Trump plans to raise tariffs by 10% on goods from China and 25% on goods from Mexico and Canada

At Monday’s close, the Dow Jones Index (US30) increased by 0.99%. The S&P 500 Index (US500) was up 0.30%. The Nasdaq Technology Index (US100) was up 0.14%. The Dow Jones Industrials set a new all-time high, and the Nasdaq 100 set a weekly high. Stocks rose on Monday amid optimism that President-elect Trump has picked Scott Bessent, a former hedge fund manager, to be US Treasury Secretary to bring a Wall Street mentality to the role and ease concerns about Trump’s inflationary agenda of tax cuts and tariff hikes. Bessent said he would support Trump’s policies, but his experience as a fiscal hawk indicates he will prioritize economic and market stability and deficit reduction.

Nvidia (NVDA) fell more than 4% and topped the list of losers in the Dow Jones Industrials and Nasdaq 100 markets after Amazon.com said it was developing its own artificial intelligence chips. Moderna (MRNA) closed up more than 6% after Jefferies said Robert F. Kennedy’s appointment to the Department of Health and Human Services is unlikely to mean an end to vaccines.

The Dollar Index climbed back above 107 on Tuesday as President-elect Donald Trump stepped up his threats to raise tariffs on China, Mexico and Canada, among others, sparking renewed demand for the dollar. Trump said he would impose additional 10% tariffs on all Chinese goods entering the US, as well as 25% tariffs on imports from Mexico and Canada.

Equity markets in Europe rallied yesterday. Germany’s DAX (DE40) rose by 0.43%, France’s CAC 40 (FR40) closed 0.03% higher, Spain’s IBEX 35 (ES35) added 0.47%, and the UK’s FTSE 100 (UK100) closed up 0.36%. The German IFO Business Climate Index for November fell by 0.8 to 85.7, weaker than expectations of 86.0. ECB Governing Council spokesman Kazaks said yesterday that given the European economy at the moment, another interest rate cut in December should follow. Swaps discount the odds of a 25 bp ECB rate cut at the December 12 meeting by 100% and a 50 bp rate cut at the same meeting by 35%.

Platinum (XPTUSD) prices fell to $950 per ounce, not far from the two-month low of $930 reached on November 13, and followed a general decline in precious metals-related assets as markets reduced their demand for safe-haven assets.

WTI crude oil prices fell by 3% on Monday to settle at $68.90 a barrel following reports that Israel and Hezbollah are close to reaching a ceasefire agreement. Iran announced plans to expand nuclear fuel production after criticism from the UN atomic watchdog, preparing for potential sanctions under a possible second Trump administration. Meanwhile, Azerbaijan’s Energy Minister said OPEC+ may maintain its current oil production cuts from January 1 as the group continues to delay planned production increases due to demand concerns. The next OPEC+ meeting is scheduled for December 1 and will be held online.

Asian markets traded flat on Monday. Japan’s Nikkei 225 (JP225) was up 1.30%, China’s FTSE China A50 (CHA50) was down 0.50%, Hong Kong’s Hang Seng (HK50) was down 0.41%, and Australia’s ASX 200 (AU200) was positive 0.28%.

Trump confirmed his plans to impose an additional 10% tariffs on all Chinese goods, adding to fears of global trade tensions. Against this backdrop, the offshore yuan fell to around 7.26 per dollar, nearing its lowest level since late July. Earlier this week, the PBoC kept the MLF rate at 2.0%, injecting 900 billion yuan and withdrawing 550 billion yuan. Last week, the Central Bank also kept the one-year lending rate at 3.1% and the five-year lending rate at 3.6%, indicating a cautious stance on supporting economic growth.