Market Update & Important Indicators:
Bank shares surged while tech and dividend stocks fell Monday, leaving major U.S. indexes little changed after their election-week rally. Investors have been shifting their money since Donald Trump's surprise victory last Tuesday. Some of the most popular bets have reflected expectations of stronger growth and higher inflation, sending financial stocks and government bond yields higher. As bonds sold off, so did dividend-paying stocks like utilities and telecommunications companies, which investors bought this year for steady income amid ultralow interest rates. Mr. Trump has also advocated for tighter limits on trade and immigration, which could spell changes for an industry that gets much of its revenue from overseas and prizes high-skilled immigrants. Bank shares continued to surge. Many investors expect interest rates to rise, which should help lenders' profits by widening the gap between what they pay on deposits and what they charge on loans. Bank stocks have also benefited from bets that Mr. Trump would scale back on regulation. After a volatile stretch of trading leading up to the U.S. presidential election, stocks ended last week with their biggest gains in years. The Dow Jones Industrial Average added 5.4%, its biggest one-week jump since December 2011.
Asian equity markets were mixed Monday, with Japan's Nikkei outperforming regional markets following stronger-than-expected economic data and a weaker yen. The Nikkei Stock Average closed up 1.7% at 17672.62, becoming the region's biggest outperformer. In other markets, Singapore's FTSE Straits Times Index was off 0.9%, and Hong Kong's Hang Seng Index was last down 1.4%. Government data in Japan showed that its third-quarter gross domestic product expanded an annualized 2.2% in the three months ended September, beating expectations of a 0.9% expansion, as forecast by economists polled by The Wall Street Journal. Monday's data also marked the third straight quarter of expansion in Japan, after a patchy economic performance in the three years since the summer of 2013. In mainland China, stock markets opened down but quickly began to rally after a strong showing last week led to equities entering a technical bull market. A slew of data released Monday also supported a view that the world's second-largest economy is stabilizing, with industrial output growth stabilizing, fixed-asset investment growth lightly accelerating, while retail sales slowed, according to official data. The Shanghai Composite Index closed up 0.5%, while the Shenzhen Composite Index added 0.3%.
Australian shares fell Monday as renewed worries over President-elect Donald Trump's proposals to stimulate growth in the U.S. economy clouded a slightly brighter outlook in China. The S&P/ASX 200 index dropped by 0.5% or 25 points to 5345.7 despite new data from China which offered some support to the view that the world's second-largest economy is stabilizing. Industrial output in China rose 6.1% in October from a year earlier, the same rate as the previous month, data from the country's National Bureau of Statistics showed.
The London Metal Exchange's three-month copper contract closed up 0.2% to $5,559/t. Other base metals closed mixed on Monday. Zinc rose 5.5% to $2,593/t, nickel rose 0.5% to $11,215/t and lead rose 4.0% to 2,181/t. Aluminium prices were flat at $1,745/t and tin fell 2.6% to $20,929/t.
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