The financial world acted quickly on November 6, 2024, the day Donald Trump won the 2024 US presidential election, from price swings in global financial markets to headlines from national and international forums comparing the possible economic fallout of Trump returning to the White House Office. Investors are being buffeted by a storm of Trumpophobia from three fronts: deregulation, trade protection, and fiscal expansion. Below is a summary of some key insights from across the top publications:
Major Shifts in International Finance: Key News On November 6, 2024
The New York Times
The article “Stocks Set Records and Dollar Soars After Trump Election Win” by Joe Rennison, Eshe Nelson, Daisuke Wakabayashi, and Danielle Kaye describes the stage for a stock market boom following Trump’s 2024 election impact on finance. It provides vital financial insights into the global markets.
- Investors chased US stock indexes to all-time highs, betting on government (Trump) spending, deregulation, and growth. The gains were substantial, particularly for the S&P 500, Nasdaq, Dow, and Russell 2000.
- The American dollar appreciated worldwide, most prominently against the Euro and Japanese Yen. That was based on the expectation of hefty tariffs, Trump and inflationary pressure, and the other key economic policies Trump espoused.
- Bitcoin also rallied, setting an all-time high price. This included what was termed a “pro-crypto policy Trump 2024” platform from Trump, which promised to undo all the work by the Biden administration to deploy an anti-crypto regulatory agenda and promote the US role as a world leader in crypto.
- US Treasury yields for Trump 2024 climbed higher over the past ten years, indicating investor indifference to Trump and inflationary pressure but fear of higher rates. Trump’s fiscal expansion fueled this fear and Trump’s economic agenda in 2024.
- European markets briefly went up, then finished only a little lower, reflecting anxiety on the higher costs of higher tariffs, especially for German exports. Japanese stocks were among the Asian markets that gained, even as markets in China and Hong Kong have shown some negative responses to the possibility of Trump-style protectionism stoking trade tensions.
Reuters
The Reuters article “What does a Trump victory in 2024 elections mean for global markets? “states the implications for global financial markets from Trump’s expected trade policies (November 6, 2024). Key points include:
- Trump’s trade policies, which seem likely to lead to heavy tariffs on Chinese imports, are probably going to make the dollar stronger since yuan depreciation or inflation in China will be the likely adaptation, and probably also because US growth will be boosted by the aggressiveness of such trade policies in the longer run. Although tariffs and tax cuts would likely slow growth abroad, a strong dollar would likely put downward pressure on the euro and yuan. This bodes well for a relatively more robust Swiss franc, as the Swiss franc usually holds up well during inflationary times.
- Meanwhile, lower corporate taxes and deregulation of the oil, defence, and banking industries have also prompted optimism that US stocks will perform well under Trump. Goldman Sachs estimates a 4% boost to S&P 500 earnings if the corporate rate is cut to 15%. Trump may bring volatility through his protectionist stance, particularly with China and Europe, which could damage internationally exposed sectors like tech and autos. European companies may report lower earnings, and sectors such as semiconductors and clean energy could be more volatile due to tariff worries.
- Trump’s fiscal policies worry investors because they would boost US government debt. “The spending plans, including $5 trillion in tax cuts, would add $7.5 trillion to deficits over 10 years,” says the Union Bank of Switzerland (UBS) team. That has pushed Treasury yields up on the way as the Fed has little room to cut rates further, given that inflation is starting to heat back up again. This will put pressure on global bond markets and may affect global borrowing costs with higher yields.
- Emerging markets could be especially vulnerable to a Trump presidency. Due to tariffs, export opportunities will lower, and a strong dollar will bear down on currencies like the Mexican peso. Other emerging markets with strong domestic growth, like India, could appeal to investors as safer bets.
- Trump may reverse environmental regulations, especially those linked to the Inflation Reduction Act, which benefits fossil fuel sectors. On the flip side, his pledge to scrap unspent green funds could stifle demand for clean energy and sustainable funds, which could be less appealing to investors during his presidency.
Foreign Policy
Below are the highlights of the article written by Keith Johnson at Foreign Policy, “U.S. Stocks and Dollar Lifted by Trump Performance,” November 6, 2024:
- Trump’s victory sent US stocks and the dollar soaring on expectations of deregulatory, pro-business policies. Expected tax cuts and deregulation would immediately benefit US companies.
