Global Summary News 4th to 9th November 2024
Last week’s key global news touched on the US election, economic growth, labour market updates, monetary policy changes, debt securities, and corporate performance.
United States (USD):
In a pivotal development, Kamala Harris conceded the election to Donald Trump, who announced Susie Wiles as his White House Chief of Staff. The Federal Reserve cut rates by 25 basis points, with Chair Jerome Powell reaffirming the economy’s strength despite potential tariff-driven inflation risks. The US saw mixed economic data; October’s nonfarm payroll growth slowed to 12,000 jobs due to hurricanes and the Boeing strike, marking the weakest report under Biden. Following Trump’s win, the S&P 500 hit a record high and rose 4.7% for the week, driven by optimism around Trump’s pro-growth policies. Additionally, a $20 billion inflow into equity funds highlighted investor confidence.
United Kingdom (GBP):
Chancellor Rachel Reeves’ Budget came under scrutiny, with debates over employer tax changes and significant discretionary fiscal easing. Reeves stated no further tax or borrowing increases would occur before the next election, though economic experts caution against rising inflationary pressures. Labour strikes on the London Underground were suspended, and the Bank of England cut rates to 4.75%, signaling further reductions might not happen until 2025.
Europe (EUR):
Germany’s coalition government collapsed after Olaf Scholz dismissed Finance Minister Christian Lindner, setting the stage for a confidence vote in January and potential snap elections in March. Ireland announced a general election on 29 November, with Fine Gael seeking a fourth term. Eurozone inflation rose to 2% in October, supporting a more cautious 25 basis point rate cut by the ECB in December.
Japan (JPY):
The yen saw fluctuations against a stronger dollar, and Japanese stocks gained slightly in anticipation of the US election outcome. Japanese wage growth rose 2.6% in September, adding momentum for a potential rate hike by the Bank of Japan. In response to a volatile yen, currency officials indicated readiness to stabilize markets.
China (CNY):
China’s exports surged in October amid Trump’s tariff threats, which could heighten tensions and potentially prompt Beijing to implement further economic stimulus. There were also signs of increased FX inflows from capital returning to China due to US rate cuts.
New Zealand (NZD):
The Reserve Bank of New Zealand noted an economic slowdown, with unemployment rising to 4.8% in Q3. Meanwhile, consumer confidence and business investment faced downward pressure, despite ongoing easing in inflation and interest rates.
Artificial Intelligence (AI):
The UK government announced a new platform to assist businesses in assessing AI risks, as part of a strategy to lead AI safety testing. The technology secretary also proposed new AI legislation to ensure safe development. On the corporate front, Tesla regained a trillion-dollar valuation, driven by optimism around its growth prospects, while Palantir shares surged on strong AI demand.
Debt Securities and Commodities:
Treasuries rallied during the week, with the 10-year yield ending at 4.30% amid heightened US election volatility. Crude oil fell to $70.41 a barrel, impacted by OPEC+ delaying output increases. Gold prices slipped to $2,685.34 per ounce.
Economic Growth and Inflation:
Globally, growth concerns persisted. The IMF expressed optimism over a soft economic landing but warned against rising protectionism, especially given Trump’s trade policies. Inflation remained a focus in Europe, with the ECB closely monitoring price pressures. The BOE cut rates, aiming to support the UK economy amidst broader fiscal adjustments from Reeves’ Budget.
In summary, this week’s news reflects a global economy at a crossroads, with political changes, ongoing rate cuts, and inflationary pressures shaping policy decisions as investors remain cautiously optimistic.