Stocks Pause Rally as Investors Await Trump Cabinet Announcements: Market Analysis
Global stock markets took a breather Tuesday as valuations reached elevated levels, and investors awaited announcements on President-elect Donald Trump’s cabinet appointments. European markets were notably impacted, with the Stoxx Europe 600 index dropping 1.1%, erasing the previous day’s gains. In the U.S., S&P 500 futures slipped slightly following five days of gains, indicating that the post-election rally could be cooling.
Despite the pause in equities, other “Trump trades” remained active. Treasury yields continued to rise, the U.S. dollar reached a one-year high, and Bitcoin hovered just under $90,000. The recent surge in equities, driven largely by expectations for Trump’s pro-business policies, has left valuations at a peak last seen three years ago, which raises concerns about sustainability. Analysts at Citigroup Inc. suggested that the current rally could lose momentum soon, as traders weigh the implications of Trump’s economic policies on inflation and Federal Reserve actions.
Market experts are particularly focused on potential inflationary pressures stemming from Trump’s proposed trade tariffs and stricter immigration policies. “If tariffs are imposed, or if deportation measures are enacted, these could lead to inflationary pressures, pushing bond yields higher,” said Kevin Thozet, a member of the investment committee at Carmignac. He added that elevated bond yields could start to weigh on markets, especially given the high valuations of stocks.
In Asia, market jitters over potential China policy decisions by the Trump administration drove Hong Kong’s Hang Seng Index down by as much as 3.3% in earlier trading. Rumors that Senator Marco Rubio, known for his critical stance on China, could be named Secretary of State, alongside Representative Mike Waltz as National Security Advisor, have fueled concerns about U.S.-China relations. With both figures advocating strong measures against China, investors worry about potential economic repercussions for the Asia-Pacific region.
Inflation data, due Wednesday, will also be a key focus as it could influence the Federal Reserve’s upcoming interest rate decisions. Economists expect the core Consumer Price Index (CPI), which excludes volatile food and energy prices, to rise at a similar pace to September’s figures. If inflation pressures intensify, the Fed may be inclined to shift its policy, which could add more volatility to markets in the coming months.
In corporate news, Bayer AG saw its shares plunge to a 20-year low following a profit guidance cut. In contrast, premarket trading showed a rise for Live Nation Entertainment Inc., which gained 7% as concert revenue buoyed the company’s earnings. Grab Holdings Ltd. also rose, benefiting from improved forecasts in the ride-hailing sector.
As the markets adjust to new political and economic expectations, investors are bracing for heightened uncertainty leading up to Trump’s inauguration in January.
Source : Swifteradio.com
