World stock markets take a break on Friday, between profit taking after the gains obtained thanks to the election of Donald Trump and a strong return of concerns about the Chinese economy, which are particularly weighing down European markets.
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The American indices opened without momentum, after two days of record races since the victory of the Republican candidate on Wednesday. Around 2:40 p.m. GMT, the Dow Jones gained 0.12%, the S&P 500 0.18% and the Nasdaq fell 0.10%,
In Europe, Paris lost 1.09%, Frankfurt 0.87%, London 1.01%, Milan 0.67% and Zurich 0.91%.
“The market reaction to the results of the American elections” was initially “caricatural”, explains Caroline Lamy, head of equity management at Crédit Mutuel AM.
But “transactions linked to Trump are unwinding,” explains Neil Wilson, analyst at Finalto, with profit taking.
Now, investors are gauging the president-elect’s program, and “the customs tariffs imposed by Trump which are looming on the horizon are causing a new wave of uncertainty,” explains Stephen Innes, analyst at SPI AM.
Donald Trump wants to increase import taxes to between 10 and 20% for products entering the United States, and up to 60% for those coming from China, which should not help the situation of the world’s second largest economy, which has been sluggish since several months.
Especially since the new recovery measures announced on Friday by Beijing – an increase of 780 billion euros in the debt ceiling of local collectives – have left the markets hungry.
“Investors want (…) to see the Chinese authorities quantify the amount of fiscal stimulus that they will deploy to counter the Trump shock,” explains Ipek Ozkardeskaya, analyst at Swissquote Bank.
These poor prospects are particularly damaging to the mood in Europe, where many sectors depend on Chinese demand.
On the front line, luxury: around 2:40 p.m. GMT in Paris, Kering lost 7.52%, LVMH 3.42% and Hermès 4.03%. In London, Burberry plunged 7.63%. The Swiss Richemont fell by 5.24%, after second quarter results already weighed down by weak Chinese demand.
On the automobile side, Volkswagen (-2.31%), BMW (-3.70%) and Mercedes (-2.99%) fell significantly in Germany. In France, Stellantis lost 4.56%.
Another market focus: the American Federal Reserve (Fed) lowered its rates by a quarter of a percentage point on Thursday, its second rate cut of the year. This measure places rates in the range of 4.50 to 4.75%.
In this context, around 2:20 p.m. GMT, the interest rate on the ten-year American bond stood at 4.29%, compared to 4.32% the day before at closing. At two years, it was at 4.21% compared to 4.20%.
Bitcoin and dollar benefit from the “Trump effect”
The victory of Donald Trump, self-proclaimed champion of cryptocurrencies, continues to push bitcoin to new all-time highs. On Thursday, the cryptocurrency star reached a new record, coming close to the $77,000 mark.
Friday around 2:30 p.m. GMT, it gained 0.22% to $76,129 compared to the previous day’s close.
On the foreign exchange market, the dollar is also benefiting from the Trump effect despite the Fed’s cut in American rates, which had been widely anticipated. The new US president’s program comes with the risk of higher inflation, which could force the Fed to slow the pace and extent of rate cuts.
The dollar gained 0.38% to 1.0765 dollars per euro.
Oil is faltering
Oil is losing ground under anticipated pressure from a trade war between China and the United States. The Asian giant is the world’s leading oil importer and the health of its economy directly influences the price of black gold.
Around 2:30 p.m. GMT, North Sea Brent lost 1.24% to $74.69 per barrel, and West Texas Intermediate (WTI) lost 1.46% to $71.30 per barrel.
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