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Crypto Surge Fuels Market Rally as Trump Crypto Policies Eyed

2024-11-10

The stock market has been on a tear, with the Dow Jones, S&P 500, and Nasdaq all hitting record highs following Donald Trump's presidential victory. Fueling the rally is a surge in Bitcoin, which has topped $80,000, as well as strong earnings from leading tech and growth stocks. Investors are betting on a tailwind under a second Trump administration, with the former president's pro-crypto stance and potential policies seen as a boon for the digital currency and related sectors.

Riding the Wave of Crypto and Market Optimism

Crypto Surge Leads the Charge

Bitcoin has been the star of the show, soaring past the $80,000 mark on Sunday amid a broader crypto run. The pioneer cryptocurrency was trading at $76,783.86 on Friday, but has since jumped 14.1% in just four sessions, starting with Election Day. This surge is being attributed to President-elect Trump's pro-crypto stance during his campaign, which is expected to usher in a more favorable regulatory environment for digital currencies.The weekend's Bitcoin move should extend the tailwind for Bitcoin ETFs and related stocks like Coinbase Global (COIN) and Robinhood Markets (HOOD). It also suggests a continued risk-on advance for financial markets broadly, as investors embrace the potential for a crypto-friendly administration.

Stocks Surge to Record Highs

The stock market rally has been nothing short of impressive, with the Dow Jones Industrial Average jumping 4.6%, the S&P 500 index popping 4.7%, and the Nasdaq composite leaping 5.7% in the past week – all hitting record highs. The small-cap Russell 2000 also spiked 8.6% to its best levels since its all-time high in November 2021.This broad-based rally is being fueled by hopes that a Trump return to the White House, backed by a GOP Congress, will mean tax cuts, deregulation, and increased merger activity. The Federal Reserve's continued rate cuts and dovish stance have also contributed to the market's bullish sentiment.

Standout Performers and Sector Strength

The market's gains were not limited to the major indexes, as dozens, if not hundreds, of individual stocks saw double-digit weekly gains. Tesla (TSLA) skyrocketed 29%, reclaiming a $1 trillion market cap, while Palantir Technologies (PLTR) had an even better week, surging 39%. Other notable winners include Axon Enterprise (AXON), which jumped nearly 42%.The strength was also evident across various sectors, with the Innovator IBD 50 ETF (FFTY) leaping 11.5%, the iShares Expanded Tech-Software Sector ETF (IGV) running up 9.7%, and the VanEck Vectors Semiconductor ETF (SMH) gaining 6%. The ARK Innovation ETF (ARKK) spiked 15.9%, and the ARK Genomics ETF (ARKG) bolted 7.9%, reflecting the continued investor appetite for growth and innovation.

Stocks Positioning for Further Gains

The market rally has also brought several leading stocks into buy range, offering opportunities for investors. Meta Platforms (META) and Google-parent Alphabet (GOOGL) are just below buy points, while CrowdStrike (CRWD), Vertex Pharmaceuticals (VRTX), and Nvidia (NVDA) are currently actionable.Nvidia, Meta, and Vertex are on IBD Leaderboard, with Tesla on the Leaderboard watchlist. Nvidia, Palantir, and Monday.com (MNDY) are on the IBD 50, and Google was Friday's IBD Stock Of The Day.As the market remains in a strong uptrend, investors should be cautious of potential pullbacks but also look to gradually build exposure to leading stocks that are not yet extended. Staying vigilant and closely monitoring the market's direction and individual stock setups will be crucial in navigating the current environment.

US stock futures pointed higher on Monday as investors assessed the staying power of a post-election rally and looked ahead to fresh economic data this week. The benchmark S&P 500 hit a fresh all-time peak and touched the 6,000 level for the first time on Friday, boosted by hopes that Donald Trump would roll out tax cuts and extensive deregulation during his second four-year term in the White House.

Unleashing the Power of Optimism: Stocks Surge Amid Economic Shifts

Futures Climb as Investors Anticipate Economic Insights

By 03:20 ET (08:20 GMT), the Dow futures contract had added 82 points or 0.2%, S&P 500 futures had jumped by 15 points or 0.3%, and Nasdaq 100 futures had gained 73 points or 0.4%. This upward momentum reflects the market's optimism as investors eagerly await the release of key economic data this week. The Federal Reserve's recent interest rate cut and the prospect of further policy adjustments have also contributed to the positive sentiment, with policymakers noting the economy's "solid pace" despite some easing in labor demand and elevated inflation.

Inflation Data: A Crucial Indicator for the Fed's Next Moves

The release of October inflation data from the Department of Labor on Wednesday will be a major focus for investors, as it will likely shape the Federal Reserve's future interest rate decisions. Economists expect the consumer price index to have risen at an annual rate of 2.4% last month, matching September's pace. The central bank's approach to interest rates will be heavily influenced by the outlook for US price pressures, as it navigates the delicate balance between supporting economic growth and managing inflationary risks.

