'Trump trade' continues to fuel markets

Investor sentiment boosted by prospect of tax cuts and deregulation, and robust US economy

- Ven Sreenivasan

The "Trump trade" continued to stimulate animal instincts, sending markets soaring towards new highs during a week when US President-elect Donald Trump continued to threaten even more harsh trade tariffs on both friends and adversaries.

Besides the prospect of tax cuts and deregulation, investor sentiment was also boosted by a robust US economy, indications of at least three more US Federal Reserve interest rate cuts over the next 12 months and strong consumer spending.

This despite US two-year and 10-year Treasury rates remaining at their highest levels in months, prevailing geopolitical uncertainties and economists warning that Trump's policy positions could rekindle inflationary pressures at home.

On Wall Street, stocks had their best month in 2024, with expectations that a tech revolution, unbridled energy markets and financial deregulation will boost corporate activity and earnings.

The Dow Jones Industrial Average traded above the key 45,000 points level for the first time in history before closing out a holiday-shorted Black Friday at a record 44,910 points, for a 2.37 per cent rise over a week.

The marquee Wall Street index is now up 7.54 per cent for the month and has gained 19.6 per cent in 2024.

The S&P 500 ended the week at a record 6,032.38 points after gaining 1.41 per cent during the week. This broad index is up 5.73 per cent for November and 26.47 per cent for the year-to-date. The tech-heavy Nasdaq rose 1.3 per cent last week to 19,218.17 points, totalling a November gain of 6.21 per cent and a year-to-date rise of 28.02 per cent.

In Singapore, the Straits Times Index (STI) began Nov 25 near the fresh 3,766.93 high made the preceding week, but did not have adequate bid tone to press on to a new high. It ended the week down 0.2 per cent, at 3,739.29 points.