News Recap • Week 45 2024

Markets

A brief summary of the most important market moves this week.

Equities

• S&P 500 rallied 4.66% to a new all-time high on the back of Trump’s victory, seeing its best week since October last year. The index briefly topping 6,000 for the first time ever on Friday. It’s now up 25.7% for the year.
• Nasdaq Composite saw an even better week than the S&P 500, jumping 5.74% to a new record and extending its annual gain to 28.48%.
• STOXX 600 fell 0.84% for the week after some significant post-election volatility. This marks the lowest weekly close since early September.
• FTSE 100 dropped 1.28% for the week after a short-lived spike after the US election.
• Nikkei 225 advanced 3.80% after a 2.61% jump on Wednesday.
• Hang Seng managed a 1.08% gain after a volatile week impacted by both the US election, national macro data, and the announcement of new stimulus measures. I’m covering all of it below.
• CSI 300 outperformed the Hang Seng by a wide margin, jumping as much as 5.50% for the week.
• Nifty 50 declined 0.64% to its lowest level since late June.

Currencies & Commodities

• The DXY rose 0.61% for the week after jumping 1.61% on Wednesday, its best one-day performance in over two years. The strength came primarily against the euro.
• USD.EUR rallied 1.15% after a massive 1.87% gain on Wednesday.
• USD.GBP was flat for the week.
• USD.JPY actually declined slightly for the week after a 1.99% jump on Wednesday.
• USD.CNH gained 0.83% for the week to its highest close since late July.
• Gold fell 1.89% for its worst week since May.
• Crypto had an extremely strong week with the total market cap rallying 17% as of Sunday morning CET. Bitcoin broke out to a new record, currently holding strong above $79,000. Ethereum has been lagging for a long time but finally got some love, jumping 30% to hit $3,200 for the first time since its massive drop in early August. Solana isn’t far off with a 26% gain for the week.

Other

• The VIX plummeted 31.72% for the week to its lowest close since August. This after a 20.60% drop on Wednesday alone, probably after determining that the election would be an orderly one and wouldn’t be disputed.
• The 10-year US treasury fell 1.78% for the week. It spiked 3.74% on Wednesday after the election but retreated 2.41% during Thursday. The 2-year on the other hand gained 1.04% to significantly close the gap to the 10-year, now yielding 4.308 and 4.256% respectively.

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Trump reelected as the 47th US president

The American election was obviously the biggest story of the week. It didn’t turn into the drama many people expected though.

In fact, the result was clear just a few hours after the vote counting began. Donald Trump won the election, which wasn’t a huge surprise. What was surprising was the decisiveness of the victory. Here are some highlights:

• Trump won with 312 electoral votes against Kamala Harris’ 226. That’s the largest margin since Barack Obama’s landslide victories in 2008 and 2012.
• Trump won every single one of the seven swing states. Joe Biden won six of them in 2020.
• Trump is also winning the popular vote by a significant margin. Votes are still being counted as I’m writing this, but Trump is leading 50.5% to 47.9%, a difference that translates to almost 4 million votes. He’s also gotten more than 10 million votes more than when he won the 2016 election.

By all accounts, this was a very clear victory for Donald Trump. On top of that, it seems all but confirmed that the Republicans achieved a clean sweep by securing both the Senate and the House of Representatives. This makes it much easier for the party to enact policy changes.

The market reaction

So, processing what we know about Donald Trump and everything I mentioned above, how did investors react?

The S&P 500 rallied 2.53% on the day and still underperformed the Nasdaq and Russell 2000 which added 2.95% and 5.84% respectively. The financial sector was one of the best performers with JP Morgan, Goldman Sachs, and Morgan Stanley all jumping more than 11%.

Asian equity markets were mostly positive as well, with China as the major exception on fears of new tariffs.

Crypto took off as well with Trump seen as extremely friendly toward the industry and technology at large. Bitcoin broke out to a new all-time high with many alt coins performing even better.

Coinbase and Robinhood stocks, sitting at the intersection of traditional finance and crypto, rallied 31% and 20% respectively. BlackRock’s bitcoin ETF saw its largest daily inflow ever with $1.12 billion entering the fund.

If you’re interested in digging a little deeper, I wrote about some of my favorite Trump trades on Wednesday.

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US Fed delivers another rate cut

The Fed delivered its widely anticipated 25 bps rate cut on Thursday, bringing the leading interest rate down from 5% to 4.75%. This was the Fed’s second rate cut this cycle after its jumbo 50 bps cut at the last meeting in September.

Jerome Powell reiterated the Fed’s perspective that the risks are about equal on both sides of its dual mandate, i.e., maximum employment and stable prices. In other words, inflation is now so close to the 2% target that there’s no reason to maintain rates at such a high level. Keeping it too high for too long puts additional pressure on consumers and businesses alike, something the Fed is no longer willing to tolerate.

None of this was news though. Jerome Powell basically reused his speech from September, with a few adjustments. The impact on the financial markets was also minimal, allowing the bullish sentiment from the previous to continue. Investors seem to be okay with the idea that we will get continuously lower rates over the coming year, without needing to know exactly how many cuts and how fast they will come.

