Commentary
Stocks in the US rallied as Trump win boosted investor confidence, with expectations on looser regulations and corporate tax cuts. Most of the major benchmarks rose to record highs, with the small-cap Russell 2000 Index leading the gains, rising 8.57%. The S&P 500 Index gained 4.66%, its best performance in nearly a year. The Fed delivered a 25 bps cut in the federal funds rate, which helped lower yields that had risen earlier in the week due to election results.
In Europe, concerns over President Trump’s trade policies impacted markets. As a result, the STOXX Europe 600 Index ended 0.84% lower. Similar to Fed, the BoE also cut rate by 25 bps in response to decelerating inflation. The Eurozone composite PMI was revised up to 50 in October, indicating no change in overall business activity, with manufacturing contracted more slowly than initially expected, while the services sector grew slightly faster. However, business confidence dropped to its lowest point of the year and German government collapse adds further to uncertainty.
Stocks in China initially surged on expectations of significant stimulus measures, but later cooled as the measures didn’t directly address demand. The $1.4tn refinancing package for local governments disappointed markets, as it focused on restructuring debt rather than boosting domestic demand. While strong export growth in October increased the trade surplus, concerns about US-China trade relations remained, with potential policies from Trump threatening export outlook.
