11/11/2024
Post-Election Rally and Inflation Concerns Shape Global Market Outlook
Following Donald Trump’s presidential election victory, U.S. markets experienced a significant rally, driven by expectations of pro-growth policies, such as tax cuts and deregulation. The Dow Jones Industrial Average surged past the 44,000 mark, while the S&P 500 and Nasdaq Composite reached all-time highs, marking one of their best weeks in over a year. Small-cap stocks, represented by the Russell 2000, also posted strong gains, reflecting investors’ optimism about Trump’s anticipated economic agenda. Treasury yields initially spiked, indicating investor expectations for higher inflation and stronger economic growth, though yields pulled back slightly by the week’s end.
Looking ahead, economic data will play a critical role in shaping market sentiment, with U.S. inflation data and October retail sales reports due this week. Investors are especially focused on these inflation readings, given Trump’s trade and fiscal policies, which may drive inflation and influence the Federal Reserve’s monetary strategy. While the Fed recently cut interest rates by 25 basis points, Chair Jerome Powell provided no indication of further rate cuts, maintaining a cautious stance as the economic implications of Trump’s policies remain uncertain. However, the probability of another rate cut in December remains high, depending on economic indicators.
In Europe, equities rose, taking cues from U.S. market strength, although sentiment in Asian markets was weaker. China’s recent economic measures, including a $1.4 trillion program aimed at local government debt, failed to boost investor confidence, as markets hoped for more substantial stimulus to address anemic inflation and declining foreign investment. UBS revised its 2025 GDP growth projection for China downward to around 4% amid anticipated trade tensions with the U.S. and potential impacts from new U.S. tariffs.
Elsewhere in the financial landscape, Bitcoin surged past $81,000, buoyed by favorable U.S. regulatory prospects for digital assets. The Bank of Japan’s cautious approach to policy changes left the yen slightly weaker, while Europe’s common currency, the euro, remained steady. Key economic releases, including inflation data in the Eurozone and growth figures from the U.K. and Japan, will be closely watched as global investors adjust portfolios in response to the shifting economic and political dynamics brought on by the U.S. election results.
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The information in this report is of a general nature only. It is not a piece of personal financial advice. It does not take into account your objectives, financial situation, and personal needs.
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