Understandably, a lot of the focus around strong US equity market momentum has been centred on the large cap cohort, in particular the so called “Magnificent Seven” which have dominated market returns in recent times. Last week it was the turn of the small cap arena to receive some time in the spotlight after the Russell 2000 index (smallest 2,000 companies in the Russell index) marched into record territory, moving beyond the level first set three years ago. The spark appeared to be incoming President Donald Trump’s nomination for Treasury Secretary with hedge fund manager Scott Bessent the candidate put forward[1]. Given his background, Bessent is viewed as a market friendly operator who is likely to prioritise economic stability which will be welcome news for those concerned about the possible impacts of Trump’s future economic policy. The S&P500 added +1.1% in dollar terms whilst the ten-year treasury yield declined by 22 basis points (bps) to 4.20%. 

Moving to Europe, the deteriorating political situation in France took another turn after Prime Minister Michel Barnier amended his proposed budget to fend of the growing threat of a no-confidence vote. French indices subsequently lost ground across the weak although overall, European equities made a modest gain of +0.3% (MSCI Europe ex UK in euro terms). As for the UK, the FTSE 100 and FTSE 250 advanced by +0.3% and +0.9% respectively, the latter benefitting from an uptick in sterling. Moving to Asia, Japanese markets posted small loses with the Nikkei 225 retreating by -0.2% (in yen) with modest strength in the domestic currency proving to be a headwind for the country’s export focused businesses. Meanwhile, Chinese equities jumped by +1.8% (in renminbi) on growing hopes of further additional government support for its labouring economy.

Regarding commodity markets, oil prices remained volatile as traders attempted to balance persistent geopolitical tensions with future demand concerns. Despite the significant bombing campaign of critical Ukrainian energy infrastructure by Russian forces and an apparent breaking of the ceasefire between Israel and Hezbollah, prices actually declined with Brent Crude concluding the week -2.4% lower at $73.20 a barrel. Gold also lost ground with a weekly decline of -1.7% to $2,659 an ounce capping off the worst month for the precious metal in over a year.

Week Ahead

Source: Workspace DataStream, 02/12/24
 

[1] T. Rowe Price – Global Markets Weekly Update 29/11/2024

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