U.S. and Global Market Indexes Diverge Amid Worries of Sharp Escalation In Trade Tensions

Alexander Garcia
06 Nov, 2024
Miami

Stock market indexes jumped amid a surge of investor enthusiasm following the presidential and congressional election results. 

Former president Donald Trump's return to the White House and the U.S. Senate's control switching back to the Republicans raised hopes that the next administration will enact more business-friendly policies. 

The S&P 500 index and the Nasdaq Composite advanced more than 2%, and the U.S. dollar advanced against all major currencies. 

Former president Donald Trump defeated his democratic opponent Kamala Harris in a hotly contested presidential election as a Republican wave swept the nation and the congressional election. 

Donald Trump is expected to secure 276 Electoral College votes, more than the minimum 270 needed to win the presidential election, including wins in key swing states of North Carolina, Pennsylvania, Georgia, and Wisconsin. 

The control of the U.S. Senate also switched to the Republican Party, while the control of the House is still in question. 

Companies seen as beneficiaries under the Trump presidency soared in Wall Street trading, and Trump supporter Elon Musk-led Tesla advanced as much as 13%. 

Cryptocurrency-linked stocks also soared, and Bitcoin jumped to a record high of $75,000 in the hopes that the relaxed regulation could benefit the sector. 

The U.S. dollar advanced against all major currencies on speculation that Trump's proposed tariffs against major trading partners, including China, the European Union, and Mexico, could boost the currency. 

The 10-year Treasury yield jumped to 4.43% on the assumption that the proposed spending plan by Trump would reignite inflationary pressures and may force the Federal Reserve to keep higher interests for longer. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 2.1% to 5,904.53, the Nasdaq Composite rose 2.4% to 18,881.61, and the Russell 2000 index rose 4.9% to 2,371.95. 

The yield on 2-year Treasury notes edged higher to 4.27%, 10-year Treasury notes inched higher to 4.45%, and 30-year Treasury bonds increased to 4.61%.

WTI crude oil decreased $0.03 to $71.98 a barrel, and natural gas prices edged up 8 cents to $2.76 a thermal unit.

Gold decreased by $82.94 to $2,662.29 an ounce, and silver declined by $1.60 to $31.05.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged lower to 105.12.

 

U.S. Stock Movers

Banks traded higher as investors speculated that the large and medium-sized banks are likely to benefit from Trump's economic policies. 

JPMorgan Chase jumped 5.2% to $233.15, Wells Fargo advanced 8.4% to $69.44, Citigroup increased 7.2% to $68.59, and Regions Financial edged higher 7.2% to $25.31. 

Discount retailers fell on the worry that the new administration would impose universal tariffs on all imported goods and 60% tariffs on imports from China.

Dollar Tree declined 2.2% to $65.30, Dollar General fell 1.2% to $80.58, and Five Below plunged 10.8% to $84.0. 

Cryptocurrency-linked stocks soared after Bitcoin jumped to a record high of $75,000. 

MicroStrategy Inc. soared 10% to $252.80, MARA Holding advanced 8.2% to $17.57, and Riot Platforms jumped 7.3% to $10.44. 

 

Trump's Return to White House May Pose Multiple Challenges for the EU

European markets advanced and bond yields edged lower as investors reviewed the latest batch of earnings and economic releases. 

Benchmark indexes in Paris, Milan, Frankfurt, and London advanced, and the former U.S. president Donald Trump was presumed to be the winner of the latest U.S. presidential election. 

Trump's win may prove to be trickier for European businesses and politicians, as the new administration is likely to ramp up trade barriers and push European nations to pay a higher share of the NATO budget. 

The Trump administration is also likely to impose new trade barriers with the European Union and demand member nations import more from the world's largest economy and lower persistent trade surpluses. 

 

German Factory Orders Rebounded 

Germany's factory orders rebounded at a faster-than-expected pace in September after demand for military vehicles, aircraft, ships, and trains soared 117.1%.

Automotive orders increased 2.9%, but the metal production and processing sector declined 10%, and mechanical engineering fell 3.6%. 

Factory orders increased 4.2% from the previous month and advanced 1% from a year ago in September, following a downwardly revised 5.4% decrease in the previous month. 

Excluding large orders, incoming orders rose 2.2% from the previous month. 

 

Europe Indexes and Yields

The DAX index decreased by 1.1% to 19,039.31; the CAC-40 index declined  by 0.5% to 7,369.61; and the FTSE 100 index fell by 0.1% to 8,166.68. 

The yield on 10-year German bonds edged lower to 2.36%, French bonds inched lower to 3.11%, the UK gilts edged higher to 4.51%, and Italian bonds decreased to 3.62%.

The euro edged higher to $1.07; the British pound inched higher to $1.29; and the U.S. dollar weakened to 87.57 Swiss cents.

Brent crude decreased $0.21 to $75.32 a barrel, and the Dutch TTF natural gas rose by €0.33 to €40.70 per MWh. 

