The initial reaction to the election or other major events is often speculative. Moreover, the stock market rise we’ve seen mostly occurred before the U.S. session opened. By the end of the day in the U.S., we’ll see more representative dynamics as investors react to the election results with their money.
Primarily, U.S. stocks are rising, while Chinese stocks have fallen. In Europe, there’s some growth, but sector dynamics vary. In the U.S., banks are the main growth drivers, as they are expected to benefit most from Trump’s presidency due to anticipated relaxed regulations, maximum digitalization, and a push towards cryptocurrency integration in the economy.
Trump has repeatedly expressed support for the crypto industry, so Bitcoin and other cryptocurrencies are growing amid expectations of a stimulative policy to introduce crypto tools into the economy.
Additionally, U.S. stocks in domestic sectors like manufacturing and automotive are on the rise, as Trump’s policy is expected to focus on protectionism and supporting the American economy.
Oil, gold, and other precious metals are declining due to a significant one-time increase in the dollar. During Trump’s first term, the dollar showed strong dynamics, so now, with a general understanding of U.S. policy direction, it is strengthening again.
The drop in U.S. government bonds is linked to the expectation that the Trump administration will implement inflationary policies and impose tariffs on imports. Consequently, import goods, including energy resources, will rise in price. The Federal Reserve is currently cutting rates to prevent excessive cooling of the U.S. economy. However, if inflation rises, rates may not be reduced or could even increase.
The growth of Ukrainian Eurobonds is related to Trump’s comments about ending the war. Accordingly, foreign shares of Ukrainian companies, such as Ferrexpo, are also rising. However, this may be an emotional reaction to the election results. What the new administration’s real policy will be is likely uncertain even for Trump himself at this point.
Artem Shcherbyna, Chief Investment Officer at Capital Times
Source – Forbes.ua
