Bitcoin hits an all-time high above $88,000. Oil remains under pressure

At the end of Monday, the Dow Jones Index (US30) rose by 0.69%. The S&P 500 Index (US500) gained 0.10%. The NASDAQ Technology Index (US100) was down 0.05%. Stocks traded mixed on Monday, with the S&P 500 and Dow Jones Industrials setting new all-time highs. The broad market continued last week’s post-election gains on speculation that President-elect Trump will boost corporate profits by cutting taxes and reducing regulation. Additionally, Tesla’s stock is up more than 8%, which is complementing last week’s 26% gain on speculation that the company will benefit from a Trump presidency. Additionally, digital-assets-related stocks soared on speculation that digital assets will benefit from the Trump administration’s pro-digital-assets policies.

Bitcoin remained above the $88,000 mark on Tuesday, holding steady after rising more than 10% to new all-time highs in the previous session. The rally was driven by expectations of a digital-assets-friendly US government under Donald Trump and a Republican-led Congress. Trump, an ardent supporter of digital assets, has promised to make the US the “planet’s capital of digital assets” and create national Bitcoin reserves, further bolstering investor optimism. Meanwhile, Onramp Bitcoin co-founder Jesse Myers noted on Air X that the post-halving supply shock could be the main catalyst for this rally.

Minneapolis Fed chief Kashkari said a strong US economy and rising productivity could force policymakers to cut interest rates less than expected in the coming months. Swaps discount the odds of a 25bp ECB rate cut at the December 12 meeting at 100% and a 50bp rate cut at the same meeting at 18%.

The Mexican peso (MXN) fell to 20.5 per US dollar in November, the lowest since July 2022, as the threat of protectionist policies from Mexico’s main trading partner, the US, weighed on the outlook for Mexican exports and foreign exchange inflows. Speculation that former Trade Representative Robert Lighthizer, known for his protectionist stance, could be reappointed by President-elect Donald Trump has heightened fears of tighter trade policies toward Mexico.

Equity markets in Europe rallied yesterday. Germany’s DAX (DE40) rose by 1.21%, France’s CAC 40 (FR40) closed 1.20% higher, Spain’s IBEX 35 (ES35) added 0.40%, and the UK’s FTSE 100 (UK100) closed up 0.65%. Investors are closely watching the possible effects of Donald Trump’s policies on Europe and political developments in Germany, including Chancellor Olaf Scholz’s willingness to postpone a vote of confidence, which could lead to early elections before Christmas.

ECB Governing Council member Stournaras said yesterday, “Now that inflation is coming down, we’ve started to lower interest rates, which looks like we’re going to continue lower and could end up close to 2% around next September.”

WTI crude oil prices fell below $68 a barrel on Tuesday, extending losses after a two-day slump, as a bearish demand outlook continues to weigh on the market. China’s recent stimulus efforts have proven insufficient to intervene directly and weak inflation persists, adding to demand concerns from the world’s largest oil importer. In addition, the rise in the US dollar, driven by the re-election of President Trump, has put further pressure on oil prices.

Asian markets were predominantly falling yesterday. Japan’s Nikkei 225 (JP225) rose by 0.08%, China’s FTSE China A50 (CHA50) fell by 0.57%, Hong Kong’s Hang Seng (HK50) lost 1.45% and Australia’s ASX 200 (AU200) was negative 0.35%. 

The offshore yuan slid to 7.24 per dollar, hitting a three-month low, pressured by a strong US dollar as Trump’s “Trump deals” continued to boost financial markets. The yuan’s decline was exacerbated by weak Chinese economic data and an insufficient stimulus package. On Monday, Chinese banks issued only 500 billion yuan in new loans for October, down sharply from September’s figures and well below market expectations. The Australian dollar is often seen as a liquid proxy for the Chinese yuan, and its fall reflects lingering concerns about China’s economic outlook.