 

Europe Stock Movers

Credit Agricole SA declined 5.7% to €13.49 after the French bank reported mixed quarterly results as record revenue in its investment banking unit overshadowed weakness in its retail business. 

Puma SE dropped 5.7% to €40.0 after the German footwear company reported lower-than-expected sales in the third quarter. 

BMW AG declined 6.8% to €67.66, and the German luxury automaker reported third quarter net income plunged 61%. 

Siemens Healthineers rose 6.6% to €51.58 after the German media technology company reported financial results that matched investor expectations. 

Marks & Spencer Group increased 4.4% to 400.70 pence after the UK-based retailer reported higher-than-expected profit in the first half. 

 

Japan Indexes Extended 2-Day Gains and Large Business Sentiment Index Weakened

Stock market indexes in Tokyo advanced for the second day in a row as investors attempted to decipher possible impacts of Donald Trump's win in the U.S. presidential election. 

The Nikkei 225 stock average soared 2.6% and the broader Topix index added 1.9% as investors reviewed the sentiment index among large businesses. 

Donald Trump's administration is likely to impose higher tariffs on goods imported from Asia and China and also raise trade barriers that could negatively impact Japanese corporations. 

Moreover, Japanese politicians may face demand from the Trump administration to bear a larger financial burden of security arrangements to defend the nation from aggression from China, Russia, or North Korea. 

On the economic front, the Reuters Tankan sentiment index for Japan's manufacturers eased to +5 in November from +7 in October. 

The sentiment weakened amid growing worries over the economic slowdown in China and rising domestic inflationary pressures. 

Japan's service sector activity index was revised higher in October, indicating that the contraction was less severe than previously estimated. 

Services PMI was revised to 49.7 in October from the preliminary estimate of 49.3, and the index declined for the first time since June amid renewed pressures on export orders. 

The Bank of Japan's latest policy meeting minutes showed that most committee members were in agreement in continuing to raise rates, and inflation and economic conditions align with the central bank's goals. 

However, most members preferred to raise rates gradually according to the minutes of the September 19-20 monetary policy meeting. 

 

Japan Stock Movers: IHI Lifts Dividend, Mercari Sales Plunged  

The Nikkei 225 Stock Average jumped 2.6% to 39,480.67, and the broader Topix index added 1.9% to 2,715.92. 

Mercari Inc. plunged 16% to ¥1,824.0 after the e-commerce company reported weaker-than-expected quarterly results. 

Revenue in the September quarter increased 1.5% to 44.9 billion yen from 44.3 billion yen, net income rose 7.9% to 3.04 billion yen from 2.8 billion yen, and diluted earnings per share rose to 17.44 yen from 16.54 a year ago. 

The company estimated revenue in the fiscal year 2025 ending in June between 200 billion and 210 billion yen, an increase between 6.7% and 12.1%.

The company guided annual core operating profit between 22 billion and 25 billion yen, an increase between 16.6% and 32.5%. 

IHI Corp. soared 19.1% to ¥9,280.0 after the heavy-duty engineering company reported its financial results and raised its dividend and profit outlook for the current year. 

Consolidated revenue in the six months ended September rose 61.1% to 757.5 billion yen from 470.31 billion yen, net income swung to a profit of 40.9 billion from a loss of 135.6 billion yen, and diluted earnings per share were 259.69 yen compared to a loss of 909.25 yen. 

The company estimated full-year revenue to increase 21% to 1.6 trillion yen, profit attributable to shareholders to rise to 85 billion yen, and basic earnings per share of 559.55 yen. 

The company estimated the full-year dividend to increase to 120 yen from 100 yen in the previous year. 

 

 

Hong Kong Stocks Drop 2% as Goods from China Face Higher Tariffs Under Trump Administration

Hong Kong Stocks Drop 2% as China Goods Face Higher Tariffs Under Trump Administration 

Stock market indexes in China and Hong Kong traded volatile as the U.S. presidential election results rolled in. 

The Hang Seng index dropped 2% and the mainland-focused CSI 300 index advanced a fraction as investors attempted to understand broad implications of the U.S. election results. 

Vice President Kamala Harris is trailing in the key battleground states of Michigan, Wisconsin, and Pennsylvania, which could tip the election in favor of former president Donald Trump. 

Regardless of who wins the White House and control of the U.S. Congress, China's exports are likely to face higher tariffs and additional trade barriers for goods shipped routed through Vietnam and Mexico. 

The Hang Seng index has advanced 27% between the announcement of stimulus measures on September 11 and October 7, but the market index has lost about 9% since then. 

The Standing Committee of the People's National Congress is set to approve raising the government debt ceiling, which will pave the way for the previously announced fiscal measures to support local government finances. 

 

China Stock Movers 

The Hang Seng index declined 2% to 20,588.66, and the CSI 300 index increased 0.2% to 4,051.35. 

Tech stocks traded down in Hong Kong amid a broad selloff in Chinese stocks.

Alibaba Group declined 3.4% to HK $95.10, JD.com fell 3.9% to HK $152.50, and Tencent Holdings fell 1.7% to HK $420.40.