Global stock markets are on track for their best week since August, with investor sentiment buoyed by U.S. President Donald Trump’s decisive election victory and a fresh round of fiscal stimulus from China aimed at supporting its struggling economy.
Following the U.S. Federal Reserve’s anticipated quarter-point interest rate cut, market attention shifted to the aftermath of Tuesday’s U.S. elections and the latest developments in China.
Wall Street’s optimism was fueled by expectations that Trump’s win would lead to lighter regulations and tax cuts, potentially giving a boost to the U.S. economy.
However, while the week overall has been strong for stocks, with the S&P 500 index up more than 4%, some caution crept in on Friday.
U.S. stock futures dipped slightly, and Europe’s STOXX 600 index fell by 0.7%, signaling some market hesitation. The offshore yuan weakened, and shares of U.S.-listed Chinese companies, as well as China-exposed sectors in Europe, saw declines.
“What you are going to get because of the clean sweep – is a mandate to improve the U.S. 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 U.S. stocks. The U.S. market has potential.”
Meanwhile, China unveiled a 10 trillion yuan ($1.40 trillion) debt package to help ease local government financing pressures and stabilize its weakening economy.
China’s Finance Minister, Lan Foan announced that additional stimulus measures are on the way, though some analysts suggest Beijing may be cautious in fully deploying its financial resources until U.S. President-elect Donald Trump officially takes office in January.
