Global stock markets have experienced a second consecutive day of downturns as U.S. Treasury yields rise once again. Investors are closely watching the upcoming U.S. inflation data release, which could influence the Federal Reserve's policy relaxation measures. U.S. stock futures are showing declines, with Dow Jones Industrial Average futures dropping 0.27%, S&P 500 futures falling 0.21%, and Nasdaq futures down 0.24%. European markets also saw minor declines, including Germany's DAX down 0.08% and the UK's FTSE 100 down 0.14%. Meanwhile, oil prices have seen a slight increase, with WTI crude up 0.26%.
Recent U.S. election results continue to have a global impact, leading to mixed performances in stock markets. Concerns are rising over President-elect Trump's trade policies and key appointments, potentially causing market volatility. The MSCI World Index (excluding the USA) has recorded its worst single-day performance since early August's global market turmoil. Emerging market currencies have dropped over 1% since the election, nearly erasing gains made this year.
Traders are assessing Trump's cabinet picks, which are expected to prioritize his "America First" policies affecting trade, national security, and the economy. The bond market has been volatile, with U.S. Treasury yields surging after the Veterans Day holiday. The benchmark 10-year yield hit 4.42%, while the 2-year yield reached 4.34%. Since Trump's re-election, yields have increased significantly due to anticipated tax cuts and trade policies that may increase government borrowing and fiscal deficits.
Analysts suggest that with Republicans gaining majority control in Congress, further market volatility is possible. Expectations are for elevated inflation due to policy changes under the new administration, potentially limiting the Fed's rate cut options in the coming year. The CME Group's FedWatch Tool indicates a 62% likelihood of a 25 basis point rate cut in the next Fed meeting.
Rising treasury yields have driven stock market growth, with S&P 500 up nearly 5% since Trump's victory. Notably, Bridgewater co-CIO Karen Karniol-Tambour remarked on the strong growth prospects for the U.S. economy under the current administration, affirming the value of U.S. stocks despite potential challenges.
There is a prevailing pessimistic outlook for oil prices, with some analysts predicting a significant decline to as low as $40 per barrel by 2025 due to expected supply surpluses.
Key stock movements include Rivian up more than 11.7% pre-market, Spotify up 6.5% pre-market, and Rocket Lab up 28% pre-market with strong Q3 earnings. Other notable movements include JD.com, Bilibili, and Li Auto with gains reported before the market opens.
