Markets Rise On Trump's Treasury Pick, Corporate Deals

Global markets saw a positive shift as stocks and Treasuries rose in response to President-elect Donald Trump’s nomination of Scott Bessent as Treasury Secretary. Investors welcomed Bessent’s track record and his reputation for promoting economic stability, easing concerns about potential volatility and protectionist policies from the new administration.

In Europe, the Stoxx 600 index gained 0.3%, while US equity futures showed stronger gains, continuing the positive momentum from Asia. The yield on 10-year US Treasuries dropped six basis points to 4.34%, signaling increased demand for government debt. Meanwhile, the US dollar weakened, and Bitcoin rebounded from a weekend decline.

This shift in market sentiment marked a reversal of the so-called “Trump Trade” that had been defined by a surging dollar and a Bitcoin rally. The cooling enthusiasm around these assets comes as traders adjust expectations for the incoming administration’s fiscal policies, such as tax cuts and tariffs, which might keep interest rates elevated and provide support for the dollar.

Bessent, who leads macro hedge fund Key Square Group, has voiced support for Trump’s tax cuts and tariff policies but is expected to prioritize economic stability over aggressive political posturing. His nomination is seen as a positive development, calming concerns over the potential for heightened inflation, worsening trade tensions, and market volatility under Trump’s protectionist agenda.

“We have the Trump reflationary agenda with maybe someone in charge of the economy at the Treasury who is probably more gradualist,” said Vincent Juvyns, global market strategist at JPMorgan Asset Management, in an interview with Bloomberg TV. “US exceptionalism will to some extent remain in place on the economic front but also on the market front.”

Bloomberg’s Dollar Index fell the most in over two weeks, reversing the strong upward trend seen in recent weeks as traders bet on Trump’s fiscal policies, including trade tariffs and robust economic growth. The euro rose against the US dollar after ECB governing council member Francois Villeroy de Galhau emphasized that European Central Bank policy would evolve independently of the Federal Reserve.

Corporate deals also captured market attention, with UniCredit SpA announcing a €10 billion all-share offer for Banco BPM, signaling an active period of consolidation in the European banking sector. Banco BPM’s stock surged by 8.5%, while Commerzbank slumped 7.2%. UniCredit shares fell by 2.5%. Meanwhile, Anglo American Plc agreed to sell its steelmaking coal business to Peabody Energy for up to $3.78 billion as part of its ongoing restructuring, and shares of ITV Plc rallied by 9.5% following reports of acquisition interest.

Looking ahead, RBC Capital Markets strategist Lori Calvasina forecasted that the S&P 500 could rise to 6,600 by the end of 2025, a gain of 11%. Despite potential short-term pullbacks following the index’s 25% rally in 2024, Calvasina believes the market will benefit from continued economic growth, political stability, and relief from inflation.

Meanwhile, global oil prices fell as Israel signaled progress toward a ceasefire deal with Hezbollah in Lebanon. Gold prices also declined after a significant surge the previous week.

This week, traders in Asia are focusing on Japan’s inflation data, which could influence Bank of Japan policy decisions. The Reserve Bank of New Zealand is expected to cut interest rates on Wednesday, and a range of inflation and growth indicators will be released in Europe. The Federal Reserve’s November meeting minutes, along with consumer confidence and personal consumption expenditure (PCE) data, will offer further clues about the potential for rate cuts next year.