Significant volatility was seen in the global financial markets last week, driven by the highly anticipated US presidential election. Contrary to expectations of a tight contest, Donald Trump secured a comfortable victory over Kamala Harris, with the Republican Party also achieving a "Red Sweep" by taking control of both the Senate and the House. This political outcome ignited optimism in US equity markets, propelling major indices, including even NASDAQ, to new record highs. However, Dollar struggled to maintain its post-election momentum. Despite initial gains, Dollar's rally was capped by a retreat in Treasury yields. If these post-election trends persist, there is prospect of further correction for Dollar in the near term, especially if Treasury yields continue to soften. Global markets did not uniformly share the US's optimism. In Europe, Euro ended the week as the worst-performing currency, along with declines in major stock indexes, Germany's DAX and France's CAC 40. Concerns over "Trade War 2.0" with the US under Trump's leadership weighed on European investor sentiment. The Swiss Franc was the second weakest currency, while Dollar ranked as the third weakest performer for the week, highlighting the greenback's relative underperformance. Conversely, risk-on sentiment boosted commodity-linked currencies. Australian Dollar emerged as the top performer. However, questions linger about the longevity of this momentum, particularly after China's announcement of lackluster stimulus measures that fell short of market expectations. Canadian Dollar was the second-best performer, and Yen secured the third spot. Sterling and New Zealand Dollar settled in middle positions. |
