Bitcoin and US stock markets benefit most from Trump election
Published: Monday, Nov 11th 2024, 14:00
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The election of Donald Trump has made big waves on the markets. While cryptocurrencies such as Bitcoin and the US stock markets benefited, investors in Europe reacted rather cautiously to the prospects of another Trump presidency.
The biggest winners are undoubtedly cryptocurrencies. Since the elections, Bitcoin has risen by around 18% and is currently at a record high of around USD 82,000. Since its annual low in January, the value of Bitcoin has more than doubled. Other cryptocurrencies such as Ether and Solana have also risen.
Most recently, Trump actively courted the crypto community. He promised to leave the crypto market largely unregulated and to provide cheap electricity for the calculation of new Bitcoin coins ("mining"). Trump also recently launched his own crypto project.
Records for Dow Jones and Nasdaq
The traditional US stock markets also reacted euphorically to Donald Trump's election. The Dow Jones and the technology-heavy Nasdaq shot up to new highs immediately after the election. The rally continued almost unabated until Friday.
Technology stocks were among the biggest beneficiaries. Above all, shares in the electric car manufacturer Tesla gained significantly in value. Its boss Elon Musk is known to have actively supported Donald Trump during the election campaign.
The US dollar also received a boost after the election. The measures proposed by Trump, such as punitive tariffs or tax cuts, could drive up inflation in the US again. "The Fed could respond by raising interest rates again, which would make the dollar more attractive," writes Thomas Stucki, CIO of St. Galler Kantonalbank, in a market assessment on Monday.
European stock markets under pressure
Initially, the European markets reacted positively to Trump's election, as a clear result emerged relatively quickly. In addition, Republican presidents are seen as more business-friendly.
However, the initial euphoria in Europe quickly turned into disillusionment. Over the course of the week, European stock markets recorded clear losses on balance. Fears of increasing protectionism and a trade war in the US, as well as the unpredictability of US President Trump, dampened sentiment.
The Swiss benchmark index SMI also continued its negative streak, which has now lasted three weeks. Over the week, it lost 1.4%, bringing the year-to-date gain to just under 6%.
Gold price falls
The price of gold also came under pressure. Shortly after the election, the troy ounce (approx. 31.1 grams) fell in price by almost 100 US dollars. On Monday afternoon, the troy ounce cost around 2670 dollars. The stronger US dollar is making gold more expensive for investors from other currency areas and is putting pressure on demand.
This has put a damper on the upward trend of recent months. Since March 2024, gold has risen in price by almost a third due to speculation of falling interest rates and fears of a geopolitical escalation in the Middle East. At the end of October, the price of gold even reached a record high of 2790 dollars.
Normalization to be expected
It now remains to be seen how the financial markets will react to the election in the medium to long term. Looking back over the last 100 years, it is no surprise that the US markets often see price gains in the first few days after a presidential election - regardless of whether a Republican or Democrat wins. As a rule, however, the euphoria then fizzles out relatively quickly, writes Salah-Eddine Bouhmidi, Head of Markets at IG Europe, in a commentary. Among stock market traders, this development is expressed by the saying "Political stock markets have short legs".
Over the weekend, investors had some time to digest the turbulence of the past week. According to the report, the measures planned by Trump are unlikely to fundamentally reshape the US economy in the short term. "They will also be mitigated by countermeasures from companies and consumers. The laws of economics will not be undermined by Trump either," Stucki from SGKB adds.
The situation on the European markets eased somewhat on Monday. The major indices - in addition to the SMI, the German DAX, the French CAC 40 and the British FTSE - were clearly up again by midday.
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