Overview
On Thursday, U.S. and European equities made modest gains as the Federal Reserve’s anticipated 25-basis-point rate cut went into effect, lowering the fed funds range to 4.5%-4.75%. The S&P 500 rose 0.74% to close at 5,973.10, the Nasdaq climbed 1.51% to 19,269.46, while the Dow Jones remained relatively flat. In Europe, the Stoxx 50 saw a 1.1% gain, closing at 4,851, driven by luxury and tech sector advances. Investors appear optimistic about the potential economic effects of President Trump’s second-term policies, which could benefit key industries.
U.S. Market Highlights
- S&P 500: Rose by 0.74%, closing at 5,973.10.
- Nasdaq: Increased by 1.51%, reaching 19,269.46.
- Dow Jones: Largely flat with minimal movement.
European Market Performance
The Stoxx 50 advanced by 1.1% to close at 4,851, supported by gains in the luxury and technology sectors. Notable contributors included LVMH, Hermes, SAP, and Spain’s BBVA, as investor sentiment improved in anticipation of Trump’s economic policies.
Asian Market Trends
Asian equities rallied on Friday, tracking Wall Street gains from the Fed’s rate cut and with additional optimism around potential new Chinese fiscal stimulus. China’s CSI 300 and the Shanghai Composite led regional growth, while Japan’s Nikkei and Australia’s ASX 200 also posted gains. President Trump’s re-election has removed some political uncertainty, though the region remains cautious due to possible trade policy challenges.
Oil Market Movements and Global Factors
Oil prices dipped slightly on Friday but remained on track for weekly gains. Contributing factors included:
- OPEC+ decision to delay planned production increases.
- Potential U.S. supply disruptions due to Hurricane Rafael.
- Continued Middle East conflict.
- Prospective fiscal stimulus measures from China, potentially boosting demand as the world’s largest oil-importing nation.
Central Bank Developments
Federal Reserve
At its November meeting, the Federal Reserve lowered its target range for the federal funds rate by 25 basis points to 4.5%-4.75%, following a 50-basis-point reduction in September. Chair Powell emphasized a data-driven, meeting-by-meeting approach, leaving open the possibility of a December rate pause without making a commitment. He also stated that President-elect Trump’s win would not affect near-term policy decisions.
Bank of England
The Bank of England also cut its Bank Rate by 25 basis points to 4.75% on Thursday, with 8 of 9 members of the Monetary Policy Committee (MPC) voting in favor. This decision aligns with slowing inflation trends, as September’s inflation rate hit a three-year low of 1.7%, with services inflation at 4.9%. The Labour Party’s budget is expected to increase inflation by 0.5% and GDP by 0.75% at peak impact.
Key Corporate Updates
Technology and Consumer Goods
Taiwan Semiconductor Manufacturing Co. (TSMC) reported a year-on-year sales growth of 29.2% for October, slightly down from nearly 40% in the previous month. Although AI chip demand remains strong, other sectors like PCs, smartphones, and consumer electronics continue to face weak demand, potentially impacting TSMC’s overall growth outlook.
Amazon is reportedly considering a second significant investment in AI startup Anthropic after a $4 billion investment last September. Anthropic utilizes Amazon’s cloud services and Nvidia-designed AI chips to train its AI models. Alphabet also invested in the company, pledging a further $1.5 billion following an initial $500 million contribution.
Retail and Financial Forecasts
Elf Beauty is expanding its reach through a partnership with Dollar General, targeting rural markets and budget-conscious consumers. The brand raised its annual sales and profit forecasts as it captures new customers, positioning itself against competitors like Estee Lauder and L’Oréal.
CRH Plc reported a strong third quarter with a 12% rise in EBITDA to $2.454 billion, supported by asset gains and cost control despite market challenges. The company expects organic EBITDA growth of 10% for the year, driven by robust U.S. and European sales. UBS commended CRH’s steady dividend, share buybacks, and acquisition strategy.
Tech and Consumer Stocks
Airbnb posted Q3 revenue of $3.73 billion, slightly exceeding expectations, though profit missed at $2.13 per share due to increased marketing expenses in regions like Brazil and Japan. Bookings were notably strong in Asia-Pacific and Latin America. Airbnb expects Q4 revenue to rise 8-10% year-over-year.
Novo Nordisk shares dropped over 1% to a nine-month low after releasing a 2025 growth outlook that fell below market expectations. Despite strong sales for its Wegovy product, the company’s high valuation has made it susceptible to hedge fund action and market corrections.
Analyst and Market Reactions
Financial Sector Updates
Bank of America raised its price target for Tesla from $265 to $350, retaining a “Buy” rating. The bank suggests that potential regulatory support under Trump’s administration may accelerate Tesla’s Robotaxi rollout and enhance its position in the U.S. EV market.
Baird downgraded JPMorgan to “sell” due to valuation concerns after a 43% share increase this year. Despite solid performance, Baird noted that the bank may be “over-earning” on net interest margins, advising caution as management remains conservative with buybacks at current prices.
Jefferies downgraded Palantir from Hold to Underperform, citing overvaluation concerns after a recent rally. High retail ownership and insider selling could drive volatility if sentiment shifts.
Other Market Performances
Motorola Solutions raised its 2024 revenue and profit forecasts, anticipating an 8.25% increase in revenue. Increased security investment demand from clients, including the U.S. and U.K. governments, supported Motorola’s robust Q3 earnings.
Pinterest shares dropped over 12% in after-hours trading following a weaker-than-expected Q4 revenue outlook, despite strong ad growth seen by larger firms like Meta and Alphabet. The company announced a $2 billion share buyback and outlined new AI-driven product initiatives, which will raise expenses.
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