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European stocks fell for a second day and US futures pointed to a weaker open on Wall Street amid signs the November rally in equities is overstretched. The Stoxx 600 retreated 0.7%, while contracts on the S&P 500 dipped by 0.2%. Dutch biotech Argenx SE sank as much as 17% after preliminary results suggested its only medicine failed in a trial. LVMH led European luxury stocks lower as HSBC Holdings Plc cut its price targets across the sector.
The dollar was little changed, on track for its steepest monthly drop in a year. Treasuries steadied after gains in the previous session. Expectations that interest rates have peaked and the economy will avoid recession have spurred stocks and government bonds this month. Now, Citigroup Inc strategists say one of the best November rallies for the S&P 500 in a century is running out of steam and net positioning in the benchmark index is looking “slightly bearish.”
Central bankers from Australia, England and Thailand, meanwhile, warned that the monetary policy outlook remains uncertain. The European Central Bank isn’t yet at a point where it should consider reducing borrowing costs, Bundesbank President Joachim Nagel said. “US markets seem to be taking a breather post-Thanksgiving so you get a bit of weakness in Europe too,” said Kamil Dimmich, partner at North of South Capital in London.
Traders will be watching a series of speeches by Federal Reserve officials on Tuesday and another batch of economic data are due this week, including the Fed’s preferred measure of underlying inflation. More than 60% of respondents in the latest MLIV Pulse survey expect stocks to provide better returns than bonds over the next month. That’s the highest level of excitement about equities that the survey registered since the question about the two assets was first asked in August 2022.
Elsewhere, gold was little changed, hovering near the highest level since May. Oil snapped three days of declines as the market weighed the possibility of deeper output cuts.