European Markets Show Broadly Positive Bias After US Jobs Data – December 2024 Update

• How Did European Markets Perform on December 4?
• Why Did Investors Ignore the Weak ADP Jobs Report?
• What’s Driving Fed Rate Cut Expectations?
• How Did US Indices Fare?
• Which Stocks Stood Out in Europe?
• What’s Next for Markets?
• FAQs: European Markets and US Jobs Data

European indices mostly closed higher on December 4, 2024, with Frankfurt being the lone exception. Investors initially treaded cautiously ahead of the ADP private payrolls report but shrugged off its surprisingly weak results, which reinforced expectations of a Fed rate cut next week. The CAC 40 edged up 0.16%, while the DAX 40 dipped slightly. Meanwhile, US indices posted modest gains. Here’s a DEEP dive into the day’s market movements, key drivers, and what it means for traders.

How Did European Markets Perform on December 4?

Most European markets ended in positive territory, though Frankfurt’s DAX 40 bucked the trend with a 0.12% decline to 23,682.45 points. The CAC 40 inched up 0.16% to 8,087.42 points, while Madrid’s IBEX 35 outperformed with a 0.76% surge to 16,598.90 points, fueled by a rally in Inditex shares. The EuroStoxx 50 also gained 0.12%, closing at 5,692.87 points.

Why Did Investors Ignore the Weak ADP Jobs Report?

The ADP report revealed a loss of 32,000 private-sector jobs in November—a stark contrast to the expected gain of 5,000. October’s figures were also revised down to 42,000 from 47,000. Despite this, markets barely flinched. As Bastien Drut of CPR AM noted, "The ADP data confirms employment momentum has stalled for six months in the US. With the Fed’s December meeting looming, this makes a rate cut on December 10 almost a certainty—and possibly more cuts in early 2025."

What’s Driving Fed Rate Cut Expectations?

CME Group’s FedWatch Tool now prices in an 88.9% chance of a rate cut next week. The weak jobs data, coupled with a slowdown in the PMI Composite index (contrary to forecasts of acceleration), has cemented dovish expectations. The ISM non-manufacturing PMI, however, edged up to 52.6 from 52.4, slightly beating estimates.

How Did US Indices Fare?

Wall Street posted modest gains: the Dow Jones ROSE 0.46% to 47,692 points, the S&P 500 added 0.16% to 6,840 points, and the Nasdaq Composite eked out a 0.03% increase to 23,420 points. Traders are now eyeing next week’s Fed decision, with most positioning for a dovish pivot.

Which Stocks Stood Out in Europe?

In France, Stellantis climbed after UBS analysts issued a bullish note, while Airbus rebounded from earlier losses despite cutting its 2024 delivery target from 820 to 790 aircraft. Airbus shares had dropped 6.82% over the prior two sessions, but bargain hunters stepped in, lifting the stock.

What’s Next for Markets?

All eyes are on the Fed’s December 10 meeting. With employment data weakening and inflation pressures easing, the central bank has little reason to hold rates steady. As one BTCC analyst quipped, "The Fed’s ‘wait-and-see’ mode might just turn into a ‘cut-and-hope’ strategy."

FAQs: European Markets and US Jobs Data

Why did Madrid’s IBEX 35 outperform?

Madrid’s strong showing was driven by Inditex, whose shares soared on positive sentiment.

How reliable is the ADP report for Fed decisions?

With the official jobs report delayed due to the shutdown, the ADP data is currently the best proxy for labor market health.

Will the Fed cut rates more than once?

Markets are pricing in a high probability of a December cut, with follow-up moves likely if economic data stays soft.