The most interesting part will be Trump’s impact on interest rates. There’s some serious speculation that he wants to get rid of Jerome Powell and instead appoint someone who’s willing to slash rates to virtually zero. However, if Powell stays put and Trump implements the policies he’s promised, we’re very likely to see higher inflation and higher interest rates.

As for the short term, the market is currently seeing a 65% probability of another 25 bps rate cut at the next meeting in December.

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China’s $1.4 trillion stimulus package

China announced a stimulus package worth 10 trillion yuan ($1.4 trillion) on Friday. The package is meant to be rolled out over five years with more economic support coming in 2025.

The initiatives are aimed at helping local governments combat so-called “hidden debt”. China’s Minister of Finance, Lan Fo’an, estimated that the total hidden debt could be reduced from 14.3 trillion yuan to 2.3 trillion by the end of 2028.

However, the stimulus measures failed to impress investors. Both the Hang Seng and CSI 300 rose initially on Friday but closed the day lower by 1%.

Many investors expect China to ramp up its stimulus efforts next year in response to new tariffs coming from Donald Trump. He will likely make the first move, so all eyes on Trump for now.

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In other news

• China exports rose 12.7% year on year in October, the highest jump since March 2023. The number was far above expectations of 5.2%. Imports declined 2.3% though, more than expected.
• US factory orders fell 0.5% in September after a 0.8% drop in August. Orders were unchanged from a year earlier.
• China services PMI grew to 52.0 in October from 50.3 in September, showing a welcome increase in activity.
• US services PMI was revised slightly lower to 55 in October from a preliminary 55.3.
• Bank of England cut rates by 25 basis points while raising its inflation forecast to 0.5 percentage points in 2025 based on Labour’s policy plans.
• Japan household spending fell for a second straight month, down 1.1% from a year earlier. This was significantly better than the 2.1% forecasted though.
• The University of Michigan’s US Consumer Sentiment Index rose to 73.0 in November, the highest since April and up from 70.5 in October. It was also well above 71.0 expected.
• China consumer price inflation slowed to 0.3% in October, down from 0.4% in September and the lowest since June. Economists had expected 0.4%.
• Southeast Asia’s digital economy is expected to grow 15% this year, down from a 17% growth rate in 2023.
• The Boeing strike finally ended after almost two months with machinists approving a new labor contract with a 38% raise.
• Nvidia once again overtook Apple in market cap to become the world’s most valuable company. This time it was a decisive move, putting Nvidia almost $200 billion ahead of Apple.

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Earnings

• Novo Nordisk delivered a mixed bag on Wednesday. The stock initially jumped 8% on the the report, likely because of how much it had already declined leading into the print. However, the early optimism faded throughout the day to the point where Novo finished just 0.55% higher.
• Palantir beat expectations for both earnings and revenue. The latter grew 30% year over year to $726 million vs $701 million expected. The company also guided higher than the street was expecting, now seeing $767 to $771 million in Q4 revenue. Shares rallied 23.5% after the report and 39% in total for the week.
• Saudi Aramco reported a 15.4% drop in net profit in Q3, citing lower oil prices and weakening refining margins. Earnings before interest and taxes dropped 17% year on year, coming in at $51.45 billion.
• Lyft delivered a big revenue beat, reporting $1.52 billion vs $1.44 billion expected. The stock soared almost 23% after the report and gained 32% for the week.
• Chip designer ARM Holdings saw revenue growth of 5% year on year to $844 million, above expectations. Net income of 10 cents per share was also a beat. The company’s sales forecast fell short of expectations though. Share opened lower but finished the day up by 4%.
• Latin American e-commerce giant Mercado Libre reported a big earnings miss of $7.83 per share vs $10 expected. Shares plummeted more than 16% on the news Thursday but regained 5.5% on Friday.
• Qualcomm reported $2.69 EPS vs $2.56 expected on $10.24 billion in revenue vs $9.90 billion expected. The company now expects between $10.5 and $11.3 billion in Q4 revenue, also above expectations. Shares rose 3.4% for the week after retreating from Thursday’s highs.
• Block delivered a 30% beat on earnings per share but fell short on revenue. Shares finished down less than 1% on Friday after falling more than 8% in early trading.
• Rivian reported a 35% year on year decline in revenue but narrowed its losses. Shares jumped 5.4% on Friday after the report and finished the week 4% higher despite a +8% drop on Wednesday.
• Airbnb’s Q3 earnings and revenue came in line with expectations with the latter up 10% from a year earlier. Shares fell almost 9% on the back of it.
• Draftkings reported a 39% increase in revenue year over year to $1.1 billion and a net loss of 60 cents per share. Both figures fell short of expectations. Shares rose almost 3% on Friday on the back of the report after a volatile day.
• Pinterest presented a slight beat in both revenue and earnings along with weak Q4 guidance. Shares plunged 14% after the report on Friday.
• Sony announced a 73% increase in operating income and a slight raise of its revenue target for 2025.
• Nissan shares plummeted after the company reported an 85% drop in operating profit and a reduction in global production capacity by 20%.
• Nintendo reported just 27.7 billion yen in net profit, far below the 48 billion expected and down a massive 69% year over year.