Trump’s Picks and Bitcoin Surge: Key Market Moves This Week

As the week draws to a close, Wall Street is preparing for a muted start on Friday, though the broader market is on track for a positive finish. Investors have been keeping a close eye on developments ranging from political appointments to global economic trends and the cryptocurrency boom. Here’s a breakdown of the latest key stories that are impacting financial markets.

Warsh to Become Treasury Secretary? A Key Appointment for Financial Markets

The search for the next U.S. Treasury Secretary under President-elect Donald Trump has been an ongoing topic of discussion, with multiple potential candidates under consideration. According to the Wall Street Journal, one name that has surfaced is Kevin Warsh, a former Federal Reserve board member and investment banker who could play a significant role in shaping U.S. economic policy.

Warsh, who served on the Federal Reserve Board from 2006 to 2011, is currently a lecturer at Stanford University. There is speculation that Trump may appoint him to the Treasury Secretary role with the long-term view of positioning him for a future as the Fed Chairman. While no official announcement has been made, other prominent figures like Marc Rowan of Apollo Global Management, Senator Bill Hagerty, and former U.S. Trade Representative Robert Lighthizer are also considered potential candidates.

Analysts are keenly observing how the appointment will affect U.S. financial markets, particularly the Treasury market. A candidate with strong financial credentials and reliability is likely to receive a positive reception from bond investors. Conversely, a pick with less market experience might lead to volatility, potentially causing a sell-off in the long end of the U.S. Treasury bond market and exerting downward pressure on the U.S. dollar.

Futures Show Muted Start Despite Positive Week for Main Benchmarks

U.S. stock futures showed a subdued performance on Friday, signaling a modest start to the final trading session of the week. At 5:00 AM EST, Dow futures were down 0.28%, S&P 500 futures dropped 0.33%, and Nasdaq 100 futures fell 0.45%. However, the broader outlook for the week remains positive.

On Thursday, the main indices closed higher, buoyed by solid earnings from Nvidia (NASDAQ: NVDA), the world's most valuable listed company. This performance has set the stage for what looks like a successful week: The Dow is on track for a 1% gain, the S&P 500 is up 1.3%, and the Nasdaq Composite has climbed 1.6%.

Investors are now looking ahead to the release of November’s preliminary purchasing managers index (PMI) reports, which will offer a glimpse into the health of U.S. manufacturing and services sectors. In addition, quarterly earnings reports from companies like Gap (NYSE: GAP) and Intuit (NASDAQ: INTU) are expected to draw attention after their releases Thursday evening.

Bitcoin Approaches $100,000: Crypto Markets Surge on Trump’s Return

Bitcoin is edging closer to the $100,000 mark, with the cryptocurrency seeing a strong surge in demand. At 5:00 AM EST, Bitcoin had risen by 1.25%, reaching $98,780, and even briefly hit a record high of $99,481 during the session. This marks a more than 9% gain for Bitcoin in just one week, and the digital currency has more than doubled in value since its lows earlier in 2024.

Several factors are contributing to this surge, with political developments playing a significant role. As President-elect Donald Trump’s return to the White House nears, investors are hopeful that his administration will implement friendlier regulatory policies for cryptocurrencies. Trump’s campaign promise to make the U.S. the “crypto capital of the planet” and his proposed idea of a Bitcoin national reserve have fueled optimism in crypto markets.

Further boosting Bitcoin's rise is the upcoming departure of Securities and Exchange Commission Chairman Gary Gensler, a figure who has been particularly tough on the crypto industry. Gensler's planned exit after Trump takes office has been seen as a catalyst for the growing bullish sentiment in the crypto space.

Europe’s Economic Struggles and the Impact on Central Bank Policy

Across the Atlantic, Europe is grappling with a set of economic challenges that are dampening growth prospects for the region. Recent data highlights these concerns, with Germany’s economy showing weaker-than-expected performance in the third quarter of 2024. The country’s GDP grew by just 0.1%, down from the initial estimate of 0.2%, and year-over-year growth showed a 0.3% contraction.

While the rest of the eurozone is faring better, Germany’s underperformance is still a significant drag on the broader European economy. As a result, the European Central Bank (ECB) is expected to ease monetary policy further, with interest rate cuts anticipated at its December meeting. Similarly, the Bank of England (BoE) is also facing pressure to cut rates, with markets predicting several more reductions in 2025.

In the UK, retail sales in October fell 0.7%, a bigger drop than anticipated, signaling that consumer spending is under pressure. This decline, coupled with rising inflation and ongoing political uncertainties, paints a grim picture for the region’s recovery.

Crude Oil Prices Edge Higher Amid Geopolitical Tensions

Crude oil prices continued their upward trajectory on Friday, poised to register strong weekly gains as geopolitical tensions, particularly the ongoing Russia-Ukraine conflict, raise concerns over supply disruptions. As of 5:00 AM EST, U.S. crude (WTI) was up 0.31% at $70.32 per barrel, while Brent crude rose 0.7% to $74.78 per barrel.

Both benchmarks are set to post weekly gains of 4-5%, their strongest performances since late September. The uptick is partly driven by fears that the conflict will lead to further disruptions in global oil supplies. Tensions escalated when Ukraine began using Western-made long-range missiles, prompting Russia to lower its threshold for nuclear retaliation and increase its military provocations. These developments have prompted traders to attach a greater risk premium to crude oil.

Additionally, supply disruptions in Norway and reports indicating that OPEC+ may delay its planned production hike have contributed to the bullish sentiment in oil markets.

Looking Ahead: What’s Next for Investors?

As the final trading day of the week approaches, market participants will be keeping a close eye on several key developments that could impact financial markets. From the ongoing search for a new Treasury Secretary to the potential for further rate cuts in Europe, there is no shortage of factors influencing sentiment. Additionally, the continued rally in Bitcoin and the strong performance of crude oil suggest that investors are navigating a complex and shifting landscape.

The coming days will likely offer more clarity on the direction of these trends, with key economic data and corporate earnings reports set to steer the market in one direction or another.