TOP-PERFORMING ASSET
In October, global gold ETFs experienced inflows for the sixth consecutive month, a trend that has now turned positive for the year after a slow start. The World Gold Council reported that North American and Asian investors are driving this demand, seeking the security of gold as a safe investment amidst geopolitical tensions and market uncertainties. Investments in gold-backed ETFs totaled $4.3 billion in October, raising total holdings to 3,244 tons, and although there were previous outflows, assets under management hit a record high of $286 billion last month. Overall, global gold trading volumes have increased, driven by both over-the-counter and ETF activities, and with gold prices up by 33% this year, hitting a record high in October at $2,790.15 per ounce, it appears that bullion is positioned to be one of the top-performing assets in 2024 due to economic and political factors.
BILLIONS POURING
The Bank of America Corp. has stated that in the wake of Donald Trump’s decisive victory in the presidential election, an unprecedented $20 billion has swiftly poured into U.S. equity funds, marking the largest daily addition in five months. This surge, highlighted by small-cap stocks reaping the most significant inflow since March, at $3.8 billion, aligned with the prevailing sentiment of these stocks benefitting from Trump’s protectionist stance. Furthermore, recent market actions have seen U.S. stock prices skyrocket to record highs, following the election outcome coupled with an additional interest-rate cut from the Federal Reserve. Nevertheless, despite the optimism surrounding Trump’s proposed lower corporate tax rates, it is important to highlight that there are prevailing investor concerns regarding the potential implications of forthcoming tariffs and immigration policies on inflation. Moreover, it is worth noting that the surge in U.S. stock funds contrasts starkly with the consistent outflows experienced by European equity funds for the sixth consecutive week, totaling $900 million, reflecting growing apprehensions about the potential ramifications of tariffs on European stocks.
TECH TITANS REMAIN STRONG
The Magnificent Seven – group of major tech companies including Apple, Amazon, and Microsoft, have also reached an all-time high during the recent market rally as investors continue to show confidence in these mega-cap stocks, driving the Roundhill Magnificent Seven ETF (MAGS) to a fresh record high on Thursday. This ETF tracks the performance of popular tech giants such as Apple, Amazon, Alphabet, Microsoft, Meta, Tesla, and Nvidia. These stocks have been significant market movers this week, with MAGS surging over 8% in the last five days, outperforming the broader S&P 500 index. Amidst discussions around potential policy changes under the incoming administration of President-elect Donald Trump, attention has also shifted towards these market leaders. The strong performance of these tech giants highlights the enduring appeal of large-cap companies and their ability to generate growth and returns for investors.
MORE CUTS EXPECTED
In other news, following the latest rate cut implemented by the Federal Reserve in November, expectations for an additional cut in December remain strong. The rates were adjusted to a target range of 4.5% to 4.75%, with market indicators initially suggesting a 67% chance of another quarter-point cut in December. However, post-announcement, the probability of a December rate cut has risen to over 70%, while the likelihood of a pause decreased to around 29%. These probabilities are based on trading in 30-day fed funds futures contracts. Conversely, the market predicts a higher likelihood of the Federal Reserve holding off on an interest rate cut in January, with a probability of around 71%. This expectation has slightly increased since the Fed’s November announcement. Overall, there is a prevailing sentiment for a continued downward trend in interest rates, with some caution for January.
THE FUTURE OF BITCON ON SOLANA
The leading cryptocurrency exchange based in the U.S., Coinbase, has recently rolled out cbBTC, a wrapped Bitcoin token on the Solana blockchain. This innovative token is designed to maintain a 1:1 peg with Bitcoin, ensuring stability and reliable value preservation for users. Currently, approximately 135 cbBTC tokens have been minted, collectively valued at around $10 million, and deployed on the Solana network. Notably, prominent platforms on Solana, including Jupiter, Meteora, Kamino Finance, Raydium, Phoenix, Jito, and Drift, have already integrated cbBTC into their services. Among them, Kamino Finance has set ambitious goals to establish itself as a primary hub for cbBTC transactions within the decentralized finance (DeFi) space. The entrance of cbBTC into the market introduces another layer of opportunities for users seeking to leverage Bitcoin in various DeFi applications. And it is worth noting that since its launch in September, cbBTC has experienced rapid growth, reaching a market capitalization of over $1 billion. However, it still lags behind BitGo’s Wrapped Bitcoin (WBTC), which currently boasts an impressive $11 billion market cap across multiple networks.
