US stocks rise as markets bet on December Fed rate cut

Good morning. Here's what happened overnight and what you need to know today.

---

1.

Rate push: US stocks were extending gains for a fourth consecutive session, as traders increasingly priced in a December interest-rate cut. The S&P 500 was rising 0.82% in afternoon trading, the Nasdaq was up 0.93% and the Dow 0.76%, and Nvidia recovered from investor concerns about competition in AI chips. Market volatility eased significantly ahead of the Thanksgiving break. While US jobless claims unexpectedly fell to 216,000 (the lowest since April) while continuing claims edged up, reinforcing views the labour market is cooling but not collapsing. The Fed’s Beige Book showed little overall change in economic activity, with softer consumer spending and mixed signals across sectors reinforcing uncertainty in the outlook. CME data cited by Reuters showed traders see an 84.9% chance of a 25-basis-point Fed cut next month, nearly double the odds from a week earlier. Dell shares were higher after forecasting AI server shipments would more than double. Shares in farm machinery maker Deere and enterprise software platform Workday fell after weaker guidance. And Robinhood share were 8% higher after unveiling a new futures and derivatives exchange with Susquehanna. (Bloomberg)(Reuters)(WSJ)(Capital Brief)

2.

Zero trust lending: National Australia Bank and Westpac are actively reviewing their lending to property investors using trusts and company structures to boost their borrowing power. The move, relayed by sources and confirmed by Capital Brief, comes after this publication revealed Macquarie had ceased lending to trusts and companies and after Commonwealth Bank tightened its rules around the practice. It means all of the big four banks are retreating from one of the most speculative parts of the property market in some shape or form. ANZ hiked its interest rates on loans to structured investors more than a year ago in a sign it wasn't interested in the risk. While neither NAB nor Westpac is expected to pull out of the market entirely, they are actively considering tightening their policies to manage their risk exposure. The big banks’ reluctance to service structured investors could leave second tier lenders to fill the void. (Capital Brief)

3.

Teen challenge: A constitutional challenge was filed in the High Court against Australia’s world-first law banning children under 16 from social media, just two weeks before the rules come into force. The case, brought by advocacy group the Digital Freedom Project and naming two 15-year-olds, Noah Jones and Macy Neyland, as plaintiffs, argues the law unlawfully limits the implied right to freedom of political communication. The group told media in a statement the legislation is “grossly excessive” and “robs” young Australians of their political voice. From December 10, platforms including Facebook, Instagram, TikTok, YouTube, Snapchat and others must block under-16s from creating or holding accounts or risk penalties of almost $50 million. The government has said the ban will protect children from harms including misinformation, bullying and body image issues. Communications Minister Anika Wells told parliament the Albanese government “will not be intimidated” by legal threats and remains “on the side of parents”. (Reuters)(AFR)(ABC)

4.

Steaming over streaming: A bipartisan group within US Congress is ramping up pressure on the Canadian government over its streaming video content quotas, in a sign of how the American government may intensify its efforts to quash similar measures in Australia. A letter signed by 29 members of Congress including Republican Lloyd Smucker and Democrat Linda T. Sanchez, viewed by Capital Brief and not previously made public, outlines a range of objections to the Canadian regulation, which aims to force streaming platforms to invest in local content. Dated 21 November, the letter says the legislation “constitutes a clearly discriminatory and burdensome levy on cross-border trade”, in violation of the US-Mexico-Canada Free Trade Agreement. It also says the policy threatens to “chill foreign investment”. The correspondence is the latest development in US efforts to pressure trading partners to abandon plans to levy US companies and coincides with efforts by the Australian government to rush its own streaming regulation through the Senate this week. (Capital Brief)

5.

Budget sweep: UK Chancellor Rachel Reeves raised taxes by GBP26.1 billion ($40 billion) in a UK Budget that increases the tax burden to 38.3% of GDP by 2029-30, the highest level since records began after the second world war. The Budget, delivered amid chaotic scenes following an accidental early release of key documents by the Office for Budget Responsibility, included a freeze on income tax thresholds, higher taxes on dividends and rental income, and a new council tax surcharge on homes worth more than GBP2 million, expected to raise GBP430 million annually from April 2028. Reeves confirmed a fiscal buffer of GBP22 billion, more than double the figure from March. The OBR said the measures would have “no significant impact on output by 2030”, while growth forecasts were downgraded due to weaker productivity. Welfare spending was revised up by GBP16 billion, including GBP3 billion to remove a two-child benefit cap. Markets responded positively, with gilt yields and the pound rising. The Institute for Fiscal Studies described the approach as “spend now, pay later”, noting that spending increases come before most tax rises take effect. (Bloomberg)(FT)(WSJ)

6.

Hong Kong Inferno: Chinese leader Xi Jinping expressed condolences to the victims of a major fire that ripped through a high-rise complex in Hong Kong from around 2:50pm local time (5:50pm AEDT) on Wednesday. At least 36 people had died while another 279 were missing, Hong Kong Chief Executive John Lee said at a media briefing. The Wang Fuk Court housing complex, where the fire started, is home to 2,000 residential apartments and some 4,800 residents, according to the Hong Kong Housing Authority. The complex is in the Tai Po district in the New Territories near the border with mainland China and some of the buildings are clad in bamboo scaffolding, fuelling the blazes. Tai Po District Councillor Mui Siu-fung told BBC Chinese that over 90% of the residents have been evacuated. (BBC)(SCMP)(AP)(Bloomberg)(Reuters)

7.

Reserve risk: S&P Global Ratings downgraded Tether’s USDT to a 5 (weak) stability rating, its lowest possible score, with increased exposure to high-risk assets and limited disclosure, the agency said. The move is a blow to the world’s largest stablecoin at a time when its market share is growing and scrutiny of reserve quality is intensifying. The downgrade from 4 (constrained) reflects a rise over the past year in Tether’s holdings of bitcoin, gold, secured loans and corporate bonds, which S&P said are subject to credit, market, interest-rate and foreign-exchange risks. Analysts said bitcoin now accounts for about 5.6% of USDT in circulation, exceeding the 3.9% overcollateralisation margin, meaning a decline in value could lead to undercollateralisation. Other concerns include limited information on the creditworthiness of custodians and counterparties, no asset segregation and restrictions on redeeming USDT directly with Tether. Tether said it “strongly disagrees” with the rating and that S&P applied “a legacy framework” that fails to reflect the nature and role of digital money. It has issued around USD184 billion in tokens. (S&P)(Reuters)(Bloomberg)

8.

Case dropped: Georgia prosecutor Peter Skandalakis dropped his state’s 2020 election interference case against Donald Trump and his allies, closing a high-profile prosecution that once posed a major legal threat to the US president. Filed in August 2023, the case accused Trump and 18 others of conspiring to unlawfully alter Georgia’s 2020 election outcome. Skandalakis, who took over after Fani Willis was disqualified in December 2024 over a relationship with a special prosecutor she hired, said the case was “on life support” adding that pursuing it would be “unduly burdensome and costly”. He wrote that even with every legal issue resolved in the State’s favour, getting to trial before 2029 would be “a remarkable feat”. The case stemmed from a 2021 call in which Trump urged Georgia’s Secretary of State to “find 11,780 votes” to win the state. Trump was booked and photographed that August and four defendants accepted plea deals. (Capital Brief)(CNN)(Reuters)(BBC)