Week 4 November / 11 November 2024
The data would seem to point financial markets toward an initial positive assessment of Trump’s reelection.
Even though one might consider that whichever of the two pretenders had won the 2024 Election, the markets might have reacted positively in the short term, due to the decline in quotations in the last two weeks, it is important instead to assess the medium- to long-term outlook because these are the ones that really matter in the financial field and it is too early for reliable considerations. Much will depend on the first economic choices to be made by the new administration.
Should Trump’s stated protectionist initiatives be confirmed, moreover, there could be a long-term negative spillover for both the economies of the U.S.’s major partners and the U.S. economy itself, with inflation growth projections all but unlikely.
Recall that following Trump’s previous election, the actual choices turned out to be less impactful than the election statements, and this situation could be repeated.
1. Markets
As far as crisis areas are concerned, glimmers of solutions seem to be opening up, for now only hypothetical, while for the markets the signs are more pronounced with the recovery of the dollar and stock markets, as well as a more restrained weakness in emerging currencies.
Gold was slightly weak at $2,664.40 an ounce (-0.73 percent) and similarly so was oil with Brent crude at $72.76 a barrel (-1.15 percent). Both signals represent the reduced perceived riskiness of financial markets. The FED’s decision to lower rates by 0.25 percent, also with image effects, appears relevant.
In the EU, the effects related to the change of U.S. administration could be negative in the event of a tightening of U.S. tariff policy, which could also bring negative effects on eastern stock exchanges.
Cryptocurrencies, within limits, could benefit from the Republican victory, even though there is a significant tightening of profit taxation for them from 26 percent to about 40-42 percent, which could reduce speculation.
2. Main indexes
European markets have retraced, while U.S. markets have moved upward so far.
In the East, the Nikkei recorded a contained recovery, Hang Seng as well as Mumbai. Shanghai finally registered an uptick.
3. Major currencies
Please note that currency trends are compared with the value of the EURO.
The dollar rallied nicely in the 1.066 area and similarly the other currencies in the area moved, Australian dollar above all.
The Mexican peso moved sideways with volatility as did the South African rand. The Turkish lira lingered in the 36.48 area. The Indian rupee recorded a decent recovery.
