By Dhara Ranasinghe and Koh Gui Qing
NEW YORK/LONDON (Reuters) – The U.S. S&P 500 zoomed past 6,000 points to a new record on Friday as U.S. Treasury yields retreated as investors again cheered Donald Trump’s decisive victory despite disappointment over the latest budget support of China dampened the mood elsewhere.
A day after the Federal Reserve cut interest rates by a quarter point as expected, attention returned to the fallout from Tuesday’s US presidential election and headlines from Beijing.
Weakened US-listed shares of Chinese companies and China-exposed sectors in Europe fell as investors heard news that Chinese stimulus measures did not directly inject money into the struggling economy.
But Wall Street investors shrugged off their frustration over the lack of a Chinese budget bazooka and bought U.S. stocks. It climbed to an intraday high of 6,012.45 points before retreating to ultimately rise 0.4%. The price rose 0.6% and ended flat.
The S&P 500 and the Dow Jones had their best week in a year, while the Nasdaq had its best week in two months. [.N]
Shares of electric car maker Tesla (NASDAQ:), whose CEO, Elon Musk, became one of Trump’s biggest supporters in the final stages of his re-election campaign, shot up 8.2%, pushing its market cap to $1 for the first time since trillion was catapulted. 2022.
Nicholas Colas, co-founder of DataTrek Research LLC, said there are several reasons to buy U.S. stocks: “The Fed is cutting rates and the U.S. economy is still strong.”
Moreover, the Republican Party won not only the White House this week, but also control of the Senate, and could gain control of the House of Representatives – a similar scenario, Colas said, to the November 2016 election results that preceded the S&P 500 elections. 22% gain in 2017. Investors are betting that a Trump administration will provide lighter regulations and tax cuts that could boost the US economy.
Outside the United States the mood was more subdued. The pan-European index lost 0.7%, while an MSCI index of world shares was flat after hitting a record high on Friday. Still, the world stock index had its best week in three months.
“What you’re going to get through appearances is a mandate to improve the American economy. So taxes will go down, bureaucracy will decrease and regulations will become lighter,” said Guy Miller, chief markets strategist at Zurich Insurance Group. OTC :).
“Between now and the end of the year, there is a tailwind for US equities. The US market has potential,” he said.
The stock index fell 0.8% on the day after its best daily performance of 2024 so far, helped by expectations that Germany could ease its debt brakes.
CHINA disappoints
China has unveiled a 10 trillion yuan ($1.40 trillion) debt package to ease local government financing problems and stabilize weak economic growth.
Finance Minister Lan Fo’an said more stimulus measures are on the way, with some analysts saying Beijing may not want to fire all its financial weapons before Trump officially takes power in January.
Mainland blue chips fell 1%, a day after rising 3%. Some caution was also required in Hong Kong ahead of the announcement.
Offshore fell 0.7% to 7.2011 per dollar. China-exposed European luxury and mining stocks fell more than 3% each.
FED CUTS
U.S. Treasury yields fell after Fed Chairman Jerome Powell signaled on Thursday that policy would continue to be eased patiently.
The Fed’s rate cut followed a quarter-point cut by the Bank of England and a large half-point cut by Sweden, also on Thursday.
Ten-year government bond yields fell 8.3 basis points to 4.343%, reversing sharp gains following the US election results.
Powell said Tuesday’s election results will have no short-term impact on U.S. monetary policy.
“The Fed pointed to a more uncertain economic outlook and still high inflation,” said Mahmood Pradhan, head of global macroeconomics at the Amundi Investment Institute.
“Along with a likely change in policy direction under the new administration, we expect a more uncertain and measured pace of easing next year.”
The , which measures the currency against six major currencies, rose to 104.91 after falling 0.7% on Thursday, the biggest since August 23. On Wednesday, the currency rose 1.53%, its highest in more than two years, a sign of increased volatility. as investors assess the policies of the new Trump administration.
The euro and sterling both fell against the dollar, while the dollar fell 0.3% to 152.46 yen.
rose 0.8% after hitting a record high after rising nearly 10% this week. Trump has vowed to make the United States “the crypto capital of the planet.”
After a rollercoaster week, gold fell 0.9% to $2,683.87. It fell more than 3% on Wednesday but rose 1.8% overnight. Last week it rose to a record high of $2,790.15.
futures pared losses in London trading and were last down 2.1% at $74.01, while U.S. West Texas Intermediate crude fell 2.6% to $70.45. [O/R]
