The Dow Jones Industrial Average closed at a new record on Friday, ending the week 1.96% higher, while the S&P 500 and the technology-heavy Nasdaq each added about 1.7%. That marks a turn from last week, when Wall Street’s postelection rally stalled.
The market gains were despite continuing uncertainty around the incoming Trump administration’s policies and escalating geopolitical tensions with threats of nuclear war rising over Ukraine. The escalation followed decisions by outgoing US President Biden and, reportedly, UK PM Starmer to allow Ukraine to fire American and British long-range missiles to strike targets within Russia.
In response, Russia lowered the threshold for its use of nuclear weapons. The new doctrine allows for a nuclear response to what it deems aggression by non-nuclear states that are supported by other nuclear powers. On Wednesday, Reuters reported that Russian President Vladimir Putin is open to discussing a Ukraine ceasefire deal with President-elect Trump but ruled out making any major territorial concessions and insisted that Kyiv abandon ambitions to join NATO. By Thursday, Russia ratcheted up pressure by using a long-range ballistic missile capable of carrying a nuclear warhead for the first time in its conflict with Ukraine.
During the week President-elect Donald Trump announced the nomination of Howard Lutnick, CEO of Cantor Fitzgerald and co-head of the president elect’s’ transition team, to lead the US Department of Commerce. Lutnick had been in the running for Treasury secretary before being appointed to head the Commerce Department, where he will play a pivotal role in tariff policy. On Friday Trump followed with his intention to nominate hedge fund executive Scott Bessent as his Treasury secretary, Bessent, 62, will be both the U.S. fiscal watchdog as well as a key official to help Trump enact his ambitious economic agenda.
The euro slumped to a two-year low against the dollar on Friday morning after preliminary purchasing managers’ indices for November contracted more than expected. The data fuelled concerns that the European economy is stagnating and increased expectations that the European Central Bank will cut rates by a half-point when it meets on 12 December. The pan-European STOXX Europe 50 Index ended 0.12% lower for the week.
In the UK, inflation accelerated more than expected in October mainly on the back of higher household energy bills. The year-over-year change in consumer prices increased from 1.7% in September to 2.3%—the highest since April and above economists’ forecasts of 2.2%. The UK’s FTSE 100 Index advanced 2.46% for the week.
In Asia, Japan’s benchmark Nikkei 225 index lost ground over the week, falling 0.93% with heightened geopolitical tensions denting risk appetite. With the timing of the Bank of Japan’s (BoJ) next interest rate hike (likely in December or January) still finely balanced, the yield on the 10-year Japanese government bond (JGB) approached 1.1%, nearing a 13-year high.
Chinese equities declined for the week as concerns about the incoming Trump administration curbed risk appetites. The Shanghai Composite Index fell 1.91%, while in Hong Kong, the benchmark Hang Seng Index lost 1.01%.
Market Moves of the Week:
South African consumer inflation slowed to 2.8% year on year in October from 3.8% in September, Stats SA said on Wednesday, with fuel and transport prices leading the way. This was the lowest read since 2.2% in June of 2020, when demand pressures in the economy were impacted by lockdowns to contain the Covid-19 pandemic.
Following the more bullish inflation print, the South African Reserve Bank (SARB) unanimously decided to lower its policy benchmark by 25 basis points Thursday to 7.75%. This is the Sarb’s second consecutive 25bp cut, which will see SA’s prime interest rate of commercial banks drop to 11.25%.
The SARB only marginally tweaked its growth and inflation forecasts. It marginally increased its 2025 growth forecast and sees the growth risks as biased upwards in the medium term. Its inflation forecasts were marginally lowered in the near term (till mid- 2025) and marginally increased thereafter.
SARB Governor Lesetja Kganyago in his final monetary policy press conference of the year, declined to comment directly on the US election but said that additional trade protectionism could have implications for interest rates.
The rand has lost almost 4% against the dollar since the Nov. 5 U.S. election, as emerging market currencies have come under pressure, as investors bet Trump’s pledge to raise tariffs and cut taxes will prompt the Federal Reserve to lower rates less than it had forecast, boosting the US currency.
On the Johannesburg Stock Exchange, the JSE All Share Index gained just over 2% for the week, with resource counters rebounding strongly (+5.34%). The Gold price was also up strongly on the week, gaining nearly 6%, as investors sought safe-haven assets as Russia-Ukraine tensions escalated.
By Friday’s close, the rand was trading at R18.10 against the US dollar.
Chart of the Week:
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