US stocks had a strong week, with major indices like the Dow Jones, S&P 500, and S&P MidCap 400 reaching record highs. The small-cap Russell 2000 Index also hit a new high of 2,466.5, surpassing its previous record set over three years ago. Investor optimism grew after Trump nominated Scott Bessent as Treasury secretary. Bessent, a respected Wall Street figure, is expected to focus on economic stability and inflation, which reassured investors. However, Trump later announced steep tariffs on imports from Mexico, Canada, and China, causing automaker stocks to drop (General Motors fell nearly 9%) due to concerns about trade disruptions. Despite this, overall markets stayed strong, with the S&P 500 posting its longest winning streak in two months. Meanwhile, optimism about Bessent’s appointment contributed to falling long-term yields, with the 10-year note yield dropping 15 bps to its lowest since October.
The STOXX Europe 600 Index rose 0.3%, despite ongoing concerns about US trade tariffs and interest rates. In the Eurozone, inflation rose to 2.3% in November, up from 2.0% in October. However, underlying inflation pressures eased, with services inflation dipping to 3.9% and core inflation staying at 2.7%. Markets expect the ECB to cut interest rates this month, but the extent of the cut is unclear. In France, political tensions increased. Prime Minister revised the 2025 budget after far-right leader Marine Le Pen threatened to push for a no-confidence vote against the government. Consequently, French bond yields surpassed Greece’s for the first time.
