World stocks, bonds bounce on Bessent pick as US Treasury Secretary

By Nell Mackenzie and Tom Westbrook

LONDON/SINGAPORE (Reuters) -World markets cheered the selection of fund manager Scott Bessent as U.S. Treasury Secretary on Monday on hopes he might restrain debt levels, while falling yields weighed on the dollar and commodities such as gold and crude declined.

Wall Street looked to open higher after Donald Trump picked fiscal hawk Bessent as Treasury Secretary, a decision that appeared to be welcomed by markets.

At 1214 GMT, Dow E-minis 1YMcv1 were up 297 points, or 0.67%, S&P 500 E-minis EScv1 were roughly 30 points, or 0.5% and Nasdaq 100 E-minis NQcv1 were up almost 120 points, or 0.56%.

Europe’s main stock index hit a two-week high on Monday, driven by the nomination of Bessent and comments from the ECB chief economist on monetary policy easing, although lenders UniCredit and Commerzbank fell on buyout developments.

The pan-European STOXX 600 was last trading down 0.1% with Frankfurt and London up around 0.1% and Paris down 0.1%.

Italian bank UniCredit CRDI.MI dropped 3.5% after launching a surprise all-share offer worth 10 billion euros ($10.45 billion) for smaller domestic rival Banco BPM BAMI.MI, which climbed 2.6%.

Shares of Commerzbank CBKG.DE fell 5.6%, weighing on the banking index, as investors assessed the impact of Unicredit’s Banco BPM deal on the German lender’s likely buyout offer.

Benchmark 10-year Treasury yields fell about 4 basis points to 4.36% and the dollar dropped 0.2% against the yen to 154.52.

Sterling rallied 0.2% to $1.2558, while the euro firmed 0.5% against the greenback.

“The market view (is) that Bessent is a ‘safe hands’ candidate,” said Societe Generale strategist Stephen Spratt, a relief as the risk of a more unorthodox pick was priced out of markets and as Bessent has mentioned restraining U.S. borrowing.

Japan’s benchmark Nikkei average closed up 1.30%, while China’s blue-chip index dropped to a five-week low and Hong Kong shares sank to their lowest in two months as concern over a looming U.S. trade war and elevated geopolitical tensions sapped already fading risk appetite.

President-elect Trump’s appointment of a Treasury secretary has been closely watched in bond markets as expectations of tax cuts as well as tariffs and an immigration crackdown have stoked fears of inflation and big deficits.

In an interview published on Sunday, Bessent told the Wall Street Journal that both tax and spending cuts were priorities.

Bessent told CNBC earlier in November, before his selection as Treasury secretary, that he would recommend “tariffs be layered in gradually”, though his appointment gave only the merest and short-lived boost to China’s yuan.

EURO PRESSURE

The broad selloff eased pressure on the euro, which has fallen sharply this month on worries over Trump tariffs, deteriorating economic conditions and signs of an escalation in the war between Russia and Ukraine.

European data due this week would shed light on the euro zone’s economic trajectory, said Bruno Schneller, managing partner at Erlen Capital Management in Zurich.

“Looking ahead, the risk of heightened volatility persists, particularly with preliminary inflation data for November from Germany on Thursday and France on Friday,” said Schneller.

At $1.0476 the euro had recovered from last week’s two-year lows, though there was hardly a sigh of relief.

This challenging backdrop intensifies the European Central Bank’s balancing act as it prepares for its Dec. 12 meeting,” added Schneller.

Expectations for a 50-basis-point rate cut from the ECB in December have surged, with market participants now pricing in more than a 50% chance of such a move.

The U.S. week ahead is likely to be lightened by Thursday’s Thanksgiving holiday in the U.S., with many traders probably making a long weekend of it.

October PCE and jobless figures will be published on Wednesday along with the latest GDP estimate, and Federal Reserve minutes are due on Tuesday.

Markets still expect a Fed cut next month, though rate-cut bets have been dialled back in recent weeks.

Bitcoin fell 1.26% from Sunday to $98,138. On Friday, it reached a record peak of $99,830 amid expectations of a more friendly regulatory environment for cryptocurrencies under Trump.

It is up about 30% since Trump’s sweeping election victory on Nov. 6, when voters also elected a slew of pro-crypto lawmakers to Congress.

Oil prices slipped on Monday following 6% gains last week, but supply worries amid mounting tensions between Western powers and major oil producers Russia and Iran kept a floor under prices.

Brent crude futures steadied at $75.15 a barrel by 1224 GMT, while U.S. West Texas Intermediate crude futures had dropped 7 cents to $71.17 a barrel.

Spot gold was down roughly 1% at $2,682 per ounce.

(Reporting by Nell Mackenzie and Tom Westbrook; Editing by Dhara Ranasinghe, Kim Coghill, Stephen Coates, Jan Harvey and Ed Osmond)