Cryptocurrency Surge: Bitcoin Reaches New Heights

Bitcoin rose to a record high, extending a rally from last week as optimism around the outlook for cryptocurrencies was heightened by Trump's victory. The world's largest cryptocurrency hit a peak of $81,792.4, and traded at $81,165.3 by 03:21 ET. Traders are betting that the Trump administration and a raft of new pro-crypto lawmakers in Congress will take a more favorable approach to the industry, potentially easing regulatory burdens and creating a reserve to hold the country's Bitcoin supply. The prospect of a softer stance from the Securities and Exchange Commission has also fueled the cryptocurrency's surge.

Chinese Stimulus Measures Fail to Impress Investors

Stocks in Hong Kong led declines in Asia on Monday, as fresh fiscal stimulus measures out of China largely underwhelmed investors. Hong Kong's Hang Seng index slid 1.7%, while China's Shanghai Shenzhen CSI 300 and Shanghai Composite were more volatile, rising by 0.7% and 0.6%, respectively. The National People's Congress announced a debt swap program worth about 10 trillion yuan ($1.4 trillion) aimed at improving the finances of local governments, but the lack of direct fiscal stimulus and targeted policies to bolster China's ailing housing market and tepid personal consumption fell short of investor expectations.

Oil Prices Remain Stable Amid Shifting Dynamics

Oil prices steadied on Monday as traders digested the latest stimulus plan from top importer China as well as the easing of any supply disruptions from Hurricane Rafael. By 03:22 ET, the Brent contract gained 0.2% to $73.99 a barrel, while U.S. crude futures (WTI) were mostly unchanged at $70.39 per barrel. Prices weakened on Friday after Beijing approved the measures, which were designed to lower government debt levels. Meanwhile, fears over immediate disruptions in US oil output were somewhat soothed after Hurricane Rafael weakened into a tropical storm as it made landfall in Cuba.

The FTSE Bursa Malaysia KLCI (FBM KLCI) futures contract on Bursa Malaysia Derivatives is poised to continue its upward trajectory, mirroring the positive sentiment in the underlying cash market. Analysts attribute this optimism to a confluence of influential global developments, including the recent Republican victory in the United States (US) election, anticipated rate cuts from major central banks, and China's ongoing commitment to supportive monetary policy.

Riding the Wave of Positive Sentiment

Upbeat Outlook for FBM KLCI Futures

The FBM KLCI futures are expected to maintain their upward momentum in the week ahead, building on the positive momentum witnessed in the previous trading sessions. This bullish sentiment is driven by a combination of factors, including the recent Republican victory in the US election, which has raised hopes for policy continuity and stability. Additionally, the anticipated rate cuts from the US Federal Reserve and the Bank of England are seen as catalysts for further market gains, as they are likely to provide a boost to economic growth and investor confidence.China's ongoing commitment to supportive monetary policy is another key factor contributing to the positive outlook for the Malaysian stock market. As the world's second-largest economy, China's economic recovery and policy decisions have a significant impact on global markets, including the FBM KLCI. Investors are closely monitoring China's actions to stimulate its economy and maintain stability, which could have a ripple effect on the Malaysian market.

Anticipated GDP Data Release

The upcoming release of Malaysia's Gross Domestic Product (GDP) data for the third quarter of 2024 is also expected to be a key driver of investor sentiment. The Department of Statistics Malaysia (DOSM) is set to unveil the GDP figures next week, and analysts are anticipating a reading that aligns with the advance estimate of 5.3 percent.A GDP reading above 5.0 percent would be seen as a positive signal, reinforcing investor confidence in Malaysia's economic resilience. This could further bolster the bullish sentiment surrounding the FBM KLCI futures, as investors interpret the strong economic performance as a sign of the country's ability to weather global economic challenges.

Futures Market Performance

In the week just ended, the FBM KLCI futures contract saw significant gains across various expiration months. The November 2024 and March 2025 contracts added 16.5 points each, reaching 1,621.5 and 1,613.0, respectively. The December 2024 contract gained 17.5 points to 1,625.5, while the June 2025 contract rose by 26.0 points to 1,621.0.Despite the positive performance, the trading volume in the futures market dipped to 35,551 lots from the previous week's 46,457 lots. Similarly, the open interest declined to 36,492 contracts from 49,429 contracts in the prior week.On a Friday-to-Friday basis, the FBM KLCI, the underlying cash market index, increased by 17.26 points to 1,621.24, reflecting the overall bullish sentiment in the Malaysian stock market.