Global Markets Surge as Trump’s Treasury Pick Eases Fears
Stability Ahead?
Traders around the world are breathing a sigh of relief as Donald Trump’s choice for Treasury Secretary, Scott Bessent, is seen as a measured decision that will bring stability to the US economy and financial markets. This optimism is reflected in the strong performance of Asian equities and Treasuries, which is expected to continue in Europe.
Euro Stoxx 50 Futures Rise
The Euro Stoxx 50 futures have risen 0.6%, mirroring gains in their US peers. This upbeat tone is a reversal of the so-called Trump Trade, which had seen a surging dollar and rallying bitcoin. The yield on 10-year Treasuries has dropped seven basis points to 4.33%, while the dollar has declined and bitcoin has rebounded from a weekend drop.
A More Gradualist Approach
Bessent, who runs macro hedge fund Key Square Group, is expected to prioritize economic and market stability over scoring political points. This has eased concerns over Trump’s protectionist policies, which had threatened to stoke inflation, worsen trade tensions, and amplify market volatility. As Vincent Juvyns, global market strategist at JPMorgan Asset Management, puts it, “We have the Trump reflationary agenda with obviously maybe someone in charge of the economy at the Treasury who is probably more gradualist.”
Currency Moves
The Bloomberg Dollar Spot Index has fallen by the most in over two weeks, with the Danish krone leading the gains. The euro has also risen against the greenback, after European Central Bank governing Council member Francois Villeroy de Galhau said ECB’s policy will develop regardless of what happens at the Federal Reserve.
Stock Markets Around the World
Stock benchmarks in India have surged as Prime Minister Narendra Modi’s Bharatiya Janata Party-led alliance secured a thumping victory in the state of Maharashtra. However, Chinese stocks have bucked the region’s trend, reflecting investors’ continued disappointment with a lack of stronger fiscal measures to revive the world’s No. 2 economy.
Oil and Gold Prices Fall
Oil has dropped as Israel said it’s potentially days away from a cease-fire deal with Lebanon’s Hezbollah. Gold has also fallen after jumping the most in 20 months last week.
Key Events This Week
Traders in Asia will be closely monitoring Japan’s inflation data after Bank of Japan Governor Kazuo Ueda last week indicated the December policy meeting is live. The Reserve Bank of New Zealand is expected to cut its key rate on Wednesday. Elsewhere, a swath of inflation and growth readings in Europe are due, along with the Federal Reserve’s November meeting minutes, consumer confidence, and personal consumption expenditure data.
Market Moves
Some of the main moves in markets include:
- Stocks: S&P 500 futures rose 0.4%, Nasdaq 100 futures rose 0.5%, and Euro Stoxx 50 futures rose 0.6%.
- Currencies: The euro rose 0.6% to $1.0482, the Japanese yen rose 0.3% to 154.32 per dollar, and the offshore yuan rose 0.2% to 7.2477 per dollar.
- Bonds: The yield on 10-year Treasuries declined seven basis points to 4.33%.
- Commodities: Spot gold fell 1.9% to $2,665.21 an ounce, and West Texas Intermediate crude fell 0.7% to $70.75 a barrel.
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