Markets surged last week amid optimism surrounding deregulation and a pro-business administration, bolstering equities, Bitcoin, and the dollar. The equal-weighted variant of the S&P 500 hit a record high, while the small-cap Russell 2000 jumped 4.5%. Technology stocks like Nvidia and Meta underperformed. Bank stocks reached a two-year high, reflecting bullish sentiment fueled by expectations of looser regulations and market confidence in government support, dubbed the “Trump put” by Fundstrat’s Thomas Lee.
Meanwhile, the dollar marked its longest winning streak since September 2023, up 2.6% this month, driven by safe-haven demand amid geopolitical tensions and robust economic data. The November S&P Global flash composite purchasing managers index (PMI) hit 55.3, signaling economic resilience with favorable growth and easing inflation pressures. In fixed income, the 10-year Treasury yield edged down to 4.41%, while WTI crude surpassed $71 a barrel and gold recorded its best week since March 2023.
Overseas, Europe’s PMI fell below contraction levels, while sovereign bonds rallied, and the euro hit a two-year low. In Asia, equities are on pace for consecutive monthly losses, weighed down by dollar strength and China’s economic concerns, though attractive valuations spurred recovery in some assets. Equities had stronger gains for the week than fixed income, benefiting more aggressive investors. The aggressive target risk benchmark below saw a healthy return of 1.45% for the week, while the moderate target risk benchmark gained 1.02%. The conservative target risk benchmark had a comparatively quiet week, with a small gain of 0.3%.
Bitcoin nears the historic $100,000 threshold, driven by optimism surrounding President-elect Donald Trump’s pro-crypto stance and the prospect of regulatory reforms. The Bitcoin rally has contributed to a $900 billion surge in crypto market value since Trump’s November 5 election victory. Market sentiment is buoyed by reports of outgoing SEC Chair Gary Gensler's resignation, coinciding with Trump’s inauguration in January. Gensler’s tenure was characterized by stringent enforcement actions against the crypto industry, which many expect will give way to a friendlier regulatory approach under Trump’s leadership. Discussions within Trump’s transition team to establish a White House digital-asset policy role further signal this shift. Speculation about Bitcoin’s climb to $100,000 is intensifying, with the milestone seen as a symbolic triumph for advocates of cryptocurrency as a modern store of value. Corporate players like MicroStrategy, now positioning itself as a Bitcoin treasury, are amplifying demand with plans to raise $2.6 billion for additional token purchases. Meanwhile, US Bitcoin-focused ETFs have drawn $5.8 billion in inflows post-election, reaching a record $100 billion in assets. The industry is also energized by Trump’s pledges to foster a strategic US Bitcoin stockpile and implement a supportive regulatory framework, though details and timelines remain uncertain. These developments follow heavy investment by digital-asset firms in Trump’s campaign and his pivot from crypto skepticism to advocacy. Despite the current enthusiasm, memories of the 2022 market collapse, marked by high-profile fraud and failures like FTX, temper unchecked optimism. Analysts, such as Tony Sycamore of IG Australia, note strong demand but caution against assuming a smooth path to six figures.
Nvidia’s meteoric rise in the artificial intelligence market has cemented its position as a leader in both technology and market valuation. Over the past 18 months, the chipmaker’s growth has been staggering, with fiscal third-quarter sales surpassing $100 billion annually for the first time—more than double last year’s figure. Its $3.6 trillion market capitalization even eclipses Apple, underscoring Nvidia’s dominance in data center GPUs, which are central to AI development. However, sustaining this momentum poses challenges. Despite beating Wall Street expectations, Nvidia’s latest earnings forecast exceeded consensus by a narrower margin than previous quarters, causing a modest stock dip in after-hours trading. This signals that Nvidia’s rapid growth may be normalizing, with third-quarter revenue growth of 94%—a deceleration from the triple-digit rates seen in the past five quarters. The upcoming launch of its Blackwell AI systems is expected to drive future growth, but supply constraints and production challenges may slow the rollout. Nvidia also faces geopolitical headwinds, including potential trade restrictions with China and uncertainties surrounding tariffs. Analysts remain optimistic about Blackwell’s potential, forecasting $62.6 billion in revenue for fiscal 2026 and $97 billion for the following year—figures that would outpace nearly all other chipmakers globally. However, these projections depend on robust capital investment from major tech players like Microsoft, Amazon, Meta, and Alphabet, which are collectively poised to spend $285 billion on infrastructure next year. While Nvidia’s technological leadership and customer demand position it well for sustained growth, its trajectory depends on successfully overcoming operational and geopolitical challenges. The company’s future hinges on maintaining its competitive edge while navigating a maturing market and scaling to meet unprecedented expectations.
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