Global Summary News 11-16 November 2024

United States

The US market experienced fluctuations influenced by Trump’s appointments, inflation data, and the Federal Reserve’s policy direction. Bitcoin surpassed $88,000 following Republican gains in the Senate. Federal Reserve discussions continue on whether to cut rates further in December, with inflation rising to 2.6% in October (September +2.4%). Trump announced hawkish appointments including Mike Waltz as National Security Adviser and Marco Rubio as Secretary of State, indicating a tougher stance on China. Treasury yields rose, and the Bloomberg Dollar Spot Index touched its highest level since 2003.

United Kingdom:

Chancellor Reeves announced plans to legislate eight pension “megafunds” to unlock £80 billion in investment but rejected forcing funds to invest in British assets. The Bank of England cut rates to 4.75% and signalled further cuts were unlikely before 2025. Wage growth steadied at 4.8% in the three months to September. Reeves also planned reforms to the financial services sector following allegations of car finance mis-selling. House prices rose by 0.2% month-on-month in October, hitting record highs despite pre-Budget growth slowdowns.

European Union:

German Chancellor Scholz’s coalition collapsed, triggering snap elections in February 2025. France’s Emmanuel Macron warned that Trump’s economic policies risk dividing Europe and dragging it into trade conflicts. ECB officials stressed that fiscal stimulus in the US could lead to global inflationary pressures. Germany’s economic growth was forecast to stagnate after the boost from the Paris Olympics faded, with uncertainty over the supplementary 2025 budget adding to concerns.

Australia:

Wage growth slowed to 3.5% in the third quarter (Q2 +4.1%, consensus +3.6%), reflecting easing inflation pressures. Employment rose by 15,900 last month, with the unemployment rate remaining at 4.1%. Consumer sentiment and business confidence increased, reinforcing expectations that the next move in interest rates will be a reduction.

Japan:

Japan introduced economic stimulus measures including cash handouts to low-income households and additional disaster preparedness funding. Input prices rose by 3.4% year-on-year in October, driven by agricultural products. The yen weakened beyond 155 per dollar for the first time since July. Semiconductor and AI industries received $65 billion in fresh government support to maintain competitiveness.

China:

Chinese exports surged in October despite Trump’s promise of higher tariffs. Retail and industrial sales showed stronger-than-expected growth due to government stimulus measures. Hong Kong stocks fell following underwhelming fiscal stimulus from Beijing. Industrial production and retail sales gained momentum, bolstered by support for the housing market and long holidays.

Artificial Intelligence:

OpenAI co-founder Greg Brockman returned to the company amidst restructuring, and Japan’s SoftBank became the first customer to adopt Nvidia’s new Blackwell chip design. Vietnam’s FPT Corp plans to establish an AI data centre in Japan. The UK government announced an initiative to help businesses evaluate AI-related risks, highlighting its ambition to lead in AI safety.

Cryptocurrencies:

Bitcoin jumped over 10% to surpass $88,000, bolstered by Republican gains in Congress. It later surged another 3.4%, while Ether rose 1.6%. The cryptocurrency market benefited from increased risk appetite following Trump’s election victory.

Equity Markets:

The S&P 500 briefly surpassed 6,000, with tech stocks leading gains, including a rally in Tesla that returned its valuation above $1 trillion. However, a tech selloff later led to declines, with the Nasdaq falling 2.4% on Friday and over 3% for the week. Applied Materials reported weak revenue forecasts, while Moderna and Pfizer stocks fell after Trump appointed vaccine sceptic Robert F. Kennedy Jr. to a health policy role.

Bond and Commodity Markets:

Treasury yields rose following strong retail sales data but saw their best weekly gain since early September by the week’s end, closing at 4.44%. Oil prices declined 2.4% to $67.02 per barrel, reflecting market concerns about global supply. Gold remained stable despite heightened volatility in financial markets.

Economic Sentiment and Risks:

Optimism around Trump’s pro-business agenda faded as markets assessed risks related to fiscal stimulus, inflation, and trade wars. Retail sales data in the US exceeded expectations, suggesting resilient consumer spending. However, rising interest rates pressured equity valuations, and risk premiums widened across sectors.