The Dow Jones broke the 44 000 mark, and the S&P 500 topped 6 000 for the first time. The deflationary scenario continues in China

On Friday, the Dow Jones (US30) rose by 0.59% to reach 44,000 points for the first time (up +4.72% for the week). The S&P 500 Index (US500) gained 0.38% and surpassed the 6,000-point mark for the first time (for the week +4.72%). The NASDAQ Technology Index (US100) closed positive 0.07% (for the week +5.52%). The US stocks continued to rise and closed at record highs on Friday, helped by the optimism associated with Donald Trump’s victory and the Federal Reserve’s interest rate cut. The best-performing sectors were utilities, real estate, and consumer staples, while commodities lagged. Tesla (TSLA) shares jumped 8.2% to $321 as the company reached a trillion-dollar valuation for the first time in two years. 

Bitcoin hit the $80,000 mark for the first time, fueled by expectations that Trump would introduce more digital-assets-friendly regulations. During his campaign, Trump vowed to make the US the “capital of digital assets” by creating a strategic Bitcoin reserve and appointing friendlier regulators. Musk, one of Trump’s prominent supporters in this election, has echoed that sentiment, warning that the US risks falling behind if it doesn’t lead innovation in the digital assets’ space.

Equity markets in Europe were declining on Friday. Germany’s DAX (DE40) fell by 0.76% (-0.09% for the week), France’s CAC 40 (FR40) closed down 1.17% (-0.65% for the week), Spain’s IBEX 35 (ES35) lost 0.16% (-2.28% for the week), and the UK’s FTSE 100 (UK100) decreased by 0.84% (-1.28% for the week). 

WTI crude oil prices fell as low as $70 per barrel on Monday, extending a decline of nearly 3% from the previous session, as a subdued outlook for major importer China continued to weigh on the market. Data released over the weekend showed weak consumer inflation in China in October and another decline in factory prices, pointing to the risk of deflation despite Beijing’s stimulus measures in late September. 

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) rose by 2.59%, China’s FTSE China A50 (CHA50) gained 1.20%, Hong Kong’s Hang Seng (HK50) added 0.70%, and Australia’s ASX 200 (AU200) posted a positive 1.54%. 

The Australian dollar stabilized near $0.659 on Monday after falling sharply by 1.4% in the previous session as China’s latest stimulus announcements failed to meet market expectations. On Friday, China announced a 10 trillion yuan debt package aimed at easing local government financing and supporting weak economic growth but did not announce any direct economic stimulus. 

China’s annual inflation rate in October 2024 was 0.3%, compared with market estimates and September’s 0.4%. It was the ninth consecutive month but the lowest since June, underscoring the growing risks of deflation despite Beijing’s stimulus measures in late September to support the slowing economy. Core consumer prices, excluding food and energy, rose by 0.2% y/y after the lowest gain since February 2021 at 0.1% in September. China’s producer prices fell to 2.9% y/y in October 2024 after declining 2.8% in the previous month and exceeding market expectations for a 2.5% decline. This marked the 25th consecutive month of producer price deflation and the sharpest decline since November 2023, indicating continued weak domestic demand.