Trump pledges to cut taxes, pay down the debt and stop the wars

EU mid-market update: Market melt up as traders rejoice at Trump's return to the Presidency; Trump pledges to cut taxes, pay down the debt and stop the wars.

Notes/observations

- Donald J Trump wins US election by electoral and popular vote (awaiting official call), spiking a heavy bid for US dDollar, equities and crypto. Oil pulls back. Trump seen as pro-business, anti-war, supporter of tariffs and overall ‘America first’; Senate goes to Republicans, still waiting for confirmation of majority in House.

- Elon Musk related stocks soar (very public supporter of Trump), Tesla up >12% in premarket; ‘Musk trade’ attributed to hopes his prominent position in new Department of Govt Efficiency will influence policy in his favor.

- US Treasury yields climb as analysts predict Trump policies on tax cuts, tariffs and immigration will cause resurgence in inflation; Reminder FOMC decision tomorrow, market will be watching for any fresh commentary from the Fed on impact of another Trump Presidency.

- Some particular stocks to watch in coming sessions for any impact from Trump’s victory: CME, CBOE (potentially lighter regulation, more trading volumes), NEE, FSLR, PLUG (potential clean energy subsidies roll back), BABA, PDD (potential new China tariffs), AEO, LULU, GPS, FIVE (potential lower taxes and increased consumer spending), NVDA, MRVL, QCOM (potential curbs on China investment), UNP, NSC, JBHT (freight demand driven by tariffs), META, GOOGL (regulatory scrutiny may persist), LMT, NOC, GD, RTX (potentially increased Pentagon spending, despite pledges to stop wars).

- European Services PMIs surprised to upside with beat from Italy and upwards revisions from France, Germany and Euro Zone; Spain disappointed but continues 14th month of expansion.

- Notable EU earnings from Novo Nordisk, Credit Agricole, Commerzbank, UniCredit, Puma, Pandora and Marks & Spencer.

- Upcoming US Premarket: OC, COR, PRGO, CVS, ODP, AEP, JCI, TRMB, TEVA, SMG, SRE, JLL.

- Asia closed mixed with Hang Seng underperforming -2.2%. EU indices are -1.5% to +1.5%. US futures are +1.8-2.7%. Gold -0.7%, DXY +1.4%; Commodity: Brent -1.1%, WTI -1.1%; Crypto: BTC +7.0%, ETH +7.2%.

Asia

- New Zealand Q3 Unemployment Rate: 4.8% v 5.0%e.

- New Zealand Q3 Employment Change Q/Q: -0.5% v -0.4%e; Y/Y: -0.4% v +0.1%e.

- New Zealand Q3; Avg Hourly Earnings Q/Q: No est v 1.1% prior; Private Wages (including overtime) Q/Q: 0.7%e v 0.9% prior; Participation Rate: 71.5%e v 71.7% prior.

- Japan BOJ Sept Minutes (2 decisions ago) noted that many members noted that uncertainties had recently heightened.

- Japan Oct Final Services PMI: 49.7 v 49.3 prelim (confirmed 1st contraction in 4 months).

Global conflict/tensions

- Israel PM Netanyahu fired Defense Min Gallant, citing differences over the war; Appoints Foreign Min Israel Katz for position.

Europe

- Times Shadow MPC believed BOE should lower Bank Rate (7-2 vote) to revive consumer and business confidence.

Americas

- Trump projected to return as US President, Republicans regain control of Senate.

- Bank of Canada (BOC) Oct Summary of Deliberations noted of 'increasingly confident' upward CPI pressures continued to weaken; Outsize rate cut appropriate considering soft labor market and considerable economic slack.

Energy

- Weekly API Crude Oil Inventories: +3.1M v -0.6M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +1.84% at 519.04, FTSE +1.33% at 8,280.74, DAX +0.98% at 19,441.75, CAC-40 +1.47% at 7,516.24, IBEX-35 -1.42% at 11,670.77, FTSE MIB +0.64% at 34,693.00, SMI +1.52% at 12,048.33, S&P 500 Futures +2.27%].

Market Focal Points/Key Themes: European indices open generally higher and advanced in wake of US election results; among sectors leading the way higher are health care and financial services; lagging sectors include utilities industrials; travel subsector seen boosted while automotive subsector seen impacted on prospect of Trump presidency; focus on remaining Congressional election results to be reported; earnings expected in the upcoming US session include Owens Corning, Cencora, Qualcomm and Gilead.

Equities

- Consumer discretionary: Puma [PUM.DE] -3.5% (earnings), Marks & Spencer [MKS.UK] +5.5% (earnings).

