Market Reactions to Trump’s Re-election
Trump’s return to office in 2024 has already caused major shifts in global markets. Investors expect his policies, including protectionism and tax cuts, to reshape multiple sectors. While some industries will benefit, others will face challenges, particularly in green energy and international trade.
Beneficiaries: Small-Caps, Russian Stocks, and Crypto
Trump’s pro-business stance gives a significant advantage to small-cap stocks, particularly in the US. After his victory, the Russell 2000 index surged by 6%. Domestic manufacturers are set to thrive as higher tariffs on imports protect them from foreign competition. US banks, including Wells Fargo, Citigroup, and Bank of America, also enjoyed substantial gains, rising around 8%. Trump’s fiscal policies, including tax cuts, will likely boost profits for financial institutions.
Russian stocks, such as Gazprom and Sberbank, gained 3-4%. The expectation of improved US-Russia relations has fueled optimism. Additionally, the Moscow Stock Exchange (MOEX) outperformed European markets with a 3.3% gain.
Tesla’s stock surged 4%, driven by Trump’s protectionist measures. Higher tariffs on foreign electric vehicles (EVs) are expected to shield Tesla from competition. Cryptocurrency markets, led by Bitcoin, saw a rise of nearly 8%, with Bitcoin hitting $75,000. The anticipated regulatory changes under Trump have generated investor optimism.
Challenges: Green Energy, Chinese Exports, and European Cars
Trump’s victory spells trouble for green energy sectors. Companies like First Solar, Enphase Energy, and NextEra Energy faced significant losses. Investors fear his reduced support for renewable energy projects could slow the transition to clean energy. Trump’s focus on fossil fuels and deregulation may also slow down investments in clean technologies.
Chinese exporters are bracing for higher tariffs. Trump’s promise of up to 60% tariffs on Chinese imports has already impacted companies like BYD and caused the Hang Seng Index to drop by 2.6%. These tariffs could stunt the growth of Chinese companies in the US market.
European car manufacturers, particularly German automakers such as BMW, Porsche, and Volkswagen, are facing uncertainty. Trump’s protectionist policies may introduce higher tariffs on imported vehicles, hurting their competitiveness. The stock prices of these companies have already fallen by as much as 6.5%.
The euro has weakened by 1.7%, driven by expectations of inflation and tighter policies under Trump. Similarly, US Treasuries saw a rise in yields, with 10-year Treasury bonds climbing by 10 basis points to nearly 4.5%. Investors anticipate an increase in the national debt due to Trump’s fiscal agenda.
Conclusion
Trump’s second term brings both opportunities and challenges for global markets. While small-cap stocks, Russian assets, and crypto markets may thrive, sectors like green energy, Chinese exports, and European car manufacturers will face headwinds. The market’s immediate reaction reflects these shifts, and investors are adjusting to the changing landscape.
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