Trump Trades Power On, Asia Investors Show Caution: Markets Wrap
US stocks rose for a fifth straight session, while Bitcoin topped $88,000 and the dollar hit a one-year high as investors continued to bet those trades will benefit from President-elect Donald Trump’s agenda. Asian shares were set for a more cautious start.
by Jason Scott · Financial Post(Bloomberg) — US stocks rose for a fifth straight session, while Bitcoin topped $88,000 and the dollar hit a one-year high as investors continued to bet those trades will benefit from President-elect Donald Trump’s agenda. Asian shares were set for a more cautious start.
Futures showed Tokyo stocks edging higher, while Sydney’s looked flat and Hong Kong shares were set to decline amid disappointment over Chinese stimulus. In the US, a drop in technology shares offset gains in several other corners of the market. A closely watched gauge of banks climbed 2.4%, while Tesla Inc. jumped 9%, extending a blistering surge.
With the election and another rate cut in the rear-view mirror, the question is whether bulls can keep pushing the market to new highs, according to Chris Larkin at E*Trade from Morgan Stanley.
“Aside from any potential profit-taking after such a strong surge, this week’s inflation data may determine whether the market pads its gains,” Larkin said.
US inflation probably moved sideways at best in October, highlighting the uneven path of easing price pressures in the home stretch toward the Fed’s target. The core consumer price index due on Wednesday, which excludes food and energy, likely rose at the same pace on both a monthly and annual basis compared to September’s readings.
The S&P 500 rose 0.1% on Monday, hovering near the 6,000 mark and notching its 51st record this year. The Nasdaq 100 was little changed. The Dow Jones Industrial Average gained 0.7%.
Treasury futures were mildly lower as the cash market was closed due to a US holiday. The Bloomberg Dollar Spot Index added 0.5%. Oil sank as a soft outlook for demand in China continued to plague the market.
In Asia, investors have been digesting Beijing’s latest stimulus package, which relieved some of the debt burden on local governments but lacked the sweeping fiscal support many investors had hoped for. Data also showed that China’s credit expansion slowed more than expected last month.
Chinese stocks in Hong Kong declined on Monday, with the Hang Seng China Enterprises Index falling as much as 2.9% before paring some of its losses, with property and consumer-related shares among the biggest losers. The CSI 300 Index was volatile, while futures on Tuesday showed it may fall around 0.6% after opening.
Meanwhile, speaking at a press briefing after winning a vote in parliament to stay on as premier, Japanese Prime Minister Shigeru Ishiba pledged more than $65 billion of support for the nation’s semiconductor and artificial intelligence sector over the next decade.
The prime minister said he wanted to spread positive examples of regional revitalization like TSMC’s chip plant in Kumamoto across the nation, and hoped aid for the sector would serve as a catalyst to generate public and private investment of more than ¥50 trillion over the next 10 years.
Trump Rally
Back in the US, the stock market could rally stronger into the end of the year following Trump’s presidential election victory than it did when he won the US presidency eight years ago, according to JPMorgan Chase & Co.’s trading desk.
“I expect 2024 returns to be larger than 2016,” Andrew Tyler, the bank’s head of US market intelligence, wrote in a note to clients Monday. A big advantage for the S&P 500 is weakness outside the US, with China, the UK, EU, Canada and Mexico all experiencing softer growth than they did back then.
The “animal spirits” being set loose by the economic policies of President-elect Trump will send the S&P 500 to 10,000 by the end of the decade, according to veteran strategist Ed Yardeni.
His uber-bullish prediction, which would represent a 66% surge by 2030, is another sign that Wall Street is growing increasingly optimistic about stock markets in the wake of the US election. Yardeni lifted year-end targets to 6,100 for 2024, 7,000 for 2025 and 8,000 for 2026.
“Stock investors are also thrilled by the regime change to a more pro-business administration promoting tax cuts and deregulation,” he wrote in a note on Monday.
Corporate Highlights:
- Nvidia Corp. was promoted to top large-cap pick at Piper Sandler, which highlighted the artificial intelligence-focused chipmaker’s dominant position in AI accelerators, as well as the upcoming launch of its new Blackwell chip.
- Cigna Group said it won’t pursue a combination with rival insurer Humana Inc. after reports the two companies had renewed discussions of a deal.
- AbbVie Inc. tumbled after two mid-stage trials of its drug to treat schizophrenia failed to meet their primary goal, a blow to the company’s $8.7 billion acquisition of Cerevel Therapeutics earlier this year.
- MicroStrategy Inc. bought about 27,200 Bitcoin for around $2.03 billion, the largest purchase by the crypto hedge-fund proxy since just after it began acquiring the digital-asset more than four years ago.
Key events this week:
- Germany CPI, ZEW survey, Tuesday
- Fed speakers include Christopher Waller, Patrick Harker and Neel Kashkari, Tuesday
- Fed issues survey of senior bank loan officers, Tuesday
- Eurozone industrial production, Wednesday
- US CPI, Wednesday
- Fed speakers include Jeffrey Schmid, Lorie Logan, Neel Kashkari and Alberto Musalem, Wednesday
- Eurozone GDP, Thursday
- US PPI, jobless claims, Thursday
- Walt Disney earnings, Thursday
- Fed speakers include Jerome Powell, John Williams and Adriana Kugler, Thursday
- China retail sales, industrial production, Friday
- US retail sales, Empire manufacturing, industrial production, Friday
Some of the main moves in markets:
Stocks
- Hang Seng futures fell 0.6% as at 7:28 a.m. Tokyo time
- S&P/ASX 200 futures were little changed
- Nikkei 225 futures rose 0.2%
Currencies
- The euro was little changed at $1.0657
- The Japanese yen was little changed at 153.71 per dollar
- The offshore yuan was unchanged at 7.2277 per dollar
Cryptocurrencies
- Bitcoin fell 1.2% to $86,927.45
- Ether fell 0.7% to $3,305.17
Bonds
- Australia’s 10-year yield was little changed at 4.58%
This story was produced with the assistance of Bloomberg Automation.