- Dollar Gains, Stocks Drop on Trump Tariff Threat: Markets Wrap
The dollar rallied and Asian shares dropped after President-elect Donald Trump said the US will impose
additional tariffs on China, Mexico and Canada, ratcheting up concerns about his America First policies.
Financial markets were rattled in early Asian trade as Trump said he will place an extra 10% tariffs on Chinese
imports, and 25% levies on all products from Mexico and Canada, in posts to his Truth Social network. He said
the measures were needed to clamp down on migrants and illegal drugs flowing across the US border.
The Bloomberg Dollar Spot Index surged as much as 0.7% before paring gains, while China’s offshore yuan fell
0.4%, and Mexican peso and Canadian dollar both tumbled more than 1%. Share benchmarks in Japan,
Australia and South Korea all dropped. Treasury yields edged higher. - Dow jumps 400 points to new record close, Russell 2000 hits all-time high after Trump makes Treasury
pick
A broad stock rally pushed the Dow Jones Industrial Average, S&P 500 and small-cap focused Russell 2000
index to new records on Monday. Investors bet President-elect Donald Trump’s choice for Treasury secretary,
Scott Bessent, would help guide the economy without sparking inflation. The blue-chip Dow rose 440.06
points, or 0.99%, to 44,736.57. The broad S&P 500 gained 0.3% to end at 5,987.37. Both hit new all-time
highs in the session, while the Dow also notched a fresh record close. The Nasdaq Composite ticked up
0.27%, finishing the day at 19,054.84. - Oil steadies amid possible Middle East ceasefire
Oil prices ticked up in early trade on Tuesday after falling in the previous session as investors took stock of a
potential ceasefire between Israel and Hezbollah, weighing on oil’s risk premium. Brent crude futures rose 29
cents, or 0.4%, to $73.2 a barrel as at 0430 GMT, while U.S. West Texas Intermediate crude futures were at
$69.2 a barrel, up 26 cents, or 0.38%. Both benchmarks settled down $2 a barrel on Monday following
reports that Lebanon and Israel had agreed to the terms of a deal to end the Israel-Hezbollah conflict, which
triggered a crude oil selloff. Market reaction to the ceasefire news was over the top, said senior market
analyst Priyanka Sachdeva at Phillip Nova. While the news calmed fear of disruption to Middle Eastern
supply, the Israel-Hamas conflict “never actually disrupted supplies significantly to induce war premiums” this
year, Sachdeva said. - Gold plunges 3% as Trump Treasury pick and potential Israel-Hezbollah truce fuel risk-on mood
Gold prices lost about 3% following President-elect Donald Trump’s pick of Scott Bessent for U.S. Treasury
secretary, as well as on emerging reports of a potential ceasefire agreement between Israel and Hezbollah.
The ~$100 wipeout in Gold today is as severe in size & pace as the post U.S. election selloff on Nov 6th, MKS
Pamp’s head of metals strategy, Nicky Shiels said. - Trump vows an additional 10% tariff on China, 25% tariffs on Canada and Mexico
President-elect Donald Trump plans to raise tariffs by an additional 10% on all Chinese goods coming into the
U.S., according to a post Monday on his social media platform Truth Social. The post immediately followed
one in which Trump said his first of many executive orders on Jan. 20 would impose tariffs of 25% on all
products from Mexico and Canada. Trump had threatened tariffs of 60% on Chinese goods while campaigning
for president. - ECB Must Be Open-Minded, Act Carefully on Rates, Lane Says
The European Central Bank must act step by step as it lowers interest rates, according to Chief Economist
Philip Lane. Remaining open-minded about the speed and scale of adjustments is in fact a valuable strategy
across various environments, as different situations may necessitate distinct approaches, Lane said in
London. This careful, step-by-step strategy enables us to observe the responses of the economy to our
decisions and continuously refine our understanding of their impacts. Less than three weeks before the ECB’s
final policy meeting of 2024, the outlook is clouded by uncertainty. The economy has cooled markedly with
some surveys pointing to shrinking activity and the threat of new trade tariffs damping sentiment. Surging
wage growth, meanwhile, suggests inflation may not yet be fully under control. Analysts predict a fourth
quarter-point cut of the year in the deposit rate, bringing it to 3%. Investors broadly agree, though see a
chance of a 50 basis-point move in light of the softening economy. - Trump Trade Muddles Inflation Outlook in Fed’s Favorite Gauge
A stock-market rally boosted by President-elect Donald Trump’s victory is set to put upward pressure on the
Federal Reserve’s preferred inflation gauge, which in turn could keep interest rates elevated. The post
election surge in stock prices will register as an increase in the cost of portfolio management and investment
advice services, a category within the personal consumption expenditures price index that largely follows
swings in the market. Moves within that category have a direct impact on Fed policy decisions as they feed
into a key metric of broader services inflation that officials watch closely. Services inflation has been a
relatively stubborn component of the overall PCE index, which is seen rising 0.2% in October from the prior
