Stocks Hold Trump Election Gains as Dollar Eases: Markets Wrap
US equity futures maintained their post-Election Day gains and the dollar eased as traders continued to map out Donald Trump’s return to the White House and what it holds for the Federal Reserve’s interest-rate path.
US equity futures maintained their post-Election Day gains and the dollar eased as traders continued to map out Donald Trump’s return to the White House and what it holds for the Federal Reserve’s interest-rate path.
S&P 500 contracts edged higher after the US benchmark surged in the previous session on bets that the newly elected President will boost corporates through pro-growth policies. An index of the dollar retreated 0.3% following its best day since 2022. Moves in US Treasury yields were muted after Wednesday’s seismic selloff.
Markets are taking a breather Thursday after grappling with the far-reaching effects of a Trump presidency. His win has forced investors to come to terms with economic policies that could lead to fewer Fed rate cuts, along with a possible Republican sweep of Congress that could help fuel fiscal expansion.
“What we saw yesterday was the playbook of the Trump trade in action but it’s soon going to evolve,” said Arnaud Girod, head of economics and cross-asset strategy at Kepler Cheuvreux in Paris. “US yields can’t continue to go up with US equities on the rise, my conviction is that yields will calm down.”
Later today, Fed Chair Jerome Powell will face a tough test as a second Trump term sparks concerns over inflation. Officials are expected to lower rates by 25 basis points, a move that will come on the heels of the half-point cut in September.
Traders are currently betting on about 100 basis points of Fed cuts by September 2025, compared to 110 basis points on Tuesday.
“What would be interesting is not so much the cut, but communication around December and next year,” James Vokins, portfolio manager at Aviva Investors, said in an interview. For Powell, “it will be a very difficult situation and it will be a very difficult communication to manage, he will have to be careful not to be too firm on any particular direction.”
The Bank of England also sets policy on Thursday and is seen lowering borrowing costs by 25 basis points. Governor Andrew Bailey, who speaks after the meeting, will likely be pressed on how the additional spending announced by the new UK government last week impacts the outlook for further easing.
Europe’s benchmark stock index advanced 0.6% as traders digested the possibility of fresh elections in Germany and whether it could help to revive growth in Europe’s biggest economy. The country’s 10-year yield rose above the equivalent swap rate for the first time as traders braced for the possibility of an administration that could be more tolerant of increasing debt.
In Asia, Chinese shares rebounded strongly as robust exports and hopes for more stimulus outweighed concerns about tariffs spurred by the US election outcome. The yen strengthened after Japan’s chief currency official warned that authorities will take appropriate action against any excessive currency moves.
Bitcoin, boosted by Trump’s embrace of digital assets during his campaign, slipped 1.5% Thursday after rising to a record high the day before. Oil extended losses after a roller-coaster session on Wednesday as traders weighed the likely impact of Trump’s election victory on the crude market.
Corporate Highlights:
Key events this week:
Some of the main moves in markets:
Stocks
Currencies
Cryptocurrencies
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
With assistance from Julien Ponthus.
This article was generated from an automated news agency feed without modifications to text.
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First Published:8 Nov 2024, 03:35 AM IST
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