Global stocks headed into a jittery final session of the month on Friday, as an outage at exchange operator CME Group hampered trading in a swathe of futures on currencies, commodities, Treasuries and stocks, further draining market liquidity.
The outage at CME datacentres came with US investors due to return from the Thanksgiving holiday for a shortened session on Friday. Some currency trading had returned on CME's EBS platform by 13:05 GMT.
Europe's STOXX 600 was roughly unchanged on the day, having gained 0.5 per cent in November, marking its weakest monthly performance since June, despite having hit record highs a couple of weeks ago.
The S&P 500 is set for its first monthly decline since April, with a fall of 0.4 per cent in November, although it has recovered from two-month lows a week ago that implied a month-to-date drop of 5 per cent.
November this year proved to be unusually choppy for global equities as concerns about tech stocks' sky-high valuations shook markets while a US government shutdown ended only after a record 43 days. Bitcoin, a good reflection of investor risk appetite, has fallen 16 per cent in November.
The lack of economic data from the government shutdown has made the Federal Reserve cautious about further policy easing, but heavyweights like Fed Governor Christopher Waller and New York Fed President John Williams have voiced support for a rate cut next month, which has been central to the recovery in stocks.
"Usually you expect volatility in September and October, we've had it in November, but recovered most of it", Lombard Odier economist Samy Chaar said.
"We were pricing the probability of a cut in December of around 30 per cent and we're now over 80 per cent. And that, I think, is a very strong reason for the month-end rally," he said.
Fed funds futures are implying an 85 per cent chance of a rate cut next month, a sea change from just 30 per cent a week earlier, CME FedWatch showed.
In the broader currency market, the dollar edged up against a basket of major currencies, but headed for its largest weekly fall since July, leaving it almost unchanged on the month.
The Japanese yen was modestly stronger, leaving the dollar down 0.24% at 156.11 yen. The yen hit a 10-month low of 157.9 last week, leaving investors watching for signs of intervention from Japanese authorities after weeks of verbal attempts to stem the currency's relentless slide.
Data showed on Friday that core consumer prices in Tokyo rose 2.8% in November from a year earlier, above forecasts for a 2.7% gain. That added to a slew of data that have kept bets for a rate hike from the Bank of Japan alive.
"Today is also month-end and FX performance can often be determined by those less predictable flows", MUFG strategists said in a note.
The Aussie and the kiwi are big gainers this week, up 1.1 per cent and 1.8 per cent, respectively, as markets bet that the rate-cutting cycles in both countries are nearing an end. Minutes from the European Central Bank's latest meeting showed policymakers there were not in a rush to cut rates either. — Reuters
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