MARKET WRAPS
Watch For:
Germany CPI, ZEW Indicator of Economic Sentiment; UK Unemployment; trading updates for AstraZeneca, Bayer, Infineon Technologies
Opening Call:
European stock futures pointed to a lower open after Asia stocks traded mixed. The U.S. dollar held steady and Treasury yields rose after bond markets were closed for Veterans Day. Bitcoin surged above $88,000 while gold rose and oil prices edged lower.
Equities:
European stocks appear to be headed for a lower open as Asia markets traded mixed, after all three major U.S. indexes closed at fresh records, extending postelection gains and rallying on policy expectations from a new Trump administration.
Trump deregulation and tax cuts could push the S&P 500 to 10000 by the end of the 2020s, Yardeni Research wrote, projecting a corporate tax cut could lift the S&P 500 index's profit margin to new record highs.
Yardeni's decade-end call for the S&P to reach 10000 would imply a roughly 66% growth in the index over the next five years, or a price return of roughly 10.75% a year.
The forecast included many optimistic assumptions about the Trump administration, including that "the wars between Russia and Ukraine and in the Middle East are resolved sooner rather than later" and that "Elon Musk will succeed in slowing the growth in federal government spending."
Forex:
The U.S. dollar held steady as Asian currencies consolidated. Some global currencies are expected to weaken on Trump's pro-growth policies, according to Commonwealth Bank of Australia.
These policies can draw capital that boosts the greenback, CBA said, adding that while "fast money" has already shifted capital, long-term investors will likely take time to reallocate their portfolios.
In Trump's first administration, however, CBA noted that the USD's strength was short--lived.
Bonds:
U.S. corporate bonds are likely to offer better returns than their government bonds equivalents, Felipe Villarroel of TwentyFour Asset Management said. U.S. corporate bonds provide attractive yields as government bond yields decline in line with Federal Reserve interest-rate cuts, he said.
Markets will pay attention to the potential consequences of the proposed policy changes by President-elect Donald Trump, Villarroel added.
Energy:
Oil markets are looking ahead to the release of OPEC's monthly oil market reports and reports from the International Energy Agency and the Energy Information Administration.
Market sentiment could be weighed down if there are further downgrades on oil demand forecasts, particularly from OPEC, ANZ Research said.
Metals:
Gold edged higher in a likely technical recovery, after front-month gold futures slid 2.8% on Monday, marking the largest daily drop since June 2021.
While the precious metal is typically perceived as a haven in uncertain times, expectations of Trump's expansive policies strengthening the dollar are drawing investors away from precious metals, said XS.com's Rania Gule.
It appears likely that gold could continue to trade below $2,670/oz, reflecting pressures from recent economic and political developments in the U.S., Gule added.
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Copper prices were flat, with markets disappointed by China's recent much-anticipated stimulus package, ANZ Research said.
The world's largest metals importer unveiled a $1.4 trillion program to restructure local government debt, but failed to deliver new stimulus, ANZ added, noting that a stronger dollar is also weighing on the base metal markets.
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Iron ore prices were lower after China's fiscal stimulus disappointed.
"The meeting outcome was likely a disappointment to offshore investors," especially for commodities that are sensitive to China policies, CreditSights said.
However, "it is too early to rule out [a] big stimulus in 2025 given the high likelihood of additional U.S. tariffs and prolonged weaknesses in the property sector and domestic consumption," Zeng said.
TODAY'S TOP HEADLINES
Trump's Policies Could Mean Fewer Fed Rate Cuts. What That Means for Stocks.
The one obvious problem with President-elect Donald Trump's policy proposals is that they would make interest-rate cuts a more complicated proposition for the Federal Reserve.
Trump proposes cutting individual tax rates. This would stimulate consumer demand but produce additional inflation, which has still been just above the Fed's 2% target. Additional demand undermines the chances that inflation can move down to 2% sustainably.
Bitcoin Passes $88,000. How Much Further Cryptos Can Rally.
The price of Bitcoin topped $88,000 Monday evening, while other cryptocurrencies were also racking up gains. Investors are betting that Donald Trump's second presidential term will boost digital assets.
The large-cap token climbed 10% to $88,083 around 4:30 p.m. Eastern time. It just passed $80,000 for the first time on Sunday. The asset is up about 40% from last Tuesday, Election Day.
Palestinian Factions Edge Toward Plan for Postwar Gaza Recovery
The two main Palestinian factions, Hamas and Fatah, are coalescing around a plan for Gaza's reconstruction when major fighting stops. Its main selling point: Neither will be in charge.
Palestinian officials from both factions, long bitter rivals, have reached a consensus to create an apolitical committee of Palestinian technocrats not affiliated with either of them to manage the sensitive and massive jobs of aid distribution and rebuilding, Palestinian and other Arab officials said. Their acquiescence clears one potential obstacle to a postwar plan discussed by the U.S. and Israel, which would put a temporary technocratic government in place in Gaza until it is stable enough for elections.
Exxon Says Trump Should Keep U.S. in Paris Climate Pact
The chief executive of Exxon Mobil says President-elect Donald Trump shouldn't pull the U.S. from an international pledge to mitigate climate change, putting the oil giant at odds with the incoming administration on a key policy issue.
In an interview, Exxon CEO Darren Woods said a second U.S. exit from the 2015 Paris climate agreement-as Trump has proposed-would create uncertainty and could confuse global efforts to stop the worst effects of climate change. Exxon has publicly supported the goals of the accord since 2015.
Google Executive Picked to Supercharge News Efforts Has Resigned
Shailesh Prakash, a Google News executive central to the tech giant's relationships with publishers, has resigned, according to people familiar with the situation.
The high-profile departure comes amid a continuing rift between Google and news outlets over how the search engine drives traffic and uses their content.
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Expected Major Events for Tuesday
05:30/NED: Oct CPI
07:00/GER: Oct CPI
07:00/UK: Oct UK monthly unemployment figures
07:30/HUN: Oct CPI
10:05/GER: Nov ZEW Indicator of Economic Sentiment
16:59/GER: Sep Balance of Payments
16:59/AUT: Nov OPEC Monthly Oil Market Report
All times in GMT. Powered by Onclusive and Dow Jones.
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(END) Dow Jones Newswires
11-12-24 0016ET
