Markets Rally as Trump Administration Signals Shift in Trade Policy

TLDR:

• US equity futures gained as Trump’s Treasury pick signals pragmatic approach to tariffs
• Dollar experienced biggest weekly decline in 3 months, dropping more than 1%
• S&P 500 up 5% in November, heading for strongest month since February
• Bitcoin trading at $96,297, showing modest gains
• Trump claims victory in Mexico migration talks, possibly indicating softer stance on tariffs

US equity futures gained ground on Friday as the dollar experienced its first decline in eight weeks. This market movement comes in response to signals from the Trump administration suggesting a more measured approach to trade policies, particularly regarding tariffs.

The Bloomberg Dollar Spot Index recorded a weekly decline exceeding 1%, marking its most substantial drop in three months. This reversal in dollar strength coincides with the nomination of Scott Bessent as Treasury Secretary, a choice that has sparked optimism among traders about a more pragmatic approach to international trade relations.

Stock market performance has shown remarkable strength, with the S&P 500 climbing 5% in November. This puts the index on track for its best monthly performance since February. The strong showing has contributed to a 26% year-to-date gain, positioning 2024 as one of the strongest years for US stocks this century.

In early trading, contracts on the S&P 500 rose 0.3%, indicating positive momentum for Friday’s shortened post-holiday trading session. The uptick suggests that investors are responding favorably to recent policy developments and economic indicators.

The cryptocurrency market has also shown movement, with Bitcoin trading at $96,297.14, representing a 1.2% increase. Ether, another major cryptocurrency, held steady at $3,571.29, reflecting broader market stability in the digital asset space.

Treasury yields showed downward movement as cash trading resumed after the Thanksgiving holiday. The yield on 10-year Treasuries declined four basis points to 4.22%, continuing a trend of easing that has characterized recent market sessions.

In the currency markets, the Japanese yen strengthened to its highest level in more than a month against the dollar, breaking past the 150 mark temporarily. This movement was partly influenced by Tokyo inflation data, which showed higher-than-expected price increases on a headline basis.

European markets remained relatively stable, though mining companies like Anglo American Plc showed stronger performance. This uptick was attributed to growing expectations of additional economic stimulus measures in China.

The oil market remained steady as traders awaited clarity on OPEC+ production plans following a four-day delay in their virtual meeting. Meanwhile, gold continued its upward trajectory for a fourth consecutive session, despite being on track for its first monthly decline in five months.

In political developments, President-elect Trump announced discussions with Mexican President Claudia Sheinbaum regarding border security. This communication has led to speculation about potential moderation in proposed trade policies, particularly concerning threatened tariffs on Canada and Mexico.

Market analysts are closely watching the tech sector, where companies like CrowdStrike, Workday, and Nutanix experienced some pressure following their earnings reports. Nvidia also faced challenges but managed to maintain key support levels.

The homebuilding sector showed strength, with companies like Toll Brothers benefiting from lower interest rates. This movement reflects broader market optimism about real estate sector prospects.

Trading volumes remained modest during the shortened post-holiday session, with US stock exchanges scheduled to close early at 1 p.m. ET and bond markets following at 2 p.m. ET.

Brazil’s currency markets faced pressure, with the real dropping to record lows following disappointment over government spending plans. This development highlights the ongoing challenges in emerging markets.

The European markets showed minimal movement, with the Stoxx Europe 600 remaining largely unchanged. This stability in European markets contrasts with the more dynamic movement seen in US futures and Asian markets.