US stocks declined slightly last week as uncertainty over the incoming administration’s policies impacted the “Trump Trade”. Financial and energy stocks rose on deregulation hopes, while Bitcoin jumped 32.5% since the election due to expectations of lighter regulation on digital currencies. Healthcare stocks fell after Robert F. Kennedy Jr., a critic of pharma and vaccine programs, was named to lead the Department of Health and Human Services (HHS). EV stocks, including Tesla (TSLA) and Rivian (RIVN), dropped after confirmation that the $7,500 EV tax credits would be eliminated. Annual inflation in US increased to 2.6%, mainly due to high housing costs. Fed Chair signaled no urgency to cut rates, reducing expectations for a December rate cut. The 10-year Treasury yield hit a five-month high of 4.51%, reflecting expectations of higher long-term rates.
European stocks fell for the fourth week in a row, with the STOXX Europe 600 Index down 0.7%, influenced by concerns over US trade policies, German political instability, and cautious US interest rate signals. Eurozone GDP grew 0.4% in 3Q24, and employment rose by 0.2%, keeping hopes of a soft landing. The European Commission predicts 0.8% growth for 2024, though Germany’s economy is expected to shrink by 0.1%. Policymakers from ECB emphasized the interest rate cut in October was precautionary and not a commitment to further cuts, with future decisions depending on economic data.