month and 2.3% from a year ago in data due Wednesday. Skanda Amarnath, executive director of Employ
America, estimates stock-market effects account for more than a third of excess core services inflation
compared with the pre-pandemic trend. - Israel and Hezbollah on the Cusp of Deal as Attacks Continue
Israel and Hezbollah inched closer to signing a cease-fire deal that may be concluded in the coming days,
according to officials and people familiar with the matter, even as the two sides continued to fire artillery and
rockets at each other. Israel’s security cabinet is expected to vote on an agreement on Tuesday, and passage
is considered likely, according to an Israeli official, who asked not to be identified discussing internal
deliberations. That could pave the way for the US and France, which have mediated the talks, to announce it
immediately, the official said. US and French officials on Monday both said there had been significant
progress but cautioned that there was still work to be done. Earlier Monday, National Security Council
spokesman John Kirby said the two sides were still working through procedural elements and nothing is
negotiated until everything is negotiated. - UniCredit offers to buy rival Italian lender Banco BPM for $10.5 billion
UniCredit on Monday offered to snap up its domestic rival Banco BPM for roughly 10 billion euros ($10.5
billion). The deal would, if completed, merge two of Italy’s largest lenders. It follows a flurry of banking M&A
news in Europe. In September, UniCredit increased its stake in Commerzbank to around 21% and submitted a
request to boost the holding to up to 29.9%. - Zoom surpasses expectations and calls for another quarter of single-digit growth
Zoom shares were down 4% in extended trading on Monday after the video calling software maker
announced strong fiscal third-quarter results and gave quarterly guidance that was just slightly above
expectations. Here’s how the company did in comparison with LSEG consensus: Earnings per share: $1.38
adjusted vs. $1.31 expected; Revenue: $1.18 billion vs. $1.16 billion expected. Zoom’s revenue grew about
4% year over year in the quarter, which ended on Oct. 31, according to a statement. Zoom has increased
revenue in the single digits for two and a half years, a sharp departure from 2020 and 2021, when the Covid
19 pandemic led the business to triple in size. Net income, at $207.1 million, or 66 cents per share, was up
from $141.2 million, or 45 cents per share, in the same quarter a year earlier. The company reported 192,400
enterprise customers in the quarter, up 800 customers from the previous quarter. With respect to guidance,
Zoom called for $1.29 to $1.30 in fiscal fourth-quarter adjusted earnings per share on $1.175 billion to $1.180
billion in revenue. Analysts surveyed by LSEG were expecting $1.29 per share and $1.17 billion in revenue.
Zoom bumped up its view for the 2025 fiscal year. It expects $5.41 to $5.43 in adjusted earnings per share,
with $4.656 billion to $4.661 billion in revenue. The middle of the revenue range implies about 3% growth. - EU challenges Chinese brandy tariffs at WTO
The EU Commission said on Monday it had formally brought the provisional anti-dumping measures imposed
by China on imports of EU brandy to the World Trade Organization, the latest development amid trade
tensions between the two blocs. France’s trade ministry said last month it would work with the European
Commission to challenge Beijing’s tariffs, which came after the European Union voted for duties on Chinese
made electric vehicles. China’s commerce ministry said it had received an EU consultation request and would
handle the matter according to WTO rules. - Rivian jumps after Tesla reaches conditional settlement in its 2020 lawsuit
Rivian Automotive Inc (NASDAQ:RIVN) shares jumped 13% after Tesla (NASDAQ:TSLA) announced it had
reached a conditional settlement in its 2020 lawsuit accusing Rivian of employee poaching and theft of
electric-vehicle trade secrets. Tesla did not reveal the details of the agreement but informed a California state
judge that it plans to dismiss the case by Dec. 24, provided the settlement terms are fulfilled. - SMCI extends last week’s gains, wounding short sellers
On Monday, Super Micro Computer (NASDAQ:SMCI) stock continued its upward trajectory following the
company’s announcement of a strategy to prevent being delisted from the Nasdaq, which had previously
fueled a significant rally. The server manufacturer’s shares experienced a 16% increase to $38.30, setting the
stock on track for its highest closing value in nearly four weeks. - Luxury stocks
Luxury stocks including Kering, LVMH and Richemont rise after news that China is expanding its visa-waiver
program to citizens from several countries, raising hopes that an increase in travel could also boost shopping
activity among tourists. - ARM Holdings Plc are up 2.8% on Monday after UBS started coverage on the chip-design company with
a buy rating and $160 price target
AI is driving positive growth vectors across all of ARM’s key end markets, with data center particularly fertile
ground, writes analyst Timothy Arcuri. The valuation looks rich, but the market wants growth and we can still
see upside here. Shares up 86% this year.
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