Optimism following Donald Trump’s victory gave way to doubt on financial markets last week.
Indeed, uncertainty about the evolution of the American economy now dominates, with the Republican candidate considering implementing customs duties, lowering taxes and deregulating the American economy, which could revive inflation. and provoke a return to the trade war with China in particular.
Especially since American inflation is not slowing down any further. Investors are nervous after the acceleration in American consumer prices in October, according to the CPI index, but also because of the PPI producer price index for October. The latter came out at a higher level than expected, at 2.4% over one year against expectations of 2.3%.
Moderation of monetary easing
On the other hand, the comments of Jerome Powell, the head of the American Federal Reserve (Fed), have cast doubt on the probability of a rate cut next December.
The prospect of further monetary easing may end sooner than expected due to growing inflation risks fueled by pro-growth policies and rising tariffs.
The American economy continues to show solid health, with GDP growth a little weaker than expected in the third quarter, at 2.8% at an annualized rate, but almost twice as high as in the euro zone.
Finally, the unemployment rate remains low, at 4.1%, despite very low job creation in October, due to hurricanes and strikes.
These elements have pushed up short-term bond rates. Thus, the 2-year US rate crossed the level of 4.30%.
Uncertainties in Germany
In Europe, Germany is the focus of attention due to the collapse of the ruling coalition and the resulting uncertainties weighing on Europe’s largest economy.
Chancellor Olaf Scholz thus announced that he was willing to hold a vote of confidence in Parliament before Christmas, although he had initially mentioned the month of January.
Feelings are currently very gloomy about Europe, plagued by numerous political and economic uncertainties in comparison with a still resilient American economy.
The arrival of Donald Trump at the White House suggests that the already fragile economy of the euro zone could face new challenges, mainly American customs duties on its exports which could reach 10 to 20%.
Over the week, the S&P500 and the Nasdaq fell by 2.08% and 3.15%, while the Stoxx Europe 600 lost 0.69%.
This week, the publication of the company Nvdia will be carefully scrutinized as well as the activity indicators in the United States and Europe.
The essentials in brief
