The markets are living in Trump’s world for now

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The markets are living in Trump’s world for now

U.S. President-elect Donald Trump at a viewing of the launch of the sixth test flight of the SpaceX Starship rocket on Nov. 19, 2024, in Brownsville, Texas.

Brandon Bell | Getty Images News | Getty Images

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Rates to come down “gradually”U.S. Federal Reserve officials anticipate lowering interest rates “gradually” to “a more neutral stance,” minutes of the Fed’s November meeting showed. That’s contingent on inflation continuing to “move down sustainably to 2 percent and the economy remaining near maximum employment” in line with Fed officials’ expectations.

Markets move past tariff threatsMarkets in the U.S. moved past President-elect Donald Trump’s threat of more tariffs to scale new highs on Tuesday. The S&P 500 and Dow Jones Industrial Average closed at record highs. Asia-Pacific stocks were mixed on Wednesday. China’s CSI 300 rose around 1.5%, while the country’s industrial profits slumped by 10% from a year ago.

Leadership reorganization in SamsungSamsung Electronics shuffled its leadership, the company announced on Wednesday. Jun Young-hyun is now Samsung’s co-CEO and head of the memory chip arm — Jun issued an apology in October after the South Korean firm posted disappointing third-quarter guidance. Other changes in leadership include the president and chief technology officer of the foundry business.

OpenAI gets $1.5 billion investment from SoftbankSoftbank is investing $1.5 billion in OpenAI, two people familiar with the matter told CNBC. As part of the deal, OpenAI is allowing current and former employees to sell shares up to roughly the same amount. Softbank had previously invested $500 million into OpenAI, but founder and CEO Masayoshi Son wanted a larger stake in it, according to one of the sources.

 [PRO] Data might show annual inflation ticking upThe personal consumption expenditures price index is the Fed’s preferred measure of inflation. The index for October will be released on Wednesday – and economists are expecting the headline number to tick up on an annual basis.

The bottom line

Even before Trump enters the White House, investors are already living in his world. That portends the influence Trump, as president, will have on the economy and markets.

Upon Trump’s election win, the so-called “Trump trade” has flourished, with risk assets in general on an upward trajectory.

The market rally stalled for a while as investors digested the possible increase in inflation and drop in economic growth due to Trump’s policies, but was jolted back to life after Trump picked Scott Bessent as his Treasury secretary.

Most recently, Trump announced he would raise tariffs by an additional 10% on ******** goods entering the U.S., and new tariffs of 25% on those from Mexico and Canada. Those three countries alone account for 43% of U.S. goods imports, wrote Goldman Sachs’s chief economist Jan Hatzius.

“The truth is that the drag from tariffs on growth is likely to outweigh tax cuts on the forecast horizon,” said Gregory Daco, chief economist at EY-Parthenon.

Automakers felt that sting most keenly because virtually all with a presence in the U.S. manufacture vehicles and parts in Mexico —  26% of auto imports into the U.S. are from Mexico, reported UBS. Shares of automakers GM, Stellantis and Ford Motor fell on reports of Trump’s planned tariffs.

That said, while individual stocks staggered, the broader market advanced. The S&P 500 rose 0.57% and the Dow Jones Industrial Average added 0.28%, with both indexes hitting fresh closing highs. The Nasdaq Composite climbed 0.63%.

“Markets have become a lot more comfortable with the prospects of these tariffs being more bluster and more negotiating tactics than actual implementation,” Jamie Cox, managing partner at Harris Financial, said.

Posturing or not, it’s likely Trump’s proposed policies will sway the markets in the foreseeable future.

— CNBC’s Sarah Min, Alex Harring and Samantha Subin contributed to this report.      

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