Take Two: US stocks hit new record as Trump elected US President and Fed cuts interest rates
- 11 November 2024 (3 min read)
What do you need to know?
US stocks soared as Donald Trump was elected US President, and the Federal Reserve (Fed) cut interest rates for the second time in a row. The 25-basis-point (bp) cut takes the benchmark rate to 4.5%-4.75%; the Fed noted inflation has made progress towards its 2% target “but remains somewhat elevated”. The Dow Jones, S&P 500 and Nasdaq indices reached record highs last week, while Trump’s decisive victory helped the US dollar record its biggest one-day gain in eight years. AXA IM believes Trump’s proposed economic measures could boost inflation over the coming years, reducing the Fed’s scope for easing policy; we forecast it pausing at 4.25% next March.
Around the world
The Bank of England (BoE) cut its benchmark interest rate by 25bp to 4.75% as expected, marking the second rate cut since it started its easing cycle in August. The BoE raised its UK growth and inflation forecasts following the new government’s Autumn Budget and said monetary policy will need to remain restrictive “for sufficiently long” in order to return inflation to target sustainably. AXA IM anticipates the BoE will keep interest rates on hold for the remainder of 2024 before pushing through four 25bp reductions in 2025.
Figure in focus: 50.0
Eurozone business activity held steady in October, the latest Purchasing Managers’ Index (PMI) showed. The composite PMI, which includes manufacturing and services, was revised up to 50.0 from the flash estimate of 49.7 – ahead of September’s 49.6. A reading of exactly 50 indicates no change in private sector output levels compared to the month before. Shrinking levels of business activity in the bloc’s two largest economies, Germany and France, offset expansion in other Eurozone countries such as Spain. Elsewhere, Japan saw a sharp fall in business activity with the composite PMI falling to 49.6 in October from 52.0 in September.
Words of wisdom
National People’s Congress Standing Committee: The permanent body of China’s National People’s Congress (NPC), the country’s legislature, which enacts China’s laws and oversees other parts of the government. The 14th NPC Standing Committee held its 12th session last week, and approved a 10trn yuan ($1.4trn) plan to refinance local government debt as part of measures to revitalise the world’s second largest economy. The policy should free up resources to boost investment and consumption, China Finance Minister Lan Fo’an said.
What's coming up?
Monday marks the start of the United Nations climate change conference COP29. This year's event is being held in Azerbaijan and will run until 22 November. On Tuesday, the UK publishes unemployment figures while Germany reports inflation data, followed by the latest US inflation data on Wednesday. On Thursday, the UK and Eurozone each report new estimates of third quarter GDP growth followed by Japan on Friday.
Disclaimer
This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.
Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.
Issued in the UK by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the UK. Registered in England and Wales, No: 01431068. Registered Office: 22 Bishopsgate, London, EC2N 4BQ.
In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.
© 2024 AXA Investment Managers. All rights reserved