Global Market Drivers - 18 November 2024

European Stocks Underperform Amid 'Trump Trade' Dynamics

European stocks have significantly lagged behind U.S. equities following Donald Trump's re-election. The S&P 500 has surged nearly 25% this year, while the Stoxx Europe 600 shows only marginal gains. This disparity is attributed to fears over Trump's proposed tariffs on European exporters, which have also led to a significant drop in the euro. The euro reached its lowest level in a year at $1.05, prompting expectations of aggressive interest rate cuts by the European Central Bank.

Anticipation Builds for Major Earnings Reports and Bitcoin's Surge

Investors are closely monitoring upcoming earnings reports from major retailers like Walmart and Target, as well as tech giant Nvidia. Nvidia anticipates strong Q3 results and significant demand for its new AI processor, Blackwell. Additionally, Bitcoin has recently surged above $93,000, with some analysts confident of its $200,000 target by the end of 2025.?

G20 Summit Highlights U.S.-China Tensions

At the G20 summit in Rio de Janeiro, world leaders are adjusting to broad outcomes due to U.S. president-elect Donald Trump's imminent return, which could disrupt global norms. Trump's focus is on his new policies, including high tariffs on Chinese imports and withdrawing from climate agreements. Chinese President Xi Jinping is strengthening China's global support amidst these uncertainties.?

Elon Musk Navigates Complex U.S.-China Relations

Elon Musk is building strong ties with both China and the incoming Trump administration, two conflicting powerhouses. Chinese state media laud Musk for his futuristic ideas and contributions to technology, while the nation offers him significant favors, such as possible autonomy over Tesla's telecommunications infrastructure. However, Musk’s alignment with Trump's administration, especially amidst hawkish anti-China sentiments, puts him in a precarious position.?

Investors Seek Opportunities Amid 'Trump Trade' Market Shifts

Global investors are shifting their positions in response to U.S. President-elect Donald Trump's policies involving taxes and tariffs. While U.S. stocks and the dollar surged on Trump's growth agenda, Chinese, European, and emerging market assets suffered. Now, investors are seeking opportunities in undervalued non-U.S. assets such as European car-makers and the Mexican peso.

Insights and analysis by Cameron Hewson, CFA

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