Stock markets around the world have enjoyed contrasting fortunes this week, with Donald Trump’s success in the American presidential race threatening to create fault lines in the global economy.
Share prices in the US maintained their post-election bounce at the start of the week before easing back from record highs as the week progressed. However, markets in Europe and Asia struggled once more to make headway, with investors worried about the potential impact of tariffs and further geopolitical uncertainty after Trump takes office in January.
The likelihood that Trump’s administration will take a more relaxed approach to cryptocurrency regulation saw the price of Bitcoin hit a record high. However, oil prices declined following more pessimistic global demand forecasts. Gold also eased back from recent highs on signs that central banks were reducing their reserves purchases.
United States
On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.5% down for the week so far, with the S&P 500 falling 0.8%. Both indexes recorded all-time highs at close of business on Monday as investor excitement around tax cuts and a more benign regulatory environment persisted. However, a rise in consumer price inflation and signs of further strength in the employment market caused some concern on Wednesday and Thursday. While financial markets had been certain the Federal Reserve would reduce interest rates once again at its December meeting, measured comments from Chair Jerome Powell suggested another cut in 2024 was far from a done deal.
UK
In the UK, the FTSE 100 closed on Thursday level for the week after weaker oil prices weighed on energy companies, and data showed a rise in inflation in the grocery sector. Share prices in London were supported to some extent by sterling’s weakness relative to the resurgent US dollar, while signs of intensifying conflict in Ukraine boosted firms in the defence and aerospace sector. Meanwhile, household finances are coming under renewed pressure from the higher mortgage costs that have been driven by recent increases in government bond yields.
Europe
In Frankfurt, the DAX index ended Thursday’s session up 0.3% for the week, while France’s CAC 40 fell 0.4%. Share prices in Europe remained under pressure from higher bond yields and political uncertainty in Germany, where national elections have been scheduled for the new year. Rising gas prices also weighed on sentiment during the week, although stocks bounced back to some extent on Thursday after European Central Bank officials suggested further rate cuts were on their way. Technology shares led the recovery after one of the eurozone’s biggest semiconductor firms issued an unexpectedly upbeat trading statement.
Asia
In Asia, the Hang Seng index in Hong Kong slumped 6.2%, falling back below the 20,000-point mark as investors reacted negatively to further details of the Chinese government’s latest stimulus programme. Details of plans to support China’s property sector appear to have underwhelmed the market, while concerns about the rising dollar and the introduction of tariffs on US exports added to the gloom. Japan’s Nikkei 225 index of leading shares, meanwhile, fell 2.4% as investors in Tokyo braced for disappointing third-quarter GDP figures on Friday. Data showing a rise in producer prices last month added to concerns about further rises in interest rates.
November 8 | November 14 | Change (%) | |
|---|---|---|---|
FTSE 100 | 8072.4 | 8071.2 | 0.0 |
FTSE 250 | 20517.9 | 20522.8 | 0.0 |
S&P 500 | 5995.5 | 5949.2 | -0.8 |
Dow Jones | 43989.0 | 43750.9 | -0.5 |
DAX | 19215.5 | 19263.7 | 0.3 |
CAC 40 | 7338.7 | 7311.8 | -0.4 |
ACWI | 861.3 | 851.2 | -1.2 |
Hong Kong Hang Seng | 20728.2 | 19435.8 | -6.2 |
Nikkei 225 | 39500.4 | 38535.7 | -2.4 |
Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 14 November 2024.
