Pictet Group
Weekly house view | The Trump put
The week in review
US equities remained in the ascendant last week, buoyed by continued optimism around the policies of the president elect. Although one of the leading US retailers reported disappointing sales figures, the results of the world’s largest AI-related chipmaker showed continued strong demand for its products, helping the S&P 500[i] to a 1.7% gain on the week (in USD). Meanwhile, the small-cap Russell 2000[ii] surged 4.5%, in part on expectations of tax cuts. Despite poor business activity data, the Euro Stoxx 600[iii] also rose (by 1.2% in euros). But emerging-market indexes treaded water, dragged down by China. Bond markets diverged: while two-year US Treasury yields rose on fears of a resurgence of inflationary pressures, their euro equivalents dropped. In currencies, the euro fell to a two-year low against the US dollar, largely due to concerns about economic weakness and the threat of a tariff war with the US. Gold and oil prices rebounded last week, largely because of growing fears of escalation in the Russia-Ukraine conflict.
Quote of the week
“He will help me usher in a new golden age for the United States,” Donald Trump said of Scott Bessent, his nominee for Treasury Secretary.
Key data
The S&P Global’s flash estimate of the composite purchasing managers’ index (PMI) for the euro area fell to 48.1 this month from 50 in October. Both manufacturing and services activity contracted, pointing to a softening of economic growth in Q4. The flash composite PMI for the UK also declined. The flash composite PMI for the US rose to 55.3 in November from 54.1 in October, with improvements in both the manufacturing PMI (to 48.8) and services PMI (to 57). The University of Michigan’s survey of consumer sentiment hit an eight-month high of 71.8 this month, while consumers’ one-year inflation expectations were steady at 2.6%. Japanese exports rose 3.1% in October on the same month a year before, rebounding from a 1.7% drop in September. Japan’s core consumer price index rose an annual 2.3% in October, up from 2.1% a month before.
[ii] Source: Pictet WM AA&MR, Thomson Reuters. Past performance, Russell 2000 (net 12-month return in USD): 2019, 25.5%; 2020, 20%; 2021, 14.8%; 2022, -20.4%; 2023, 16.9%.
[iii] Source: Pictet WM AA&MR, Thomson Reuters. Past performance, STOXX Europe 600 (net 12-month return in EUR): 2019, 27.6%; 2020, -1.5%; 2021, 25.5%; 2022, -10.1%; 2023, 16.5%.