Market Commentary: Wednesday 6th November

The "Trump Trades" are on: Bitcoin has broken $75,000, 10-year yields rose by as much as 19 basis points to a four-month high of 4.47%, DJT - Trump Media and Technology Company is up 40%, the S&P is up 1.2%, and the Hang Seng is down 2.6% on protectionist promises. The latest results show Trump winning both North Carolina and Georgia, with Republicans gaining control of the U.S. Senate. The dollar is stronger across the board, with EUR/USD opening at 1.0740, approaching major support at 1.0666 (June low), then 1.0601, the YTD low. Cable opens at 1.2870 and USD/JPY at 154.00.

What has driven this political shift? Exit polls suggest economic concerns are top of mind, but historically, the S&P 500 has tended to rise after elections, regardless of the balance of power in Washington. The focus now will be on fundamentals: the Fed remains accommodative and is expected to cut rates again this week, providing a strong backdrop for stocks. Time to add them to those pensions…

As for today, we have German factory orders for September and the final services and composite PMIs for October in the Euro Area. ECB speeches are expected from President Lagarde, Vice President de Guindos, and board members Escriva, Vujcic, and Villeroy.

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