Global Markets gained this week driven by outcomes of the U.S. presidential elections and rate cuts by the Federal Reserve (Fed), Riksbank and Bank of England (BoE). The European markets lagged as markets digested potential foreign policy changes which could be implemented by the Trump presidency, continued contraction in manufacturing and poor corporate earnings. Asian markets also rose this week.

Donald Trump won the U.S. presidential elections this week. He will be appointed as the 47th U.S. president in January, 2025. China introduced a $1.4 trillion package to raise the debt ceiling for local governments but refrained from direct injection of liquidity into the economy.

Global Updates
  • The MSCI All Country World Index rose sharply this week as global markets reacted optimistically to the U.S. presidential election and the rate cuts by the Fed, Riksbank and BoE. European markets were subdued due to disappointing earnings in the oil and gas sector and luxury firms, possibility of Trump tariffs, and the continued contraction in European manufacturing.
  • European manufacturing continued to contract for the 28th consecutive month, albeit at a slower pace. Italy’s private sector expanded in October driven by the expansion in the services sector with a PMI of 52.4, even as the manufacturing sector contracted with a PMI of 46.9. German industrial orders rose by 4.2% in September, even as exports and industrial output declined.
  • FTSE 250 marginally gained and FTSE 100 lagged this week due to underperformance by Richemont, Vistry, Rolls-Royce, John Wood Group, etc. Moreover, the BoE cut policy rates by 25 bps to 4.75% and projected a slowdown in its rate cutting cycle considering the inflationary effects of the new budget.
  • Associated British Foods reported $2.6 billion in pre-tax annual profits driven by strong grocery sales and lower costs.
  • Novo Nordisk reported third quarter sales beat driven by 79% growth in sales of its weight loss drug Wegovy and earnings in line with expectations. The company’s profits rose to $3.92 billion.
  • Sports accessories company Puma maintained its full year guidance range of $677.8 million and $732.4 million, enthused by growing sales in the third quarter and a strong orderbook for rest of the year.
  • Ferrari reported a 7% increase in sales and earnings to $1.78 billion, bucking the downward trend in the auto sector. Ferrari reiterated the full year guidance, despite falling sales in China, due to a superior product mix and personalization options.
  • BMW’s quarterly net profit plunged 84% and 16% drop in sales, weighed down by the higher costs of a recall and a drop in demand from China.
  • Energy prices gained over the week due to uncertainty in the future U.S. foreign policy and the estimated impact of Hurricane Rafael on U.S. oil production. Saudi Arabia’s national oil company Aramco reported 15.4% drop in third quarter profits due to lower oil prices and weak margins during the quarter.
  • Vestas Wind Systems shares dipped due to annual profit margins of the company coming in at the lower end of its guidance range due to higher costs, logistical disruptions, increasing competition and warranty provisions.
  • Marks & Spencer reported higher profits of $511.1 million for the first half of fiscal year 2025. The company tempered expectations for the rest of the year owing to uncertainty in consumer spending.
  • China’s trade surplus rose to $95.27 billion due to a larger than expected 12.7% year-on-year growth in exports and 2.3% fall in imports.
U.S. Equity
  • The S&P 500, Dow Jones index & Nasdaq indices surged this week following Donald Trump’s victory in the U.S. presidential election and the 25 bps rate cut by the Fed. Fed Chair Jerome Powell reiterated that the U.S. monetary policy will be data driven to support economic and employment growth even as inflation steadily contracts.
  • The Fed cut policy rate to 4.5%-4.75% range by 25 bps, driven by the Feds target of improving employment and growth to achieve a soft landing for the American economy. Weekly jobless claims marginally increased by 3,000 claims in the last week. Labour markets are expected to recover in November due to the waning effects of hurricanes and worker strikes.
  • The Boeing strike ended after machinists ratified the 38% wage hike agreement between the workers’ union and Boeing.
  • Super Micro Computer lagged owing to lower-than-expected sales and delay in filing the annual report for the latest fiscal year. Last week Ernst and Young had resigned as the company’s auditor citing mistrust of management, demoralizing investors.
  • Trump Media & Technology has reported a loss for the third consecutive quarter due to high costs.
  • Blackstone is in talks to acquire a minority stake in the hedge fund Millenium Asset Management. Blackstone’s real estate division is also seeking to acquire the retail store operator Retail Opportunity Investments in a $4 billion deal.
  • Nvidia stock rallied to become the first company to cross a stock market valuation of $3.6 trillion driven by investor optimism on lower taxes and regulations in a Trump regime.
  • Nvidia and Sherwin-Williams will replace Intel and Dow Inc. in the Dow Jones Industrial Average index for blue-chip stocks from today, reflecting their ascendancy in the global stock markets.
  • Gold prices dipped to their lowest in five months weighed down by the potential impact of Trump government on interest rates and inflation.
  • Exxon reported higher than expected profits of $8.6 billion in the third quarter driven high production volumes which offset the low prices during the quarter. The company raised its dividend to 99 cents per share for the fourth quarter.
  • Arm Holdings (ARM) stock gained after the company reported higher than expected revenue and net income of $844 million and $107 million respectively.
  • Qualcomm stock gained owing to quarterly revenue of $10.24 billion beating expectations and raising revenue guidance to $10.5 billion to $11.3 billion for the current quarter. The company also announced a $15 billion share buyback.
Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index lagged this week.
  • The U.S. 10-year Treasury yield rose to 4.30% and the yield on the 2-year note remained in line at 17% over the week as markets digested The U.S. presidential election results and the Fed’s rate cut.
  • The U.S. Dollar Index rose to 104.49 this week.
Fixed Income

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