- Consumer staples: Ahold Delhaize [AD.NL] +7.5% (earnings).

- Energy: Orsted [ORSTED.DK] -9.0% (traders weigh Trump's victory impact on the European renewable-energy sectors).

- Financials: Credit Agricole [ACA.FR] -3.5% (earnings), Commerzbank [CBK.DE] -1.0% (earnings), Unicredit [UCG.IT] +1.0% (earnings).

- Healthcare: Novo Nordisk [NOVOB.DK] +8.5% (earnings), Siemens Healthineers [SHL.DE] +7.0% (earnings).

- Industrials: Rheinmetall [RHM.DE] +3.5% (traders weigh Trump's victory impact on the European renewable-energy sector), BMW [BMW.DE] -3.5% (final results).

- Technology: Wise [WISE.UK] +3.5% (earnings).

Speakers

- President-elect Trump stated that were going to help our country heal; It was a political victory and he will fight for every citizen.

- PVP-Elect J.D. Vance stated that country to lead the greatest economic comeback in US history.

- Czech Finance Ministry updated its quarterly economic outlook which maintained 2024 GDP growth forecast at 1.1% while cutting the 2025 GDP growth forecast from 2.7% to 2.5%. Projections maintained 2024 CPI forecast at 2.4% and kept 2025 CPI forecast at 2.3%.

- Iran Govt Spokesperson stated that Trump election victory is not a concern and won't change much.

- Malaysia Central Bank Policy Statement noted that the current level of OPR rate remained supportive of economy. Inflation expected to be manageable in 2025.

Currencies/fixed income

- The shift of US political landscape to the right has propelled the USD to 1-year highs as the world prepares for Trump 2.0 reign.

- Markets are pricing in renewed trade wars.

- The greenback was supports by surging US bond yields.

- EUR/USD tested the lower end of 1.07 before consolidating. Dealers noted that a Trump Presidency increased the growth risks in Europe as the incoming Administration policies could mean the ECB cutting interest rates "deep” into accommodative territory.

- USD/JPY tested above 154 overnight aiding by a 15bps jump in US 10-year bond yields. Market believes that Trump policies on immigration, tax cuts and tariffs would put upward pressure on inflation. The pair could test the 160 level and forcing the BOJ to consider hiking interest rates sooner.

- Bitcoin moved above the $74K level for fresh all-time highs as the community has long had a favorable view of Trump due to his relatively open stance on decentralized finance and cryptocurrencies.

Economic data

- (RU) Russia Oct Services PMI: 51.6 v 50.2e (4th month of expansion); Composite PMI: # v 49.8e.

- (MY) Malaysia Central Bank (BNM) left Overnight Policy Rate unchanged at 3.00% (as expected).

- (DE) Germany Sept Factory Orders M/M: 4.2% v 1.5%e; Y/Y: +1.0% v -2.1%e.

- (FI) Finland Sept Preliminary Trade Balance: +€0.3B v -€0.4B prior.

- (HU) Hungary Sept Industrial Production M/M: -0.7% v -0.7%e; Y/Y: -5.4% v -4.4%e.

- (AT) Austria Oct Wholesale Price Index M/M: +0.7% v -0.7% prior; Y/Y: -1.3% v -3.1% prior.

- (CZ) Czech Sept Industrial Output Y/Y: 3.9% v 2.4%e; Construction Output Y/Y: -7.1% v +0.4% prior.

- (CZ) Czech Sept Trade Balance (CZK): 21.3B v 22.3Be.

- (TW) Taiwan Oct CPI Y/Y: 1.7% v 1.8%e; CPI Core Y/Y: 1.6% v 1.7%e; PPI Y/Y: -0.7% v -0.5% prior.

- (ES) Spain Oct Services PMI: 54.9 v 56.6e (14th month of expansion); Composite PMI: 55.2 v 56.3e.

- (IT) Italy Oct Services PMI: 52.4 v 50.2e (10th month of expansion); Composite PMI: 51.0 v 50.2e.

- (FR) France Oct Final Services PMI: 49.2 v 48.3 prelim (confirmed 2nd month of contraction); Composite PMI: 48.1 v 47.3 prelim.

- (DE) Germany Oct Final Services PMI: 51.6 v 51.4 prelim (confirmed 8th month of expansion); Composite PMI: 48.6 v 48.4 prelim-49.4.

- (EU) Euro Zone Oct Final Services PMI: 51.6 v 51.2 prelim (confirmed 9th month of expansion); Composite PMI: 50.0 v 49.7 prelim.

- (IS) Iceland Oct Preliminary Trade Balance (ISK): B v -24.8B prior.

- (UK) Oct Construction PMI: 54.3 v 55.1e (7th month of expansion).

