There is nervousness in the world’s markets. The week closes with widespread falls in global stock markets, driven by concerns about a possible shutdown of the United States government and new trade tensions led by the president-elect Donald Trump.
This context generates uncertainty in the markets, which They also face the expectation of key inflation data in the US that could influence the Federal Reserve’s decisions in 2025.
Government shutdown and political tensions in the US
The lack of consensus in the House of Representatives on a Trump-backed spending bill highlighted a volatile political landscape. Dozens of Republicans challenged the president, raising the odds of a government shutdown, a situation that historically negatively impacts financial markets.
Trump also warned of imposing tariffs to the European Union if they do not increase their purchases of oil and gas from the United States. In a post on Truth Social, he stated: “I told the European Union that they must make up their tremendous deficit with the United States by purchasing our oil and gas on a large scale. Otherwise, TARIFFS all the way!! !”
Impact on global markets
European stocks fall 1%, with a cumulative weekly loss of 3%. On Wall Street, stock futures pointed to a lower opening, with falls of up to 1.1%. The prospects of a 0.2% monthly rise in the basic personal consumption spending index in the US keep investors attentive, since a higher figure could reduce expectations of monetary easing.
In the bond market, 10-year Treasury yields topped 4.5%, marking a fourth consecutive year of losses in this segment.
Currency and commodity movements
The dollar fell 0.3% against a basket of currencies, although it remains close to its maximum in two years. For its part, the euro gained 0.2%, trading at $1.03925. The yen showed a significant drop following comments from Bank of Japan Governor Kazuo Ueda, who adopted a cautious tone on the economic outlook.
In commodities, WTI oil fell 0.6% to $68.96 per barrel, while gold rose 0.5% to $2,605 per ounce.
Global monetary policies
Meanwhile, several central banks, including those of the United Kingdom, Japan and Australia, held interest rates steady. Others, such as Switzerland and Canada, implemented significant cuts, following the trend of the European Central Bank and the Swedish Riksbank.
Short-term outlook
With political uncertainty in the US, potential trade retaliation and key inflation data on the horizon, markets could experience additional volatility in the coming weeks. The Trump administration’s actions on trade and the decisions of the Federal Reserve will play a crucial role in the global financial landscape by 2025.
Later on Friday, an indicator of US inflation, core personal consumption spending, will be released. Forecasts are focused on a monthly rise of 0.2% for November, and any upside surprise could lead markets to further reduce bets on an easing of US monetary policy next year.
These prospects have had a significant impact on the Treasury market, where benchmark 10-year yields surpassed the key 4.5% level for the first time since May, and Treasuries are headed for a fourth year consecutive losses.
The central banks of the United Kingdom, Japan, Norway and Australia kept their interest rates stable, while Switzerland and Canada applied cuts of 50 basis points in their last meetings of the year. The Swedish Riksbank reduced its official interest rate by 25 basis points, as did the European Central Bank last week.
The dollar was down 0.3% at 108.12, but held near its two-year high of 108.43. The euro gained 0.2% to $1.03925.
The dollar fell 0.4% against the yen, to 156.87 yen. The yen had fallen 1.7% overnight, after the Bank of Japan held rates steady and Governor Kazuo Ueda struck a bearish tone, saying he would take some time to assess wage prospects and the impact of Trump’s policies.
Oil prices fell on Friday, with US West Texas Intermediate down 0.6% to $68.96. Gold rose 0.5% to $2,605 an ounce.
Source: Ambito
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