President-elect Donald Trump continued to stir the markets by saying that his administration will potentially impose tariffs on the United States’ major trading allies. Trump intends to implement a 25% tariff on goods from Mexico and Canada, citing concern regarding border security and drug issues, along with a 10% additional tariff on China imports. The market responded positively, with the US dollar gaining 1 percent against Canadian dollar and 2 percent against the Mexican peso. William Reinsch and other experts see these tariffs as a move in negotiations, that Trump is using pressure to push countries into making concessions. The suggested tariffs might breach the U.S.-Mexico-Canada Agreement (USMCA), leading to changes in global trade patterns and raising concerns among economists about higher inflation and altered global supply chain dynamics. The Chinese government has responded by warning against the notion of another trade war, with a spokesperson reiterating that "no one will win a trade war."
EQUITY
The US stock market kicked off the week with enthusiasm after President-elect Donald Trump's nomination of hedge fund manager Scott Bessent as Treasury Secretary. The Dow printed record high, while the S&P 500 and Nasdaq grew slightly. Tech stocks are balanced, with Amazon and Alphabet gaining ground while Nvidia and Netflix seeing red. Corporate highlights included Bath & Body Works flourishing after raising its full-year earnings outlook and Macy's battered by a $100 million hidden expenses scandal.
GOLD
Gold's massive rebound hit a speed bump with prices tumbling nearly 3% after testing $2720 as safe-haven buying fades in conjunction with reports of a potential ceasefire between Israel and Lebanon compounded by President-elect Donald Trump's Treasury Secretary pick, hedge fund billionaire Scott Bessent, who is known as a fiscal hawk that advocates for measured tariff approaches. A softer U.S. dollar had also contributed, breaking a six-session winning streak that had previously seen prices regain 6.5%. Analysts remain optimistic with a target of $3,000 in the medium term.
OIL
Brent dipped below $73 per barrel after a plausible ceasefire negotiation between Israel and Hezbollah. Crude oil markets are in a wide range sideways as they find reasons to move in either direction while traders are monitoring market movers, mainly the upcoming OPEC+ meeting on December 1st, where production cuts may be maintained. There is notable movement on the corporate side with EQT's $8.8 billion midstream joint venture with Blackstone Credit & Insurance and the proposed merger between ONEOK and EnLink Midstream.
CURRENCY
The US dollar opened higher after President-elect Trump's threatened tariffs as high as 25% on Mexico and Canada while proposing an additional 10% on Chinese imports. The Canadian dollar was particularly hammered, along with commodity currencies like the Australian and New Zealand dollars, which were also hit hard. Investors are now closely watching upcoming economic indicators, including the FOMC meeting minutes and PCE inflation data since odds are currently split on December's cut.
