Market developments
Equities: Investors were enthusiastic about stocks this week, driven by expectations that Donald Trump’s economic policies will enhance corporate profits through tax cuts and deregulation. On the day of Trump’s victory, approximately $20 billion flowed into U.S. equity funds. Market analysts are cautious about the sustainability of recent gains, noting that while there is initial enthusiasm for Trump’s policies, significant legislative changes may take time to materialize. The S&P 500 and Nasdaq Index closed 4.7% and 5.7% higher, respectively
Fixed income: U.S. Treasury bond yields initially soared late Wednesday night as Trump’s agenda is expected to fuel inflation. The U.S. 10-year yield crossed 4.45% before gradually settling around 4.30% by the end of the week. The U.S. dollar also strengthened to its highest level in a year against the Canadian dollar due to anticipated faster inflation and higher interest rates.
Commodities: Gold prices fell at the end of a volatile trading week as investors evaluated the implications of Donald Trump’s election victory and the future path of U.S. interest rates. It suffered its largest weekly drop since May. The precious metal had briefly gained on Thursday following a Federal Reserve rate cut, but this was not enough to offset a significant rout earlier in the week triggered by Trump’s win.