“Trump trade” has boosted the US Dollar and US stocks, but Trump’s policies may have less favorable effects on global assets. Trump’s plan to raise tariffs is expected to negatively impact economies worldwide, especially exporters like China.
Asia & European Sessions:
- Bitcoin Surge! Bitcoin broke $90K, driven by Trump trade once again. Bitcoin is up roughly 110% in 2024, helped by robust demand for dedicated US ETFs, interest rate cuts by the Federal Reserve and Trump’s cryptofriendly agenda.
- Crypto market capitalization has exceeded its pandemic-era peak, reaching $3.1 trillion. Traders are betting on Bitcoin reaching $100,000 by year-end, according to data from the Deribit exchange.
- Open interest — or outstanding contracts — for CME Group Inc. futures for Bitcoin and second-ranked Ether (ETHUSD) scaled records on Monday, a sign of growing engagement by US institutional investors.
- Asian shares dropped, alongside European and US equity futures, as traders evaluated the implications of President-elect Donald Trump’s policy agenda and potential cabinet choices. The MSCI Asia Pacific Index fell for a third consecutive day, driven by rising Treasury yields amid concerns that Trump’s proposed tax cuts could increase inflation.
- There are also reports that Trump is considering two individuals for prominent roles in his administration with track records of criticizing China.
- DAX and FTSE100 are down -1.1% and -0.5% respectively, after a pickup in German HICP inflation and higher than expected UK wage growth dampened easing expectations.
- Investors await the US CPI report for insights into the Fed’s easing path, as Trump’s inflationary policies may lead to fewer rate cuts.
Financial Markets Performance:
- The USDIndex continues to rise and is currently at 105.75. It hit a 1-year high.
- EURUSD drifts to 1.0620 and GBPUSD is in a sell off, currently at 1.2800.
- Oil prices fell after their biggest 2-week decline, amid a weak demand outlook from China, a stronger US Dollar, and concerns over a potential oversupply.
- Crude oil has traded within a narrow range since mid-last month, influenced by Middle East tensions, the US election, and OPEC+ output decisions.
- Gold remains under pressure and is currently at just $2604.36 per ounce. It hit a one-month low, down 5% since Trump’s election victory, as a strong dollar and US equity rotation pressured the metal. Gold’s decline was also technical, breaking below the 50-day moving average, causing funds to cover long positions. Despite recent drops, gold remains up 25% for the year, supported by central bank purchases and geopolitical risks.
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Andria Pichidi
Market Analyst
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