HIGHLIGHTS
US equities went up this week. Despite the pullback in mega tech stocks, it was offset by the increase in cyclical stocks such as banks and industrials. This week was dominated by news and speculations about Trump’s cabinet.
Crypto: Bitcoin continues to hit record highs, reaching near the 100k level. It increased by over 42% post-election, driven by the potential favorable policies and supporters from the Trump administration.
Geopolitical: The tension between Russia and Ukraine has escalated. Russia shot a ballistic missile capable of carrying a nuclear warhead for the first time. Oil prices boosted, and Brent went up by nearly 6%.
ECB: European Central Bank’s president mentioned that he expected further rate cuts while was concerned about the risks of cutting too quickly due to the uncertainties of trade tensions and geopolitical conflicts.
MARKETS
19,003.65 | +1.73% | |
S&P 500 | 5,969.34 | +1.68% |
Dow | 44,296.51 | +1.96% |
10-Year | 4.41% | -2bps |
Brent | 74.53 | +4.91% |
DXY | 107.49 | +0.77% |
*Data as of market close. 5-day change ending on Friday.
VIEW FROM THE STREET
Equity
UBS: Trump’s tariffs should have a limited impact on AI growth. However, it could drive volatility. In 2018, tech stocks had a significant correction from peak amid trade worries. But we think some tech segments may get tariff exemptions, and the AI supply chain has a low dependency on China.
Standard Chartered: We remain overweight in the US financial and technology sectors. The financial sector would benefit from deregulation and an increase in investment banking activity. Technology sector will be driven by continuous AI-related investments, and earning growth will be driven by increasing efficiency.
Fixed Income
J.P. Morgan: Risk is more skewed toward inflation than 3 months ago. We expect the December dot plot will reflect this, while the Fed will likely stay in the cutting cycle. Markets are pricing 70bps cut by the end of next year, compared to 95bps before the election and 120bps at the September meeting. In the future, easing could be slower and end quicker than previously expected.
Goldman Sachs: We expect spreads are going to stay in the same range this year. Historically, tight spread levels imply low but positive excess returns, usually driven by carry. We expect 2025 will feature another solid year for total returns because of the strong yield support.
Economy
Standard Chartered: We expect pro-growth policies and protectionism from the Trump administration to sustain the economic expansion of the US. It would be beneficial to equity performance in the coming year.
Barclays: The low PMI print in the eurozone increased the recession risk. In that case, the ECB is likely to cut rates more quickly. Economic data in the UK also indicated slow private sector growth, and inflation remains unstable.
KNOWLEDGE TRANSFER
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DISCLOSURE
This newsletter is meant for informational purposes only and is not investment advice. Always consult a licensed investment professional before making important investment decisions. Advertising and sponsorship do not influence editorial content or decisions. Market Hedwig is not responsible for the promises made or the quality or reliability of the products or services offered in any advertisement.
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