Global shares are on track for their best month since May, with hopes for strong U.S. growth and a boom in artificial intelligence (AI) investments outweighing concerns over political instability and economic slowdown in Europe. MSCI’s broad gauge of world stocks traded steadily, maintaining a 3.2% monthly gain, led by Wall Street’s S&P 500, which futures markets indicated would rise again later on Friday.
Europe’s STOXX share index drifted lower during early trading but is still poised for a modest monthly gain, while Asian equities have struggled due to concerns over U.S. President-elect Donald Trump’s proposed tariffs, which could harm the prospects of exporter nations. Trump’s victory on November 5 and his pledges of tax cuts, deregulation, and import tariffs have heightened investors’ expectations that U.S. and Wall Street stocks will continue to outperform other regions.
“The U.S. economy remains resilient. Employment is strong, inflation is easing, and interest rates are beginning to decline,” stated Christopher Rossbach, chief investment officer at J. Stern & Co. He anticipates further gains for AI-related stocks, including the leading chipmaker Nvidia. Futures trading suggested that the S&P 500 would rise by 0.3% in early dealings, adding to its 5.1% monthly increase. French bonds and stocks are showing greater stability today, but this may just be the calm before the storm.
Trump has promised to impose immediate 25% tariffs on all products from Mexico and Canada when he takes office in January and an additional 10% on imports from China, which is a significant trading partner for Asian economies and a key exporter for the eurozone, particularly Germany. Indonesian shares have dropped by 5% in November—marking their worst month since September 2020—while South Korean shares have declined by 3.9%, resulting in a five-month losing streak, the longest since 2021.
European stocks have also felt the impact of tariff fears and a bleak economic outlook, although this has been somewhat mitigated by expectations of rate cuts from the European Central Bank. The euro has fallen more than 3% against the dollar this month to $1.058, and benchmark German government bond yields have decreased for four consecutive weeks, reflecting anticipated monetary easing.
On Friday morning, the 10-year German yield remained steady at 2.113% after falling by 27 basis points this month, widening the gap with France, where yields touched their highest point over Germany’s since 2012. France’s 10-year yield traded around 2.96%, just below the benchmark borrowing rates in Greece.
The compensation investors require for lending to France over Germany is now at 83 basis points, up from about 48 basis points before President Emmanuel Macron called a snap election in June, which led to a significant far-right vote and a hung parliament. Far-right leader Marine Le Pen has recently intensified her threats to overthrow France’s fragile coalition government as Prime Minister Michel Barnier struggles to garner support for tax hikes and spending cuts aimed at reducing a considerable budget deficit.
Market speculation about the euro dropping to $1 or lower has eased this week, as the index tracking the dollar against its major peers decreased by 1.5%, although analysts expect more volatility in the euro-dollar exchange rate moving forward. Traders have fully accounted for a 25-basis-point cut by the European Central Bank, bringing rates down to 3% in December, although hawkish remarks from board member Isabel Schnabel this week have tempered speculation about a potential 50 basis point reduction.
On Friday, 10-year U.S. Treasury yields were at 4.24%, down 17 basis points this week after Trump nominated hedge fund manager and Wall Street veteran Scott Bessent for Treasury Secretary, alleviating concerns about excessive U.S. borrowing. While Trump’s import tariffs could lead to increased U.S. inflation, Federal Reserve officials have adopted a cautious stance regarding rate cuts, although markets still expect a reduction of the funds rate—currently between 4.5% and 4.75%—by a quarter-point next month.
Meanwhile, Japan’s yen rose to its best week in four months, trading at 150.15 per dollar, as strong inflation data from Tokyo fueled expectations of a rate hike from the Bank of Japan.
Brent crude oil decreased by 0.4% on Friday to $72.13 a barrel, heading for a drop of more than 3% for the week, as a ceasefire deal between Israel and Hezbollah in Lebanon eased supply concerns. Gold fell by 0.5% to $2,655 an ounce.