NEW YORK/LONDON :MSCI’s global equities gauge rose and U.S. government bonds rallied while the dollar fell on Monday as investors welcomed the incoming U.S. president’s selection of fund manager Scott Bessent as the next U.S. Treasury secretary.
Wall Street indexes closed higher with the S&P 500 and the Dow touching intraday records as investors approved of Donald Trump’s choice. Investors said they were hoping for tax cuts as well as fiscal caution from Bessent.
U.S. Treasury yields fell sharply as bond investors bet on a more moderate than feared U.S. fiscal trajectory.
In an interview published on Sunday, Bessent told the Wall Street Journal that both tax and spending cuts were priorities.
And Bessent told CNBC earlier in November, before his selection as Treasury secretary, that he would recommend “tariffs be layered in gradually.”
“Bessent understands a lot of different asset classes and is going to help Trump stay very sensitive to market reactions,” said Carol Schleif, chief investment officer, BMO family office noting that investors worried that other candidates for the job would take a hard stance on tariffs and spending and think less about the potential market reaction.
“Markets are pretty self-centered. They want to make sure people are paying attention to them or they throw a tantrum.”
The Dow Jones Industrial Average rose 440.06 points, or 0.99 per cent, to 44,736.57,which was a record closing high.
The S&P 500 rose 18.03 points, or 0.30 per cent, to 5,987.37 and the Nasdaq Composite rose 51.18 points, or 0.27 per cent, to 19,054.84.
MSCI’s gauge of stocks across the globe rose 3.84 points, or 0.45 per cent, to 857.97 while Europe’s STOXX 600 index had closed up 0.06 per cent earlier.
The European index hit a two-week high during its trading session, boosted by the Bessent nomination and comments from the European Central Bank chief economist on monetary policy easing.
In a trading week shortened by Thursday’s U.S. Thanksgiving holiday, key events will include the release of October Personal Consumption Expenditures, the latest GDP estimate and U.S. Federal Reserve minutes from its last meeting.
Traders are hoping for a Fed rate cut next month, though bets have been dialled back in recent weeks.
In Treasuries, the yield on benchmark U.S. 10-year notes fell 14.1 basis points to 4.269 per cent, from 4.41 per cent late on Friday while the 30-year bond yield fell 13.9 basis points to 4.4562 per cent.
The two-year note yield, which typically moves in step with interest rate expectations, fell 10.5 basis points to 4.264 per cent, from 4.369 per cent late on Friday.
“He’s a Wall Street guy, he’s very good at what he does. He’s not an extremist to the left or right. He’s a sensible, smart businessman, and I think the market likes that, and he’s anti-deficit,” said Tony Farren, managing director at Mischler Financial Group, referring to Bessent.
In currencies, the dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.56 per cent to 106.89.
The euro was up 0.74 per cent against the dollar at $1.0494 while against the Japanese yen, the dollar weakened 0.37 per cent to 154.16.
The euro had fallen sharply this month on worries over Trump tariffs, deteriorating economic conditions and signs of an escalation in Russia/Ukraine war.
Oil prices fell more than $2 per barrel after reports that Israel and Lebanon had agreed to the a deal to end the Israel-Hezbollah conflict, citing officials from Israel, Lebanon, the U.S. and France.
U.S. crude futures settled down 3.23 per cent or $2.30 at $68.94 per barrel and Brent finished at $73.01 per barrel, down 2.87 per cent or $2.16 on the day.
Bitcoin fell more than 2 per cent to $94,811.03 after hitting a record of $99,830 on Friday as investors bet on a friendly regulatory environment for cryptocurrencies under Trump.
Gold prices fell sharply, breaking a five-session rally, as reports of Israel nearing a ceasefire with Hezbollah, coupled with Trump’s Treasury secretary pick, tarnished demand for the safe-haven precious metal.
Spot gold fell 3.14 per cent to $2,627.27 an ounce. U.S. gold futures fell 2.56 per cent to $2,640.40 an ounce.
