The record-breaking stock rally paused last week as investors digested what the new US administration will do first. Will tariffs take several months to be enacted or will they come from day one?  Eyes will be on the earnings season, which is nearing an end, with heavyweight megacap Nvidia reporting after the US closing bell on Wednesday. The near 200% surge in the stock price has raised the bar quite high for more earnings outperformance. Consensus sees third quarter revenue increasing by over 80% to $32.9 billon. A slip-up would hit the indices hard, due to the megacap’s hefty weighting.

In general, financial markets have continued to assess the implications of a second Trump presidency, attempting to ascertain version 2.0’s priorities through appointment announcements for the incoming administration. The dollar has continued to rally strongly with a seven-week win streak but is now looking stretched. Treasury yields have also risen as a Republican majority, albeit a slim one, was confirmed for the House of Representatives. That gives President Trump more freedom to implement his agenda, centred around lowering taxes, deregulation and reducing immigration. Nominees for Treasury Secretary and confirmation of the Trade Representative will be watched this week.

There’s no top tier US data to move bets on the December FOMC meeting. This swung closer to a coin flip after Fed Chair Powell’s relatively hawkish comments pointing to a more gradual path of policy easing. Global PMIs will be assessed to see if manufacturing is showing more signs of bottoming out. The euro could very much do with some cheer after slumping around 5% from more than one -year highs in September. The key long-term low from October 2023 sits at 1.0448. Investors are betting on a growth hit to Europe that will force the ECB to cut rates more aggressively, just as US growth strengthens.

In Brief: major data releases of the week

Tuesday, 19 November 2024

– Canada CPI: Annual inflation slowed more than expected to 1.6% in September. That was mainly on cheaper gasoline, but indicators of underlying price pressures held steady. USD/CAD recently hit highs last seen in 2020, with around a one in three chance of a 50bps BoC rate cut in December.

Wednesday, 20 November 2024

– UK CPI: The October inflation measures are set to tick higher, with the headline rising above 2%, from 1.7% in September. This is due to an approximate 10% jump in household energy bills. Core is likely to remain steady at 3.2% while key services inflation sticks around the 5% level. There is little chance of a December BoE rate cut.

Friday, 22 November 2024

– UK Retail Sales: Sales activity is seen easing back with the reception to the UK Budget in focus. Rising energy bills may also hamper activity. But improving real wages are expected to help the consumer and keep retail spending solid.

– Global PMIs: European November flash PMIs are expected to signal a small uplift in the beleaguered manufacturing sector. Services in all regions are doing the heavy lifting for economies and remain in expansionary territory. This will be the first survey data since the Trump victory in the US elections.