Date Issued – 8th November 2024
Today’s Newsletter
Donald Trump’s re-election has reshaped the financial landscape. While clean energy stocks experienced a sell-off due to concerns about pro-fossil-fuel policies, U.S. stocks are benefiting from a Fed rate cut and Trump’s business-friendly stance. Russia-linked shares are surging on hopes of a Ukraine peace deal. Additionally, the prediction market Polymarket’s accurate forecast of Trump’s win demonstrates the rising influence of blockchain-driven platforms, which may see expansion under a crypto-supportive administration.
Trump Win Wreaks Havoc on Global Rate-Cut Expectations
Donald Trump’s re-election has sent ripples through global central banks, with expected tariffs, tax cuts, and tighter immigration policies raising fears of slower growth and higher inflation. With proposed tariffs as high as 60% on Chinese imports, there’s concern over disrupted trade that could limit central banks’ rate-cut abilities, especially in developing economies. The U.S. dollar surged, Treasury yields rose, and several Asian central banks, including those in China and India, intervened in currency markets. The European Central Bank is also monitoring potential inflation impacts.
Investment Insight: Trump’s policies may strengthen the U.S. dollar and challenge global rate cuts, particularly in emerging markets. Investors should monitor the dollar, Treasury yields, and export-sensitive sectors like technology and manufacturing, as these may face increased tariffs and changing trade dynamics.
Oil Rises After Election as Traders Assess Trump’s Impact
Oil prices have climbed as markets assess Trump’s re-election. Brent Crude is nearing $76 per barrel, while West Texas Intermediate is above $72. A stronger dollar adds pressure on commodities, and markets are speculating about the impact of Trump’s policies, including potential sanctions on Iran and increased U.S. oil production. Citigroup noted that Trump’s win could be bearish for oil due to higher supply and possible tariffs on China that could suppress demand. Meanwhile, Hurricane Rafael’s threat to Gulf production has lessened, as the storm’s path has shifted.
Investment Insight: Trump’s re-election adds bullish and bearish factors to oil markets. Stricter Iran sanctions could tighten supply, but increased U.S. production and a stronger dollar may cap price gains. Investors should stay alert to policy changes affecting energy production and global supply-demand balance.
Boeing, Airbus to Share Taiwan’s China Airlines Jet Order
China Airlines is nearing a split decision on a $4 billion order for up to 20 long-range jets between Boeing’s 777X and Airbus’s A350-1000. The timing is politically sensitive, following Trump’s re-election. Taiwan values this deal not only for fleet expansion but as a show of strong U.S. ties. Boeing and Airbus both declined to comment as China Airlines’ board prepares to finalize the decision, with freighter orders still pending.
Investment Insight:
This deal illustrates the intersection of politics and global manufacturing. For Boeing and Airbus, it secures orders but also highlights how geopolitical shifts impact market positioning. Investors should observe U.S.-Taiwan relations for potential shifts in future aviation deals.
Market Price:
- Boeing (BA): $150.98
- Airbus (AIR.PA): €143.00
Clean Energy Stocks Plunge After Trump Win: Buying Opportunity?
Clean energy stocks faced a sharp sell-off after Trump’s re-election, as markets responded to expectations of pro-fossil-fuel policies. Solar and wind companies fell, with investors fearing policies that could favor traditional energy sources. Despite Trump’s stance, analysts believe Biden’s Inflation Reduction Act’s renewable subsidies are likely to persist, presenting possible buying opportunities. Experts argue that structural drivers like technological advancements will sustain the clean energy shift.
Investment Insight:
The clean energy sell-off may be overdone, with potentially oversold stocks offering value. Long-term fundamentals of renewable energy remain strong, and strategic investors might consider quality names like First Solar and NextEra Energy at attractive valuations.
Market Price:
- First Solar (FSLR): $196.70
- NextEra Energy (NEE): $74.58
Stocks Rally as Fed Cuts Rates and Russia-Linked Shares Surge on Trump’s Win
U.S. stocks continued their post-election rally as the Federal Reserve cut rates by 25 basis points. The Nasdaq hit a record high, up 1.5%, while the S&P 500 gained 0.8%. Optimism surrounding Trump’s pro-business policies is fueling market momentum. Fed Chair Jerome Powell emphasized a data-driven approach, despite inflation remaining above target levels. Russia-linked stocks surged on speculation that Trump may pursue a peace deal in Ukraine, with Raiffeisen Bank International, OTP Bank, and Enka Insaat showing significant gains.
Investment Insight:
The Fed’s rate cut, coupled with Trump’s re-election, is fueling optimism in both U.S. and Russia-linked equities. However, investors should consider inflation risks and geopolitical uncertainties, particularly in relation to the Ukraine conflict, when balancing portfolio positions.
Market Price:
- Nasdaq Composite: $19,269.46
- S&P 500: $5,973.10
Conclusion:
The market’s response to Trump’s re-election brings both challenges and opportunities across energy, clean tech, and U.S. and emerging markets. Staying informed about evolving fiscal policies and geopolitical dynamics will be essential for navigating this complex landscape. As always, our team is here to provide insights and support as you evaluate potential portfolio adjustments.
Upcoming Dates to Watch:
- November 13, 2024: U.S. Consumer Price Index (CPI) data release
- November 14, 2024: Eurozone Q3 GDP report release
- November 20, 2024: U.S. Federal Open Market Committee (FOMC) meeting minutes
Find below some of our Buy/Sell Recommendations. Balfour Capital Group is a distinguished global boutique investment management firm with $400 million AUM and over 1000 Clients.
Disclaimer: This post provides financial insights for informational purposes only. It does not constitute financial advice or recommendations for investment decisions.