Last Friday, the U.S. stock market closed higher across all three major indices, driven by the possibility that the Republican Party could take control of both the Senate and the House. This outlook has increased expectations for Trump’s pro-domestic business policies. For the week, the Nasdaq led the indices with the best performance, while U.S. long-term bond yields showed a decline over two trading days. In contrast, the 2-year yield, representing shorter-term bonds, rose to 4.252%.
Meanwhile, China’s economic stimulus measures have fallen short of market expectations, and the trade conflict with the U.S. is expected to intensify. This has weighed down stocks of companies tied closely to China. Among the M7 companies, only Tesla, associated with Elon Musk, who has good relations with Trump, showed gains, while other companies faced a subdued trading day.
Due to the disappointing Chinese stimulus, the dollar appreciated. However, oil prices, which often move in tandem with the dollar, failed to rise and instead closed lower. For now, the outlook for U.S. stocks appears positive.
However, I’m cautious about being overly optimistic. Between December and January — or perhaps February to March if there’s a delay — the U.S. stock market could face a challenging mid- to long-term trend. Therefore, it’s wise to approach with a clear investment perspective.
This week, key events include the release of the Consumer Price Index (CPI), Producer Price Index (PPI), retail sales figures, and a speech by Fed Chair Jerome Powell.