- (EU) Euro Zone Sept PPI M/M: -0.6% v -0.6%e; Y/Y: -3.4% v -3.4%e.

Fixed income issuance

- (IN) India sold total INR190B vs. INR190B indicated in 3-month, 6-month and 12-month bills.

- (DK) Denmark sold total DKK3.26B in 2033 and 2052 DGB Bonds.

- (SE) Sweden sold total SEK4.0B vs. SEK4.0B indicated in 2032 and 2035 bonds.

Looking ahead

- (PL) Poland Central Bank Interest Rate Decision: Expected to leave Base Rate unchanged at 5.75%.

- 05:30 (DE) Germany to sell combined €1.5B in 2041 and 2046 bunds.

- 06:00 (IE) Ireland Oct Unemployment Rate: No est v 4.3% prior.

- 06:00 (PT) Portugal Q3 Unemployment Rate: No est v 6.1% prior.

- 06:00 (BR) Brazil Oct FGV Inflation IGP-DI M/M: 1.6%e v 1.0% prior; Y/Y: 6.0%e v 4.8% prior.

- 06:00 (ES) ECB’s Escriva (Spain).

- 06:00 (CZ) Czech Republic to sell CZK0.5B in variable Aug 2043 bonds.

- 06:00 (CZ) Czech Republic to sell €500M in 6-month Bills.

- 06:00 (RU) Russia to sell OFZ Bonds.

- 07:00 (US) MBA Mortgage Applications w/e Nov 1st: No est v -0.1% prior.

- 07:00 (MX) Mexico Oct Vehicle Production: No est v 378.6K prior; Vehicle Exports: No est v 315.7K prior.

- 07:00 (UK) Weekly PM Question time in House.

- 08:00 (BR) Brazil Oct Services PMI: No est v 55.8 prior; Composite PMI: No est v 55.2 prior.

- 08:00 (BR) Brazil Oct Vehicle Production: No est v 230.0K prior; Vehicle Sales: No est v 236.3K prior; Vehicle Exports: No est v 41.6K prior.

- 08:00 (HU) Hungary Central Bank (MNB) Oct Minutes.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 09:00 (EU) ECB chief Lagarde.

- 09:30 (ES) ECB’s De Guindos (Spain).

- 09:45 (PL) Poland Central Bank (NBP) Policy Statement.

- 10:00 (CA) Canada Oct Ivey Purchasing Managers Index (seasonally adj): No est v 53.1 prior.

- 10:00 (CO) Colombia Sept Exports: $4.2Be v $3.8B prior.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 12:40 (CA) Bank of Canada (BOC) Rogers.

- 13:00 (BR) Brazil Oct Trade Balance: $4.6Be v $5.4B prior; Exports: $30.4Be v $28.8B prior; Imports: $25.7Be v $23.4B prior.

- 13:00 (US) Treasury to sell 30-Year Bonds.

- 14:10 (NZ) RBNZ officials in Parliament.

- 16:00 (NZ) New Zealand 3-Month Financial Statements.

- 16:30 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to raise Selic Target Rate by 50bps to 11.25%.

- 17:00 (CO) Colombia Central Bank Oct Minutes.

- 18:00 (KR) South Korea Sept Current Account Balance: No est v $6.6B prior; Balance of Goods (BOP): No est v $6.6B prior.

- 18:30 (JP) Japan Sept Labor Cash Earnings Y/Y: 3.0%e v 2.8% prior (revised from 3.0%); Real Cash Earnings Y/Y: 0.1%e v -0.8% prior (revised from -0.6%); Cash Earnings (Same Sample Base) Y/Y: 3.5%e v 3.5% prior (revised from 3.1%); Scheduled Full-Time Pay (Same Sample Base) Y/Y: 2.9%e v 2.8% prior (revised from 2.9%).

- 19:30 (AU) Australia Sept Trade Balance Sep (A$): 5.3Be v 5.6B prior; Exports M/M: No est v -0.2% prior; Imports M/M: No est v -0.2% prior.

- 21:00 (PH) Philippines Q3 GDP Q/Q: 1.6%e v 0.5% prior; Y/Y: 5.7%e v 6.3% prior.

- 21:00 (JP) Japan Oct Tokyo Avg Office Vacancies: No est v 4.6% prior.

- 22:00 (ID) Indonesia Oct Foreign Reserves: No est v $149.9B prior.

- 22:30 (JP) Japan to sell 6-Month Bills.

- 22:35 (JP) Japan to sell 10-Year JGB Bonds.

- 23:00 (TH) Thailand Central Bank to sell THB40B in 6-month bills.