- US indices futures saw gains during pre-market hours, suggesting optimism for the energy, finance, and manufacturing sectors, which appear poised to benefit from a Trump-led economic agenda.
- The Nikkei index in Japan gained more than 2%, but in China, the Shanghai Composite fell back amid signs that renewed trade conflicts with the US could be on the table.
- The dollar’s strengthening created downward pressure on multiple foreign currencies. In response, the renminbi ( aka Chinese yuan (CNY)) and other nations susceptible to US trade designs were lower.
- Johnson says a stronger dollar could pose challenges for developing nations with large amounts of dollar-denominated debt or economic dependence on the US. This financial burden may cause fluctuations in such economies.
- While any growth-based increase in funded investments may raise US-focused investments, it will likely add to global market unrest that holds in all territories affected by expanding US policy initiatives such as tariffs and sanctions.
The Washington Post
The article “What Trump’s Win Means for the World’s Most Pressing Problems” appeared in ‘The Washington Post,” authored by Annabelle Timsit, Adela Suliman, and Kelsey Ables, and was published on November 6, 2024. This in-depth analysis discusses the potential global impacts of Donald Trump’s second presidential term, focusing on several key areas:
- Conflict in the Middle East (Trump supports Israel and will not call for a ceasefire in Gaza, which probably encourages Israel’s actions against other enemies in the region)
- Trump’s adversarial stance may lower support for NATO, and each NATO country may need to finance it more individually.
- Many view Trump as a sceptic of US aid to Ukraine, which signals a fear that he will force concessions with Russia. However, one Ukrainian official sees possibilities for increased assistance from the US.
- Meanwhile, his authoritarian-style relationship with other autocrats could embolden those leaders worldwide and erode global democratic norms and emerging markets’ Trump policies.
- Trump threatened to withdraw the US from the Paris Agreement and freeze environmental regulations, stopping climate action worldwide.
- Latin American Immigration and Trade Moving Forward on refugees, Trump’s announced plans for mass deportations and substantial tariffs on Mexico could alter U.S.-Mexico relations, with wide-ranging repercussions for both economies and migration.
BBC News
The article “US Shares and Bitcoin Hit Record Highs on Trump Win” by João da Silva and Charlotte Edwards, published by BBC News on November 6, 2024, reports financial markets’ positive response to Donald Trump’s presidential victory. Key points include:
- Record high for U.S. Stock Market: The major U.S. stock indexes, especially the banking indexes, registered new highs, reflecting investors’ confidence in Trump’s eventual tax cuts and trade tariffs.
- US Dollar Gets Strengthened** The Dollar gained its biggest gain in the last eight years, with other core global currencies moving simultaneously and the pound and euro losing massive amounts.
- Bitcoin makes an all-time high: Bitcoin achieved an all-time high on the phrase stating that Trump would have a more ‘Bitcoin-friendly’ policy compared to Biden, who would have a stricter administrative policy regarding crypto regulation.
- The Nikkei 225 in Japan and the UK’s FTSE 100 opened higher. German DAX and French CAC 40 European stock indexes were down, likely due to Trump’s protectionist trade views.
- Trump’s idea of increasing tariffs on countries like China disrupts world trade (Asia, Europe).
- While increased US bond yields and high interest rates should support dollar-denominated environments, they can destabilise economies dependent on trade.
Conclusion
Trump’s potential 2024 administration has a new global financial landscape, seemingly ripe for radical change. U.S.-centric investments could benefit from growth and pro-business policies in the US, while emerging markets and trade-dependent countries with the US may struggle. As the US dollar gains strength, bond yields rise, and the markets become nervous, investors are cautiously positioning themselves to benefit from his policies while managing the financial sector deregulation Trump. These qualms are probably reflected in brand-new US Treasury market movements (note: rate changes in a mode that prices fall as their yields rise). Ultimately, as these market reactions show, Trump has aimed as a protectionist and nationalist to shake up global finance, bring along different risks, and eventually out-adjust global investment strategies.
