The US stock market struggled at the start of December as risk appetite took a hit, largely due to a fresh downturn in the cryptocurrency space and growing concerns over economic growth. The S&P 500 ended lower, following a steep drop in Bitcoin and the broader crypto market, which saw nearly $1 billion in leveraged positions liquidated as Bitcoin tumbled by up to 8%.
Meanwhile, a slump in US factory activity added to the bearish sentiment, with the ISM Manufacturing Index showing its biggest contraction in four months, pointing to a slowdown in business orders and manufacturing output. On the geopolitical side, concerns about US trade policies resurfaced as Costco (NASDAQ:COST) joined other businesses in a legal fight over tariffs, further complicating the economic outlook. These factors, combined with a potential rate hike by the Federal Reserve, left investors cautious.
European markets also faced headwinds, with stocks sliding due to weak economic data and sector-specific concerns. Notably, Airbus shares dropped sharply after the company disclosed quality issues with critical fuselage components in its A320 aircraft, sparking investor concerns about further delays or safety issues.
The defense sector also saw weakness, contributing to broader market declines. In economic data, Europe's manufacturing sector continues to show signs of strain, adding to worries about slower growth in the region. Meanwhile, tensions between Russia and Ukraine remain a key geopolitical risk, with the EU voicing its discontent over US attempts to push Ukraine into a peace agreement that could potentially benefit Moscow.
In Asia, market sentiment was mixed as a combination of domestic and international factors weighed on performance. Japan's retail sector felt the effects of strained relations with China, while stocks in Hong Kong were rocked by the ongoing investigation into a deadly fire, which claimed 151 lives.
In China, liquidity concerns continued to ripple through the market, with property giant Vanke seeking to extend the repayment period on its domestic bonds as it faces mounting pressure. Meanwhile, the cryptocurrency selloff spilled into Asia, with Bitcoin's decline affecting investor sentiment across the region. However, some optimism remained, as companies like DeepSeek made strides in artificial intelligence, showing potential for innovation-driven growth in the tech sector.
Australia's economic outlook remains uncertain, with growth likely accelerating in the most recent quarter, but inflation concerns are prompting speculation that the RBA may soon raise interest rates. A technical glitch at the ASX added to investor frustration as it halted company disclosures for several hours.
Meanwhile, commodity-driven growth continues to be a major factor, with Australian miners ramping up gold exploration in response to soaring prices. About the geopolitical developments, tensions between the US and Venezuela are likely to keep markets on edge, while BHP's failed bid to acquire Anglo American highlights the ongoing consolidation trends in the mining sector.