Written by Alden Bentley and Naomi Rovnick
NEW YORK/LONDON (Reuters) – U.S. stocks joined a global rally on Friday, and appear set to crown November with the biggest monthly gain for Wall Street in a year thanks to post-election growth hopes, while the dollar is headed toward a weekly loss on prospects for a stronger rise. Interest rates in Japan and easing in Europe.
US trade was very weak the day after Thanksgiving. Many investors take a day off for a long weekend. Wall Street closes at 1:00 PM EST/1600 GMT and Treasury markets close at 2:00 PM, and most month-end position adjustments are made before the holiday.
The index rose by 0.34% in early trading, which if it continues, will secure the best monthly gain since November 2023, while the index is heading towards the best month since May if it continues to rise by 0.53%.
MSCI’s broad index of world stocks was firmer at 0.26%, also looking like its best month since May.
Donald Trump’s victory in the presidential election on November 5 and his pledges to cut taxes, deregulate and impose tariffs on imports have increased investors’ expectations that US and Wall Street stocks will continue to outperform other regions. US technology stocks are also benefiting from the AI investment craze.
Speculation about a Japanese interest rate hike fueled a weak yen recovery, even though it was poised for its biggest weekly gain against the dollar since July. The dollar fell 1.06 percent to 149.93 yen. The currency fell to 149.53 yen overnight for the first time since October 21 after the Japanese government finalized its stimulus budget and inflation in Tokyo came hotter than economists expected.
The index, which measures the currency against six major rivals, fell 0.05% to 106.02, and was also poised to end the week down 1.4% thanks to a surprise rebound in the euro, which had been heading towards the key $1 level on tariff and monetary policy concerns. Gloomy outlook for the Eurozone
Expectations of lower US interest rates have also weighed on the dollar, with futures traders expecting the Fed to cut interest rates by another 25 basis points at its December meeting at 65%. However, for 2025, they see less chance that the Fed will continue to cut interest rates at each meeting.
“The dollar is a little bit weaker,” said Quincy Crosby, chief global strategist at LPL Financial (NASDAQ:) in Charlotte, North Carolina. “That’s good for multinationals in the S&P 500.”
Trump has pledged to impose immediate 25% tariffs on all products coming from Mexico and Canada when he takes office in January, and impose an additional 10% tariff on imports from China, the main trading partner of Asian economies, and Germany, the euro zone’s export powerhouse.
“President-elect Trump has ruled out Canada, Mexico and China for now, but Europe is not far off the list,” strategists at BCA Research said, recommending investors limit their exposure to European stocks and favor German government bonds.
The euro fell 0.04 percent to $1.0549. The euro has recovered from crushing losses since the US elections on November 5, gaining 1.2% so far this week, supported by data on Friday showing rising inflation in the euro zone, which limited bets on deep interest rate cuts from the European Central Bank.
The European Stoxx index rose by 0.01%, while the broad European index rose by 0.02%. Asian and emerging market stocks were hit hardest by fears of tariffs.
Indonesian stocks fell 5% during November in their worst month since September 2020, while South Korean stocks fell 3.9% to record a five-month losing streak, the longest since 2021.
The 40-share index was the worst performer on major European markets this month, falling 2.3% as Michel Barnier’s fragile coalition government struggled to win support for its attempts to reduce the country’s huge budget deficit.
Far-right leader Marine Le Pen, whose National Rally won a strong share of the vote in June’s snap elections, this week intensified threats to bring down Barnier’s administration and sparked a rush to get rid of French government debt.
The French 10-year yield was trading on Friday at around 2.8980%, after touching its highest level since 2012 in Germany earlier in the week.
Traders priced in the European Central Bank’s 25 basis point interest rate cut to 3% in December, although hawkish comments from Governing Council member Isabel Schnabel this week dampened speculation about a 50 basis point cut.
The yield on US 10-year bonds fell by 4.4 basis points to 4.198%. Investors bought government bonds this week after Trump nominated hedge fund manager and Wall Street veteran Scott Besent to be Treasury secretary, alleviating concerns about excessive US borrowing.
While Trump’s tariffs on imports could boost US inflation, Federal Reserve officials have become cautious about interest rate cuts, although markets still expect they will lower the funds rate, which currently ranges between 4.5% and 4.5%. 75%, by a quarter of a percentage point next month.
It rose 1.06% to $69.45 per barrel and rose to $73.36 per barrel, up 0.11% on the day. Brent came under more pressure after the ceasefire agreement between Israel and Hezbollah in Lebanon calmed concerns about supplies, while gold rose 0.44% to $2,652.59 an ounce.
In cryptocurrencies, Bitcoin rose 3.02% to $98,010.00.
