Rising US stocks, a stronger dollar and a Bitcoin record high: these are the reactions on the stock markets to Donald Trump‘s victory in the US presidential election.
The stock markets initially reacted positively to Donald Trump’s re-election as US President.
John Angelillo / Imago
Investors are preparing for a new presidency of Donald Trump – many have entered into Trump trades. This means stocks and other assets that will benefit from his victory in the elections. Meanwhile, yields on American government bonds rose significantly and the dollar also strengthened. There were significant losses in the price of gold, which has reached record highs this year.
“Stock investors like Trump”
With the news of Trump’s election victory, prices initially rose on most stock exchanges. The US stock exchanges started trading with significant gains. The American standard values barometer S&P 500 was up more than 2 percent after the stock market started.
The euro zone stock index Euro-Stoxx-50 also posted gains on Wednesday morning. In the afternoon the index fell significantly into the red. The Swiss Market Index, the barometer of Swiss standard values, gave up its initial gains over the course of the day and ended trading slightly negative.
Many investors expect a second Trump presidency to lower taxes for companies and weaken existing regulations. This could lead to increasing profits for corporations. “Stock investors like Trump because they expect him to have business-friendly policies,” said Michael Strobaek, global investment head at Bank Lombard Odier. It can also be assumed that a recession in the USA will be avoided and that economic expansion will continue until 2025.
Donald Trump supporters at a party in Florida.
Callaghan O’Hare / Reuters
Tesla shares are going through the roof
Many investors will be relieved that there will be no deadlock over the outcome of the US presidential election. “Uncertainty is always bad for the stock market,” says Sébastien Gyger, head of investment at Banque Cantonale Vaudoise. It is interesting to see that surveys by market participants have been predicting Trump’s election victory for months, while opinion research institutes were expecting a close election outcome.
With the renewed gains, there is much to suggest that 2024 will be a very strong year, especially for US stocks. The S&P 500 is already up almost 24 percent this year. The Euro-Stoxx-50 has so far increased by just over 6 percent, the SMI by around the same amount.
Tesla shares temporarily gained 15 percent when the stock exchange opened in New York. The founder and boss of Tesla, Elon Musk, strongly supported Trump in the election campaign. “Thanks to another Trump presidency, Tesla should be able to withstand Chinese competition,” says Gyger. Trump is planning high tariffs on Chinese cars, which should help Tesla compete with Chinese competitors.
Damage to China’s stock market – soon also to Europe?
Meanwhile, Chinese stocks were hit by Trump’s strong performance in the election. The Hang Seng index in Hong Kong and the Chinese CSI 300 index fell. Investors expect Trump to take a tougher stance towards China. During the election campaign he promised additional protective tariffs.
In Europe too, the financial markets’ initial relief that there was no political stalemate in the USA could be short-lived, says Matthias Geissbühler, head of investment at Raiffeisen Switzerland. Depending on which tariff policy Trump implements, this could lead to the European economy stagnating in the coming year.
Switzerland as a possible safe haven
According to the Raiffeisen investment director, domestic companies are affected by tariffs to varying degrees. Industrial companies that produce in Switzerland for export to the USA are particularly exposed. The topic could also become current for the watch and luxury industry. “If Trump introduces comprehensive import tariffs, this would be very negative for the Swatch Group,” says Geissbühler.
He estimates the impact of a second Trump term on the pharmaceutical industry to be less pronounced. On the one hand, this is because Novartis and Roche already have production in the USA. On the other hand, the pressure on the industry to reduce healthcare costs would have been greater under Kamala Harris.
The Swiss market is likely to continue to serve as a safe haven for investors, at least in the short term, according to John Plassard, senior macroeconomics expert at private bank Mirabaud. Trump is unpredictable. “For example, only after his inauguration in January will it become clear what additional tariffs he will actually introduce,” he says. Then the effects on the luxury and pharmaceutical industries become clear; the USA is an important export market for these companies.
Investors are positioning themselves for higher inflation
The upcoming Trump presidency also left its mark on the bond market. The yield on ten-year US government bonds rose by 0.2 percentage points to 4.47 percent on Wednesday. The financial markets expect Trump to pursue an even more expansive financial policy than under Joe Biden. If budget deficits and debts increase, states have to pay higher interest rates.
Investors are also positioning themselves for higher inflation under Trump. This could be fueled by higher tariffs in trade policy. This in turn could lead to the US Federal Reserve reducing key interest rates less. “Trump’s planned trade policy could make interest rate cuts by the Federal Reserve more complicated,” said Strobaek.
Strong dollar and falling gold price
The dollar was also stronger and gained against both the franc and the euro. The dollar’s development against the euro was even clearer. The evening before, one euro cost 1.0903 dollars, on Wednesday evening it was 1.0731 dollars. A protectionist US trade policy under Trump could have negative consequences for the euro zone economy.
Meanwhile, the strong dollar weighed on the price of gold. This fell significantly by around 3 percent to $2,666 per ounce by Wednesday evening. The price of the precious metal has staged a long rally this year, reaching a record high of $2,790. The price of gold has still been up 29 percent since the beginning of the year.
Record high for Bitcoin
Bitcoin also benefited from Trump’s victory. The price of the crypto reserve currency rose by 8 percent and reached a new record high of over $75,000. During the election campaign, Trump held out the prospect of easier regulation for the crypto industry and suggested building a strategic currency reserve in Bitcoin. He positioned himself as the first crypto-friendly president and promised to make the USA the “crypto superpower of the world”.
For this he received support from investors from Silicon Valley. They expect a lot from his presidency. Trump has promised to fire the crypto-critical head of the Securities and Exchange Commission, Gary Gensler. “We are at the beginning of a new American renaissance,” wrote crypto entrepreneur Tyler Winklevoss on the short message service X.
A Swiss crypto expert assumes a much friendlier environment for digital assets in the USA, with less regulation and a lower tax burden. This increases pressure on states that are less open to crypto, says Leon Curti, head of research at Digital Asset Solutions. Switzerland positioned itself early with progressive regulation. But if Trump makes rapid progress, the balancing act will become more difficult.
The shares of Trump Media & Technology Group, the parent company of Donald Trump’s social media platform Truth Social, also made a jump in price when trading began in New York. The volatile stocks had weakened in the days before the elections. They were seen as a barometer for Trump’s election prospects and the motivation of his supporters. A new presidency gives the platform new growth prospects.
