neutral levels, not ruling out even lowering them below neutral, but stated that negative interest rates (NIRP) should remain in the ECB’s toolbox. The yen, which has inexplicably appreciated in recent days, was the weakest among the G-10 currencies, falling 0.6% against the dollar and sending USD/JPY to 152. The Mexican peso rose 1.7% after Trump said he had a productive conversation with Mexican President Sheinbaum.

In commodities markets, oil prices rose in thin trading after OPEC+ confirmed it would postpone an online meeting to cut oil production from Sunday to December 5. WTI rose 0.6% to $69.10 a barrel. Spot gold rose $9 to $2,645 an ounce. Bitcoin Falls Below $95,000.

Also, now that the US is closed for the Thanksgiving holiday, there are no macroeconomic events on the calendar.