① As Trump regained control of the White House, a series of "Trump deals" in the global financial markets on Wednesday undoubtedly plunged into a night of revelry Many investors quickly picked up many profitable strategies from 2016, and from the trend of the market, it seems that many market sectors are even more "crazy" this time than in 2016
As Trump regained control of the White House, a series of "Trump deals" in the global financial markets on Wednesday undoubtedly plunged into a night of revelry. When Trump's slogan "Make America Great Again" resounded in the United States, many investors quickly picked up many of the money making strategies from 2016.
From the trend of the market, it seems that many market sectors are even more "crazy" this time than in 2016
The most obvious thing is that at least on Wednesday, the "America First" trading (where US assets perform better than globally) received strong impetus as the market bet that the next US president will introduce policies to stimulate domestic growth and "exempt" the world's largest economy from overseas competition.
The most vivid manifestation may lie in the stock market.
With the momentum of Trump's big victory, the three major stock indexes in the United States further broke historical highs on Wednesday. As of the close, the Dow Jones Industrial Average rose 1508.05 points, or 3.57%, to 43729.93 points; The Nasdaq rose 544.29 points, or 2.95%, to 18983.47 points; The S&P 500 index rose 146.28 points, or 2.53%, to 5929.04 points. The last time the Dow Jones Industrial Average rose over 1000 points in a single day was on November 10, 2022, when the index rose over 1200 points.
This is also the largest single day increase in the history of the S&P 500 index on the second day after the election:
In terms of specific sectors, the contrast between strength and weakness around the Trump deal is clearly quite distinct. Bank stocks benefiting from "relaxed regulation" have surged, while renewable energy and retail stocks facing tariff risks have plummeted
Note: The black line represents the banking sector, the gray line represents renewable energy stocks, and the blue thin line represents retail stocks
A basket of large tech stock indices soared to near historical highs:
The man standing behind Trump - Musk - clearly became the big winner overnight after this election: Tesla's stock price surged 15% on Wednesday, reaching its highest level since July 2023.
Of course, how could the presence of Trump Media (DJT) be absent from the list of winners. Although the stock gave up most of its gains after a significant opening, it still closed up nearly 6%.
The Russell 2000 Index, a benchmark for small cap stocks, also surged 5.84% overnight, hitting a 52 week high. Analysts point out that this is because small companies tend to be more cyclical, and they may benefit from some of the tax cuts implemented by Trump.
Whether it's the stock market or the foreign exchange market, "America First" trading is particularly prominent on the day of the election results.
A comparison shows that the ETF (SPY) tracking the S&P 500 index rose 2.5% on Wednesday, while another ETF (IEFA) that invests more extensively in developed country stocks fell 1.4%. The last time such extreme disagreements occurred was in 2016, when Trump won the presidency for the first time. Meanwhile, as Trump's destructive protectionist agenda became the focus, emerging market stock markets also fell overall on Wednesday.
A similar phenomenon is also emerging in the foreign exchange market. The US dollar strengthened against major non US currencies on Wednesday, achieving its best single day performance since September 2022. After Trump took office, the eurozone, Mexico, China, and Canada were seen as facing potential new tariff risks that could harm economic growth in these regions. This will also widen the interest rate differential between these markets and the United States, and drag down these major non US currencies.
The significant appreciation of the US dollar on Wednesday has temporarily curbed the record breaking rise of gold, while putting pressure on oil and base metals, which are often seen as indicators of the global economy.
Note: Gold price trend
Perhaps only Bitcoin has not been impacted by the appreciation of the US dollar. Bitcoin exploded strongly on Wednesday, hitting a new high of $76000
This has led many cryptocurrency enthusiasts to speculate whether Bitcoin's next destination will be $100000?
On Wednesday, the only alternative "US priority" asset area, perhaps in the bond market - the risk of additional issuance of treasury bond bonds and runaway inflation after Trump took office, caused a large sell-off of medium and long-term US bonds. The data shows that the yield of five-year US treasury bond rose 13 basis points on Wednesday, while the yield of German five-year treasury bond fell 9 basis points. The reason is that the European Central Bank may cut more interest rates under the threat of Trump plus tariffs, which is a rare divergence in the trend of treasury bond between the two countries since the reunification of Germany in the early 1990s.
The 10-year US Treasury yield, which is inversely related to the price trend, rose 15.3 basis points in late trading to 4.441%, and is expected to record the largest daily increase since April.
It is not difficult to foresee that after the "crazy Wednesday" after the election results were announced, the November decision of the Federal Reserve, which will be released in the early morning of Friday Beijing time, is likely to trigger a new wave of market sentiment this week.
Although a 25 basis point rate cut by the Federal Reserve this week seems to be a foregone conclusion (with a market implied probability of 95%)... but who knows what the path of rate cuts will be in the future?
From the expectations of the interest rate market, as Trump's victory may pose more challenges to the Federal Reserve's efforts to curb inflation, traders currently expect the Fed to only cut interest rates by 57 basis points in 2025. The expected total rate cut from now until the end of 2025 is less than 100 basis points (less than 4 25 basis point rate cuts)