Bassanese Bites: Farewell February Cut – November 25 2024
Global markets
Global equities bounced back last week, helped by ongoing strength in the US economy and excitement around the ‘Trump trades’ in the wake of Donald Trump’s return to the US Presidency.
There was little in the way of major global economic data last week, with the highlight being Friday’s global manufacturing and service sector PMI data. The key takeaway from these reports was the ongoing strength in the US economy yet the weak and seemingly deteriorating outlook for Europe. Both Japanese and European stocks lagged last week while the S&P 500 returned 1.7%. The NASDAQ-100 returned 1.9%.
In Trump-related news, the choice of hedge fund billionaire Scott Bessent as his nominated Treasury Secretary was at least less weird and wacky than some of his other Administrative choices – markets breathed a quiet sigh of relief. That said, Bessent seems just as keen as Trump on tariffs, so his selection in no way seems to lessen the odds of ‘trade wars’ in the new year.
Other key news included the escalation of Russia-Ukraine tensions, with the latter firing US and UK missiles into Russian territory and the former retaliating by warning it could resort to nuclear weapons. Perhaps surprisingly, equity markets seemed to take the latter threat in their stride – maybe sensing not even Putin would really go that far.
Despite beating both earnings and revenue market expectations, Nvidia’s share price initially dipped after its results last week but then quickly recovered lost ground. AI euphoria remains firmly in place. Also firmly in place is crypto euphoria, with Bitcoin surging further last week to be within touching distance of $US100,000. It’s up a lazy 50% since early October.
Last but not least, several Fed members spoke of the need for ‘patience’ in cutting rates further. Markets still see a rate cut next month as a 60% chance, though now see only two further rate cuts in 2025.
Global week ahead
Global highlights this week include minutes to the last Fed meeting and the October reading for the US private consumption expenditure (PCE) deflator.
