Market Overview: A Look at the Day Ahead in European and Global Markets

Author: Rae Wee

Market movement over the past week or so since Donald Trump won the U.S. presidential election has been characterized by a turbo-charged rally in bitcoin, higher Treasury yields, and a relentless U.S. dollar. Thursday was no different.

Despite traders now pricing in an over 80% chance of a Federal Reserve interest rate cut next month after Wednesday's inflation report, the dollar rose to a one-year high, buoyed by the bullish momentum from Trump's victory.

The President-elect's promised tax cuts could stimulate the economy, widen budget deficits, and increase government borrowing—all factors that have pushed long-end Treasury yields higher. Additionally, Trump's proposals for hefty import tariffs are expected to stoke inflation and limit the Fed's ability to ease policy.

With projections suggesting the Republican Party will likely control both houses of Congress when Trump takes office in January, he is poised to have sweeping power to advance his agenda.

In Europe, markets will be looking forward to the release of the euro zone's second estimate for gross domestic product growth and third-quarter flash employment data. Preliminary figures in October indicated that the bloc grew faster than market watchers had expected in the third quarter compared to the previous three months, though remained fragile with industry in recession and household consumption growing minimally.

Later in the day, Fed Chair Jerome Powell will speak in Dallas after having absorbed the U.S. October producer prices report that will be released just beforehand. PPI figures feed more directly into the Fed's preferred inflation indicator, the personal consumption expenditures price index, which will arrive later in the month.

However, there’s only so much Powell can say looking towards 2025 and beyond, as much depends on Trump's actions once in office. Trump has already made several cabinet picks across various domains such as defense, intelligence, diplomacy, trade, immigration, and economic policymaking.

Sources inform that billionaire banker Howard Lutnick has emerged as a contender for the top Treasury job alongside investor Scott Bessent.

Key Developments That Could Influence Markets on Thursday:

• Second estimate of Q3 euro zone GDP
• Euro zone Q3 flash employment
• U.S. weekly jobless claims
• U.S. October PPI
• Fed's Powell speaks

(By Rae Wee; Editing by Christopher Cushing)