MPC Morning Call 3rd December 2025 –Stocks drift higher on rate cut” Hope-ium”
Stocks drifted higher on “rate cut hopes”, despite the odd being lower than last week as manufacturing softened.
Fed rate cut expectations have strengthened after weaker ISM manufacturing data, with futures markets and prediction platforms now implying roughly mid‑80% odds of a 25‑basis‑point cut at the Dec. 9–10 meeting, reflecting softer activity and easing inflation pressures. Bank of America Global Research has shifted its call to now forecast a 25‑basis‑point reduction in December as well, plus two more quarter‑point cuts in June and July 2026, which would bring the fed funds rate down toward a 3.00%–3.25% terminal range; its economists stress that the extra 2026 cuts are mainly a function of expected leadership change at the Fed rather than a weaker economic outlook. Political uncertainty is part of the story, with White House economic adviser Kevin Hassett widely reported as the frontrunner to succeed Jerome Powell as Fed chair, reinforcing market bets on a more dovish policy path next year. In equities, the earnings calendar is relatively light, putting focus on Marvell Technology as a key after‑the‑bell report, while MongoDB has already surged more than 20% after raising full‑year guidance on stronger‑than‑expected Q3 results. The semiconductor space remains active on the M&A front, with Marvell reported to be in advanced talks to buy optical‑AI startup Celestial AI in a multibillion‑dollar cash‑and‑stock deal, underscoring ongoing interest in custom and networking chips versus larger rival Broadcom. Elsewhere, Dell Technologies shares gained after President Donald Trump highlighted the Dell family’s large new philanthropic initiative, which would fund long‑term investment accounts for millions of U.S. children and expand on the administration’s existing “Invest America” seeding program. Boeing shares jumped sharply after management guided to positive free cash flow in 2026 and disclosed a roughly $100 million U.S. Navy contract to repair aircraft display systems, helping improve sentiment around the company’s long‑term outlook. In digital assets, Bitcoin has rebounded more than 7% to trade back above the psychologically important $90,000 mark, a move that has coincided with improving risk appetite in crypto‑linked equities and with traders positioning for easier Fed policy. Stocks tied to the crypto theme, including major listed players such as MicroStrategy and Coinbase, have traded noticeably higher alongside the move in Bitcoin, reflecting both short‑covering and renewed dip‑buying interest. ASX Overnight: SPI 8607 (+0.17%) The Day Ahead: The main data news for the day is Australia’s gross domestic product figures, which are out at 11.30am. Bloomberg economists predict 0.7 per cent growth, which would be a three-year high. Westpac senior economist Pat Bustamante expects the data to show business investment grew at its fastest pace since March 2012. WiseTech Global holds its investor day.
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