S&P 500 hits record above 6,000 points on Trump win

New York/London — The US S&P 500 zoomed past 6,000 points on Friday to a new record while Treasury yields retreated, as investors again cheered Donald Trump’s decisive victory, though disappointment about China’s latest fiscal support dampened the mood elsewhere.

A day after the Federal Reserve delivered a quarter-point rate cut, as anticipated, the focus returned to the fallout of Tuesday’s US presidential election and headlines out of Beijing.

The offshore yuan weakened, while US-listed shares of Chinese firms and China exposed-sectors in Europe sank as investors took in news that China’s stimulus did not directly inject money into the struggling economy.

But investors on Wall Street shrugged off frustration about the lack of a Chinese fiscal bazooka and bought US stocks. The S&P 500 index climbed to an intraday high of 6,012.45 points before pulling back to finish up 0.4%. The Dow Jones industrial average climbed 0.6% and the Nasdaq composite ended flat.

The S&P 500 and the Dow had their best week in a year, while the Nasdaq had its best week in two months.

Shares of electric carmaker Tesla, the CEO of which, Elon Musk, became one of Trump’s biggest supporters in the last leg of his re-election campaign, shot up 8.2%, catapulting its market capitalisation to $1-trillion for the first time since 2022.

Nicholas Colas, a co-founder of DataTrek Research, said there were several reasons for buying US stocks: “The Fed is cutting rates, and the US economy is still strong.”

Lighter regulation

In addition, the Republican party won not only the White House last week, but also control of the Senate, and may win control of the House of Representatives — a similar scenario, Colas said, to the November 2016 election outcome that preceded the S&P 500’s 22% gain in 2017.

Investors are betting that a Trump administration will bring lighter regulation and tax cuts that could boost the US economy.

Outside the US the mood was more subdued. The pan-European Stoxx 600 lost 0.7%, while a MSCI index for world stocks was flat after hitting a record high on Friday. Still, the index for world stocks had its best week in three months.

“What you are going to get because of the clean sweep is a mandate to improve the US economy. So, taxes will come down, bureaucracy will ease and regulation will become lighter,” said Guy Miller, chief markets strategist at Zurich Insurance Group.

“Between now and year-end, there is a tailwind for US stocks. The US market has potential,” he said.

Germany’s DAX stock index fell 0.8% a day after posting its best daily performance of 2024 so far, helped by expectations that Germany could scrap its debt brake.

China unveiled a ¥10-trillion yuan ($1.40-trillion) debt package to ease local government financing strains and stabilise flagging economic growth.

Finance minister Lan Fo’an said more stimulus was coming, with some analysts saying Beijing may not want to fire all its financial weapons before Trump takes over officially in January.

Yuan fell

Mainland blue chips fell 1%, a day after rising 3%. Hong Kong’s Hang Seng also slid in a sign of some caution before the announcement.

The offshore Chinese yuan fell 0.7% to 7.2011 per dollar. China-exposed European luxury and mining stocks each fell more than 3%.

US Treasury yields fell after Fed chair Jerome Powell on Thursday signalled continued, patient policy easing.

The Fed’s rate cut followed a quarter-point cut from the Bank of England and a large, half-point cut by Sweden, also on Thursday.

Ten-year Treasury yields fell 8.3 basis points to 4.343%, reversing sharp rises after the US election result.

Powell said Tuesday’s election result would have no “near-term” impact on US monetary policy.

“The Fed pointed to a more uncertain economic outlook and inflation remaining elevated,” said Mahmood Pradhan, head of global macroeconomics at the Amundi Investment Institute.

“With a likely change in policy direction under the new administration, we expect a more uncertain and measured pace of easing next year.”

The dollar index, which measures the currency against six major peers, rose to 104.91, after a 0.7% drop on Thursday, its biggest since August 23. On Wednesday, it soared 1.53%, the most in over two years, a sign of increased volatility as investors assess the new Trump administration’s policies.

The euro and sterling both fell against the dollar, while the dollar slipped 0.3% to ¥152.46.

Bitcoin was trading near record $80,000 on Sunday after hitting it earlier in the session, following Trump's decisive victory. Bitcoin, the world’s biggest and best-known cryptocurrency, is up 65.4% from the year’s low of $38,505 it hit on January 23. Trump has vowed to make the US “the crypto capital of the planet”.

After a roller-coaster week, gold fell 0.9% to $2,683.87. It slumped more than 3% on Wednesday, but bounced 1.8% overnight. Last week it surged to an all-time high of $2,790.15.

Brent crude oil futures pared losses during London trade and were last down 2.1% at $74.01, US West Texas Intermediate crude fell 2.6% to $70.45.

Reuters