Trump's Re-election Rekindles Market Enthusiasm: Five Key Global Financial Market Focuses Next Week

Trump's Re-election Rekindles Market Enthusiasm: Five Key Global Financial Market Focuses Next WeekThis week, the "Trump trade" returned to the US stock market, driving major indices significantly higher. The Dow Jones Industrial Average rose approximately 2%, the S&P 500 and Nasdaq Composite gained about 1

Trump's Re-election Rekindles Market Enthusiasm: Five Key Global Financial Market Focuses Next Week

This week, the "Trump trade" returned to the US stock market, driving major indices significantly higher. The Dow Jones Industrial Average rose approximately 2%, the S&P 500 and Nasdaq Composite gained about 1.7%, and the Russell 2000 surged by a strong 4.5%. The market widely anticipates that President Trump will continue to implement tax cuts and deregulation during his second term, benefiting US companies, particularly industrial stocks and small-cap stocks. However, a series of key events will shape global financial markets next week, demanding close attention from investors.

I. US Economic Data and Fed Moves: The Inflation-Interest Rate Tug-of-War

Next week, the US will release several key economic data points. The most closely watched will be the October Personal Consumption Expenditures (PCE) data and the minutes from the November Federal Reserve monetary policy meeting, both scheduled for release next Wednesday (Beijing time). The core PCE price index is the primary inflation indicator closely monitored by Fed officials, and its trajectory will directly influence the Fed's monetary policy decisions.

Currently, money market pricing suggests investors expect a slightly higher than 50% probability of a Fed rate cut in December, but a total rate cut of only 67 basis points from now until the end of 2025. This expectation reflects a cautious outlook on US economic growth.

In a report, HSBC economists noted that the November Fed meeting minutes might include discussions among policymakers regarding the potential economic impact of the US election results. During his campaign, Trump repeatedly stated plans to impose 10% to 20% tariffs on all imported goods. If implemented, this policy could push up US inflation, forcing the Fed to slow down or even pause rate cuts. Therefore, the Fed minutes' statements on inflation and interest rate outlook will be a key focus for investors.

Beyond the PCE data and Fed minutes, other important US economic data will be released next week, including the November Dallas Fed Manufacturing Activity Index (Monday), November Consumer Confidence Index (Tuesday), September FHFA House Price Index (Tuesday), the third-quarter real GDP annualized growth rate (revised) (Wednesday), and the November Chicago PMI (Friday). This data will further help investors assess the health and future trajectory of the US economy.

II. Eurozone CPI Data: A Pressing Decision for the ECB

Next Friday, the Eurozone will release the preliminary November Consumer Price Index (CPI). This report is closely watched as a growing number of voices suggest the European Central Bank (ECB) may need to accelerate rate cuts, possibly even cutting rates by 50 basis points at its December meeting, to counter the pressures of a slowing Eurozone economy. The Eurozone currently faces multiple challenges, including high energy prices, rising inflationary pressures, and escalating geopolitical risks. The ECB's monetary policy decision will significantly impact the Euro exchange rate and European financial markets.

III. Reserve Bank of New Zealand and Bank of Korea Rate Decisions: Divergent Monetary Policy Paths

Next week, the Reserve Bank of New Zealand (RBNZ) and the Bank of Korea (BOK) will announce their latest rate decisions. The market widely expects the RBNZ to cut rates by 50 basis points, with some predicting a cut as high as 75 basis points. The New Zealand economy is currently facing the dual pressures of a global economic slowdown and a cooling domestic real estate market.

In contrast, economists anticipate the BOK will hold rates steady next week but may signal potential future rate cuts. The BOK faces a difficult balancing act between economic growth and inflation control.

IV. Gold and Bitcoin: The Future Trajectory of Safe-Haven Assets

Gold and Bitcoin, as two important safe-haven assets, warrant attention next week. Following a previous pullback, gold prices rebounded strongly this week, rising approximately 6% to reclaim levels above $2,700 per ounce, primarily driven by the ongoing tension in the Russia-Ukraine conflict.

Meanwhile, Bitcoin continued its strong upward trend since Trump's election win, breaking through $99,000 this week and approaching the $100,000 mark. The future trajectory of both will be influenced by geopolitical risks, the macroeconomic environment, and market sentiment.

V. US Q3 Earnings Season Wrap-up and Thanksgiving Market Closure

With Nvidia reporting its earnings this week, the US Q3 earnings season is nearing its end. Next week, Dell Technologies, HP, and Meituan, among others, will release their financial results, and their performance will influence market sentiment. It's also noteworthy that the US stock market will be closed for Thanksgiving on Thursday and will close three hours early on Friday, potentially leading to reduced trading volume and impacting market volatility.

In conclusion, next week's global financial markets face a series of critical events, including significant US economic data, the minutes from the Fed's monetary policy meeting, Eurozone CPI data, rate decisions from the RBNZ and BOK, and US corporate earnings reports. These events will collectively shape global financial market trends, requiring close monitoring and cautious responses from investors.