Wall Street experienced a surge following Donald Trump’s election, with major indices like the Dow Jones and Nasdaq hitting record highs. The Nasdaq rose nearly 3%, driven by optimism around Trump’s proposed economic policies. While U.S. stocks, particularly in technology and finance, thrived, European markets faced declines amid concerns over potential trade barriers and inflation. German exporters braced for challenges, with Goldman Sachs downgrading Eurozone growth forecasts due to tariff risks, despite positive industrial order data.
Wall Street Celebrates Trump’s Victory
While European stock markets experienced a downturn, Wall Street was filled with exuberance. Many sectors flourished in response to the anticipated protectionist economic policies promised by the newly elected Donald Trump.
The atmosphere on Wall Street was electric. Trump’s electoral success was met with jubilance as the Dow Jones and the S&P 500 indices reached historic highs. The technology-heavy Nasdaq also surged, reaching unprecedented levels.
The Nasdaq soared by 2.95 percent, peaking at 18,983 points during the session and marking a new record high of exactly 19,000 points. Additionally, the Nasdaq 100 index saw an impressive increase of 2.74 percent, closing at 20,781 points, with the selection index reaching a high of 20,807 points.
The Russell 2000 index, often overlooked, experienced a significant rise of 5.84 percent, reaching an all-time high of 2,393 points during the day. Market analysts emphasize the importance of this broad market uptrend, indicating a stable upward movement.
David Morrison, a senior market analyst at Trade Nation, noted, “There is relief over the swift and uncontested election results, and Trump’s victory is viewed as a significant advantage for U.S. companies, thanks to his pledges to lower taxes and reduce regulations.”
Focus on Trump Trades and Sector Performances
As the market reacts to Trump’s election, the so-called “Trump trades” are gaining traction. Bitcoin reached new heights with Trump’s clear support for cryptocurrencies, while yields increased and prices decreased. Portfolio manager Thomas Altmann commented, “Trump’s campaign promises could significantly escalate U.S. debt, yet stock prices are climbing as U.S. companies stand to gain from his tax initiatives.”
The stock market rejoiced over Trump’s election victory, with Bitcoin, the DAX, and the Dow all showing upward trends, alongside shares in Trump and Tesla.
Among individual stocks, the Trump Media & Technology Group saw its initially high gains wane, closing at $35.96, up 5.9 percent. Investors opted to take profits, especially since the valuation did not align with the platform’s business metrics, making it a speculative investment.
U.S. chip stocks were notably popular, with shares of Nvidia, Micron, Broadcom, Qualcomm, and Advanced Micro Devices seeing significant gains. Intel, too, rose by 7.42 percent as expectations grew that Trump would prioritize domestic technology, particularly semiconductor production, putting Chinese and Taiwanese firms at a disadvantage.
The financial sector also enjoyed a boost from the prospect of U.S. growth and relaxed regulations under Trump. Speculation about a tighter monetary policy from the Federal Reserve further benefited financial stocks, with shares of Bank of America, Citigroup, JPMorgan, and Goldman Sachs climbing as much as 13 percent on Wall Street.
The dollar surged in the foreign exchange market, a favored “Trump asset,” as investors anticipated persistently higher interest rates. Conversely, the euro fell temporarily by two percent, trading below $1.07, with the European Central Bank setting the reference rate at $1.0695.
Thomas Gitzel, chief economist at VP Bank, remarked on the implications of lower corporate taxes and higher tariffs for U.S. monetary policy. “Lower tax rates could fuel growth, while higher tariffs might lead to inflation, potentially prompting the Federal Reserve to reconsider its planned interest rate cuts, which would support the dollar,” he explained.
Emerging market currencies felt the strain, particularly the Mexican peso, which dropped over three percent amid fears of new trade barriers. This strengthened dollar also led to declines in commodity prices, with gold, copper, and oil all trading lower.
Concerns for the German Export Economy
As fears of a higher budget deficit loomed due to Trump’s tax cuts, economists warned of rising inflation, contrasting with the anticipated interest rate cuts by the Federal Reserve. This trend is pushing yields on U.S. bonds upward.
In the wake of Chancellor Scholz’s dismissal of Finance Minister Lindner, which led to the collapse of the governing coalition in Berlin, investors reacted with relative calm. The DAX was seen slightly higher at around 19,090 points in after-hours calculations.
Despite initial optimism, the DAX, which had climbed to a peak of 19,563 points, slipped into negative territory in the afternoon. Trump’s election raised concerns for many export-driven German companies, confirming pre-election fears about the potential challenges they may face.
The German leading index ultimately closed at 19,039 points, reflecting a daily loss of 1.13 percent. At its lowest, the index fell to 19,007 points, just shy of the 19,000 support mark. The MDAX of medium-sized companies also declined by 0.86 percent, settling at 26,338 points.
Particularly hard-hit were auto stocks, which faced intense pressure as Trump’s anticipated protectionist policies raised concerns about their export-oriented business models. Thomas Gitzel highlighted, “It could become uncomfortable for trading partners, with further punitive tariffs on the horizon.” Discussions of a 60 percent tariff rate on Chinese imports and a ten percent rate on imports from other countries have emerged.
Goldman Sachs has revised its economic outlook for the Eurozone following Trump’s election, now projecting growth of only 0.8 percent for the currency union by 2025, down from a previous estimate of 1.1 percent, citing tariff risks as a significant factor.
Despite the challenges, positive news emerged with robust order data from the German industry, showing a surprising 4.2 percent increase in orders for September compared to the previous month, marking the strongest growth since June, according to the Federal Statistical Office.