Donald Trump’s resounding victory in the US presidential election has sparked a wave of enthusiasm on Wall Street, while markets in Asia and Europe are more cautious. The election of the Republican candidate has raised concerns about the possible effects of tariffs on global economies.
In the United States, financial markets rallied significantly. The dollar and Bitcoin hit new all-time highs, while the Nasdaq was driven by the performance of Tesla, which rose 14% thanks to the support of Elon Musk. US government bond yields also rose, while raw materials, especially oil, showed signs of weakness. In Asia, reactions were mixed: while Tokyo gained 2.6%, Chinese stocks fell. In Europe, the opening was optimistic thanks to US futures, but concerns about the auto industry and renewable energy changed the trend of the day. Milan closed down 1.54%, as did Frankfurt by 1.13% and Paris by 0.5%. London contained the decline to 0.07%, while Madrid was the worst with a decrease of 2.93%.
“The impact of the tariffs could be huge,” warned Luis de Guindos of the ECB, highlighting the risks for trade relations between the United States and China.
Investors are reinterpreting the concept of the “Trump trade.” On Wall Street, the election outcome is welcomed as no significant protests are expected. The president’s tax and trade policies could boost American economic growth and corporate profits. However, these changes also carry risks such as rising inflation. The Federal Reserve is due to meet on Thursday to discuss a possible interest rate hike of 0.25%, but the Trump administration’s policy moves could complicate its strategy to keep inflation at its 2% target. The dollar benefited from Trump’s protectionist policy, gaining ground against other currencies. The euro fell by more than 2%, hitting its lowest level since 2016 before recovering some of its losses. Additionally, Trump’s promise to turn the United States into the cryptocurrency capital of the world has pushed Bitcoin above $75,000, approaching the $80,000 threshold. With these dynamics in play, eyes remain on the Fed’s next moves and the evolution of international trade relations that could profoundly impact the global economy in the months ahead.
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