Week 12 November / 19 November 2024
The trends recorded on the stock markets over the past week certify that the positive effect resulting from Trump’s election was less impactful than it seemed and persisted for a very short period.
Only on the currency side for now is the effect significant with the dollar appreciating sharply from about 1.09 to about 1.05.
Probably the reason for this substantial negative response has to be found on the fact that the U.S. economic picture is much more complex than what was present in the first term because the public accounts are suffering, the debt-to-GDP ratio is at 122% from 106%, and the deficit has increased from 3.10% to 6.7%.
1. Markets
The choice of characters of dubious ability in the composition of the governmental team certainly does not help to gain support. The economic weight to the U.S. economy of the tariffs that Trump will decide to adopt is also to be evaluated.
Another element to be evaluated is the contrast between Trump and the Federal Reserve immediately highlighted by Powell, which could also lead to the slowdown of accommodative policy on rates depending on the results realized on the real economy.
Finally, the protectionist agenda that Trump will adopt could affect the stock prices of emerging markets, while a favored sector could be energy and especially oil.
The exchange rate is also significantly affecting the markets as the dollar exchange rate rose in two weeks from 1.09 to 1.054; a hypothesis considered in previous reports although we predicted a slower appreciation. Obviously, it is too early to give definitive assessments of the short- and medium-term outlook given the too many variables present and highlighted above, in addition to those known internationally.
Another element of attention that has recently emerged is the Bank of England top management’s consideration of Brexit: it would be severely affecting the British economy, including structural damage, and therefore a rapprochement with the EU would be necessary where possible.
2. Main Indices
EU markets performed negatively while U.S. markets performed positively although less significantly than expected. Nikkei is slightly negative as are Hang Seng, Shanghai and Mumbai.
For many analysts, Trump’s election should have produced a strongly positive effect on quotes at least in the BT/MT but it did not.
Below is data on the performance of world stock exchanges during the period 06.11.2024 – 18.11.2024:
-FTSEMib Index -4.87%
-Eurostoxx Index -2.10%
-Dow Jones Index +2.64%
-Nasdaq Index -0.59%
-Nikkei 225 Index -0.39% -Hang Seng Index -3.55%
-Shanghai Index -0.69%
3. Major currencies
Please note that currency trends are compared with the value of the EURO.
The dollar continues its recovery now in the 1.059 area as do the other Area currencies (AUD, NZD, CAD).
Mexican peso sideways slightly recovering as the South African rand.
The Turkish lira also recovered slightly, while the Brazilian real moved sideways and the ruble depreciated slightly above 105.
