U.S. stocks are little changed in early trading after holiday

The renewed decline in oil and commodity prices and its impact on inflation is having a negative effect on inflation expectations which could make bringing inflation back up to the target more hard.

Investors are likely to be jolted from their Thanksgiving week torpor by a slate of key economic events this week.

Divergence will be a huge theme for markets in 2016 – divergence between monetary policy in the USA and Europe, divergence between China’s economy and others – says Saxo Bank’s equities strategy chief Peter Garnry who will speak about the topic in a Webinar later today with Saxo Bank’s fixed-income chief Simon Fasdal.

The gauge, which shows where markets see 2025 inflation forecasts in 2020, rebounded from about 1.56 percent at the end of September, after Draghi signalled the European Central Bank was mulling more measures to ease policy.

But even if the figures disappointed somewhat, the Fed is still expected to hike at its meeting on December 15-16 given near full employment, with the debate likely shifting to future rate hikes rather than near term moves. Shares of Citic and Guosen plunged by the daily limit on Friday, while Haitong was suspended from trading. All three firms have said they will cooperate with the regulator and operate as normal. It was 0.2 per cent lower at $1.0576 at 11:47 a.m. Frankfurt time. Sydney’s S&P/ASX 200 lost 0.7 percent to 5,166.50 and Hong Kong’s Hang Seng shed 0.3 percent to 21,996.42.

The currency has weakened 3.8% in November, its biggest loss since a 4.2% decline in March, when the central bank embarked on a €1.1T asset-purchase program.

“The euro has moved as expectations of European Central Bank easing have mounted”, SocGen’s Tan said. Japan’s industrial output rose for a second straight month in October and retail sales grew much faster than expected.

On Friday, ministers of the Organization of the Petroleum Exporting Countries meet in Vienna and are not expected to cut production.

The euro fell a third of a percent to US$1.0565.

“Expectations surrounding the ECB are running very high and this is driving European markets higher, weakening the euro and helping them do better than US stocks”, said Marco Vailati, head of research and investment at Italy’s Cassa Lombarda.

Futures on Australia’s S&P/ASX 200 Index were little changed, while those on the Kospi index in Seoul dropped 0.3 per cent on Friday.

Oil has slumped 37 per cent in the past year as USA crude inventories climbed.

Against the yen, the euro was down about 0.2 per cent at 129.90, not far from a seven-month trough of 129.67 set on Friday. It last traded down 0.1 percent at $1,057 an ounce.

What this means is that if the European Central Bank merely does what is effectively priced in by the market on Thursday we might all wake up the next day feeling a bit deflated, like an ungrateful child discovering on Christmas day that his parents “only” gave him what had been asked for. Sri Lanka updates on consumer prices, India posts third-quarter gross domestic product data and markets in the Philippines are closed for a holiday.