The markets saw notable movements this week, influenced by the Federal Reserve’s rate cuts, Bitcoin’s surge, TSMC’s mixed performance, and strong oil prices. Here’s a quick overview of the top developments.
1. Federal Reserve’s Interest Rate Cut Boosts Market Sentiment
The US Federal Reserve announced a 25-basis point reduction in its interest rate, bringing it down to a range of 4.50%–4.75%, the second cut in consecutive meetings. This move, aimed at normalising monetary policy amid cooling inflation, signals further potential cuts in the coming months.
Fed Chair Jerome Powell expressed cautious optimism, suggesting economic conditions could improve next year, with inflation on track to hit the 2% target. However, with Donald Trump poised to begin his second term, questions arise about Powell's tenure, given his historically tense relationship with Trump. When asked if he’d step down if requested, Powell firmly stated he would remain in office, emphasising that the position is not subject to presidential dismissal.
2. US Stock Futures Gain Amid Post-Election Rally
US stock futures edged higher on Friday following the Fed’s rate cut, bolstering a post-election rally. The Dow, S&P 500, and Nasdaq 100 futures saw modest gains, reflecting confidence in a more favourable interest rate environment. All three main indices recorded substantial gains throughout the week, with the Nasdaq outperforming at a 5.6% increase.
Investors appear encouraged by Trump’s pro-business stance, as well as the Fed’s actions to maintain stable growth. This uptick continues the upward trend seen since Trump’s 2024 election victory, with the Dow Jones Industrial Average and S&P 500 experiencing their best days since late 2022.
3. TSMC’s Sales Growth Slows
Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, reported steady sales in October, up 24.8% from the previous month and 29.2% year-on-year. However, this growth marks a slowdown from nearly 40% the previous month, indicating potential cooling demand.
Despite strong performance driven by AI chip demand, TSMC warned of weakening sales from other sectors like personal computers and smartphones, reflecting global economic pressures. As a major supplier to US tech giants such as Nvidia and Apple, TSMC’s performance is closely watched as an indicator of broader tech sector health.
4. Bitcoin Holds Near Record Highs
Bitcoin surged to near-record highs following Trump’s election victory, spurred by market optimism around his promised “crypto-friendly” regulatory policies. At $75,852, Bitcoin approached its all-time high of $76,837, reflecting investor confidence in future growth.
Trump has pledged to position the US as the “crypto capital” of the world, with institutional investors betting that his policies will encourage Bitcoin’s broader adoption. Analysts predict continued upward momentum, with Bitcoin’s price potentially reaching between $130,000 and $150,000 by the end of 2024.
5. Crude Oil Prices Rise Despite Recent Dip
Crude oil prices dipped slightly on Friday, yet both US crude (WTI) and Brent remained on track for approximately 3% weekly gains. The market found support from a delay by OPEC+ in increasing production, as well as potential new sanctions under the Trump administration on oil-exporting nations like Iran and Venezuela.
Additionally, concerns over Hurricane Rafael, which temporarily shut down significant portions of US crude production, buoyed prices. Although the storm is expected to move away from key production zones over the weekend, it highlights the ongoing vulnerability of supply chains to weather events and geopolitical pressures.
Source: (Investing.com)
