Equities rise as traders weigh Trump 2.0
LONDON: Major stock markets mostly rose Thursday following Donald Trump’s election win that is set to see the returning president unveil US tax cuts and import tariffs.
A man walks past a screen showing Chinese stock market movements in Beijing on November 7, 2024.-- AFP.
The dollar retreated having surged Wednesday on news of Trump’s win, while bitcoin came off record highs.
Focus was also on interest-rate decisions, with the US Federal Reserve and Bank of England (BoE) set to announce fresh cuts Thursday after big drops to inflation. Ahead of the decisions, Sweden’s central bank slashed borrowing costs by 0.5 basis points—its biggest reduction in a decade—while Norway made no change. “All eyes will now turn to interest rate decisions from the Bank of England... and the Federal Reserve,” noted Derren Nathan, head of equity research at Hargreaves Lansdown.
Analyst Joshua Mahony at Scope Markets said that “with markets largely deeming a Trump presidency as inflationary, we are already seeking a more cautious (US) rate-cut trajectory being priced in by markets”. The London stock market steadied before the BoE decision, with Frankfurt Europe’s standout performer in late morning deals thanks to a gain of 1.1 percent.
In Europe’s biggest economy Germany, the conservative opposition heaped pressure on Chancellor Olaf Scholz’s crisis-hit government Thursday to allow for speedy elections by calling a confidence vote next week rather than in 2025. Christian Democrats chief Friedrich Merz made the demand after Scholz’s three-party coalition imploded Wednesday, as finance minister Christian Lindner from the pro-business Free Democrats was sacked.
He will be replaced by Joerg Kukies, a member of Scholz’s Social Democrats, government sources told AFP. In Asia on Thursday, Chinese stocks rallied as investors brushed off concerns that China in particular would be the target of Trump’s tariffs.
Wall Street stocks surged to all-time records Wednesday after it emerged the tycoon would return to the White House having beaten Democrat Kamala Harris. His Republican Party gained control of the Senate and looked set to hold the House of Representatives. The decisive win is expected to pave the way for a series of business-friendly measures such as tax cuts and deregulation, though analysts warn that such moves—along with the pledge to impose duties on imports—could relight inflation.
The prospect of higher inflationary pressure could complicate matters for Fed boss Jerome Powell. The central bank is expected to announce a 25 basis-point reduction to US rates Thursday, but there are now questions over the chances of another next month, and the outlook for the new year. The BoE is also expected to cut its rate by a quarter-point after UK annual inflation fell below the central bank’s target.
Bitcoin traded close to $75,000, having touched a new high close to $76,475 Wednesday. Ahead of his election win, Trump pledged to make the United States the “bitcoin and cryptocurrency capital of the world”. — AFP.
