Global stock markets showed mixed reactions to Donald Trump’s election victory, with U.S. indices hitting record highs. Wall Street celebrated, with the Dow Jones and S&P 500 reaching new milestones. In contrast, European markets declined amid concerns about potential tariffs and the impact on the Chinese economy. Luxury brands and the automotive sector faced significant losses, while the U.S. dollar strengthened. Bitcoin rose due to favorable expectations for cryptocurrency deregulation, but oil prices fell amid disappointing economic support from China.
Stock Markets React to Trump’s Election
On Friday, global stock markets displayed a mixed response, with U.S. indices reaching unprecedented levels following Donald Trump’s election victory. Meanwhile, European markets expressed concerns over the Chinese economy and the protectionist policies anticipated from the incoming American president.
Wall Street Hits New Heights
In the bustling environment of Wall Street, the New York Stock Exchange continued its upward trajectory, with the Dow Jones climbing by 0.59%, the Nasdaq gaining 0.09%, and the S&P 500 increasing by 0.38%. Notably, the S&P 500 crossed the 6,000-point mark for the first time, while the Dow Jones surpassed 44,000 points.
This rally is attributed to investors celebrating Trump’s victory, which is expected to usher in lower corporate tax rates and reduced regulations, as noted by Patrick O’Hare from Briefing.com. “The post-election momentum is persisting, and investors are eager not to miss out on potential gains,” he remarked.
Additionally, Wall Street responded positively to the recent interest rate cut by the Federal Reserve and the strong economic indicators emerging from the U.S. Consumer confidence hit a six-month high in November, further boosting market sentiment.
However, the European markets faced a downturn, with significant losses: Paris dropped by 1.17%, Frankfurt fell by 0.76%, and London decreased by 0.84%. Zurich’s SMI also declined by 1.00%. Analyst Stephen Innes from SPI AM highlighted that the looming tariffs proposed by Trump are creating a wave of uncertainty across the Old Continent.
Trump’s plan to increase import taxes—ranging from 10% to 20% for various products and potentially up to 60% for Chinese goods—could exacerbate the already sluggish situation of the world’s second-largest economy, impacting many European companies reliant on exports to China. Despite Beijing’s announcement of a €780 billion increase in local government debt limits, market reactions were tepid.
Luxury brands took a substantial hit, with Kering plummeting by 7.75%, LVMH by 3.33%, and Hermès by 4.13% in Paris. London saw Burberry drop by 7.56%, while Swiss Richemont fell by 6.61% due to disappointing second-quarter results attributed to weak demand from China.
The automotive industry also faced declines, with significant drops for Volkswagen (-1.91%), BMW (-3.21%), and Mercedes (-2.62%) in Germany, while Stellantis in France lost 3.70%.
In the British property sector, Vistry Group’s shares nosedived by 15.51% after the company revised its annual profit forecasts downward due to underestimated construction costs. Media group Paramount Global also suffered, declining by 3.99% after reporting disappointing results amid a slowdown in traditional television and cinema.
The U.S. dollar experienced a boost from the “Trump effect,” rallying on expectations that the new administration will encourage the Federal Reserve to maintain higher interest rates. By 20:30 GMT, the dollar rose 0.86% against the euro, trading at 1.0714 dollars per euro.
Bitcoin also saw an uptick, reaching $76,521, bolstered by Trump’s promises to deregulate cryptocurrency markets. However, oil prices fell as the market reacted to China’s economic support measures, which failed to impress investors. January delivery prices for North Sea Brent crude sunk by 2.33% to $73.87, while West Texas Intermediate (WTI) crude dropped by 2.73% to $70.38.