Markets Last Week - 29/11/2024

Small-caps Hit Record Highs

The Russell 2000 Index reached a new intraday high, alongside record highs for the Dow Jones Industrial Average, S&P 500, and S&P 400 MidCap Index. Markets closed Thursday for Thanksgiving and had shortened hours Friday.

Domestic Policy and Trade Tariffs

President-elect Donald Trump’s nomination of hedge fund manager Scott Bessent as Treasury secretary was well-received for his balanced approach. However, Trump’s announcement of tariffs on imports from Mexico, Canada (25%), and China (10%) negatively impacted automakers like General Motors, whose stock fell nearly 9%. Broader markets remained resilient, buoyed by a cease-fire between Israel and Hezbollah.

Economic Data Highlights

Personal income and spending exceeded expectations, while pending home sales showed strong gains. In contrast, the manufacturing sector underperformed, with durable goods orders missing forecasts. Long-term Treasury yields fell, influenced by optimism over Bessent’s nomination.

Mortgage Approvals up but Consumer Demand Weakening

According to the Bank of England (BoE), mortgage approvals for house purchases in the UK reached their highest point since August 2022, this is a key indicator for future borrowing. However, signs of weaker consumer demand was reflected by other indicators. The BoE noted that consumer credit growth had slowed to its lowest rate in nearly two years. Meanwhile, the Confederation of British Industry’s distributive trades survey highlighted a steeper-than-expected decline in November’s retail sales volumes and reported the retail sector’s poorest confidence levels in two years.

Stock Market Performance

The STOXX Europe 600 Index ended higher despite mixed performances across major indexes. Germany's DAX rose 1.57%, while Italy’s FTSE MIB and France’s CAC 40 declined.

Inflation and Economic Data

Eurozone inflation accelerated to 2.3% in November, though core inflation remained steady at 2.7%. German retail sales fell sharply, but the labour market showed resilience. In France, political instability deepened as the government adjusted its budget to avoid a no-confidence vote. In the UK, mortgage approvals rose, but retail sales volumes dropped.