By S&P 500 opened in the green this morning after President-elect Donald Trump signalled intent to nominate Scott Bessent as the next US Treasury secretary.
Bessent is the founder of Key Square Group – an investment firm based out of Greenwich, CT.
Investors appear to be welcoming his nomination this morning as he’s well-accustomed to navigating ups and downs of the global financial markets.
Scott Bessent is a “safe pair of hands” for the S&P 500 that now looks “set for another flurry o gains,” as per Susannah Streeter of Hargreaves Lansdown.
Why is Scott Bessent a positive for the stock market?
Financial markets see Bessent’s nomination to lead the Treasury Department as a positive because he’s broadly expected to push for a softer approach towards tariffs as part of Trump’s cabinet.
Additionally, Scott Bessent may also advise the President to focus on lowering deficit spending.
“We have the US 10-year yields coming down to 4.0% over the next six months. That’s confirming the idea that US budget deficit will not run too far away,” the chief investment officer of UBS argued in an interview today.
Mark Andersen now expects the S&P 500 to hit 6,600 by the end of next year that translates to a more than 10% upside from here.
AI and rate cuts to drive further upside in S&P 500
Investors expect Scott Bessent to rally for regulatory leniency to boost growth as well.
UBS’s Andersen is bullish on the benchmark index also because he forecasts artificial intelligence to remain a key driver of growth in the coming year.
Other sectors that will likely do well under Donald Trump in 2025 include financials and utilities, he said this morning on CNBC’s “Worldwide Exchange”.
Finally, Mark Andersen expects a further tick down in inflation and continued rate cuts to help drive the S&P 500 to new highs next year.
The US Federal Reserve lowered its key interest rate by another 25 basis points on November 7th.
Gold could rally further next year as well
All in all, markets seem to believe that Scott Bessent will support pro-business policies as the Treasury Secretary.
According to Mark Andersen, a way to play his nomination is to sell the US dollar and buy gold.
The US dollar index declined close to 1.0% following Bessent’s nomination on Friday.
And gold looks headed for $3,000 in the coming year, as per Vivek Dhar of CBA.
“One of the big attributes of gold this year has been its ability to find support in any environment – and it will very still find support drivers going into 2025,” he told CNBC in an interview today.
Note that the benchmark S&P 500 index as well as gold are already up some 28% currently versus the start of 2024.
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