U.S. Stocks Jump as Republicans Sweep the White House and Congress
Last week, American shares surged thanks to a big political win for the Republicans—think of it as a double‑golden ticket for businesses looking for newer tax breaks, lighter regulations, and a general boost from the new administration.
Small Caps Lead the Charge
- Russell 2000 climbed 8.57% for the week, just shy of its 2021 record.
- S&P 500 rallied 4.66%, marking the strongest weekly run in a year.
Investors seem to be dialing up their optimism for improved earnings and a fiscal policy that fans the economic flame.
Key Insights from the Economist
Rowe Price’s Blerina Uruçi, in a recent webinar, noted that the Trump admin’s plan—including tighter immigration rules and higher tariffs—might push up inflation. She also warned that a stronger dollar could soften the blow if it’s paired with tax cuts and regulatory loosening, potentially giving the economy a short‑term lift.
Fed’s Tactical Move
The Federal Reserve cut interest rates by 25 basis points—its first dip since mid‑September. Fed Chair Jerome Powell reassured markets that policy stays data‑driven, refusing to speculate on future fiscal changes. The cut dragged down mid‑ and long‑term Treasury yields, while overall bond market responses were mixed.
Europe’s Mixed Playlist
The pan‑European STOXX Europe 600 fell 0.84%, as traders fretted over potential U.S. tariff shifts that could dampen European growth.
- Italy (FTSE MIB) — down 2.48%
- France (CAC 40) — down 0.95%
- Germany (DAX) — down 0.21%
Central banks are keeping an eye on the slowdown: the Bank of England trimmed its key rate to 4.75%, hinting at future cuts if data weakens; the Swedish Riksbank slid its rate to 2.75%. In the Eurozone, the October PMI nudged to 50 from 49.7, suggesting activity remains flat rather than shrinking, but business confidence hit a yearly low.
Asia’s Theatre: Japan and China Take the Spotlight
Japan’s Market Wins
Japan’s Nikkei 225 and TOPIX improved 3.8% and 3.7% respectively, buoyed by the Fed’s rate cut and hopes for stable U.S.‑Japan trade. Despite a strong yen, officials like Atsushi Mimura say the government stands ready to tame volatility. Analysts predict the Bank of Japan might raise rates as early as January 2025.
- Real wages dipped 0.1% YoY in September (down from 0.8% in August), a swing that undercuts consumer spending power.
- Nominal wages rose 2.8% but lagged behind 2.9% inflation.
- Household spending fell 1.1% versus an expected drop of 2.1%.
China’s Stimulus Surge
China’s Shanghai Composite and CSI 300 both leapt 5.5%, spurred by a new refinancing package targeting local government debt. The National People’s Congress approved a ¥10 trillion loan program and lifted the debt ceiling to ¥35.52 trillion. Finance Minister Lan Fo’an pledged stronger fiscal backing for 2025, aiming to steadier the economy amid global uncertainty.
Wrap‑Up
Global markets are in the throes of major political shifts and fresh economic data. Investors are finger‑tapping the clock to gauge how U.S. policy changes might ripple across the world. Stay tuned for the next update—because in the jungle of finance, the next swing could be right around the corner.
