International markets have reacted positively to Donald Trump’s return as President of the United States, with numerous major indexes rallying on the morning of November 6.
The S&P 500 index climbed 1.2 per cent mid-morning, drawing closer to the record established in October. The Dow Jones Industrial Average rose 427 points, or 1 per cent, while the Nasdaq Composite Index increased 1.4 per cent.
Trump Media & Technology stock jumped 40 per cent while Elon Musk’s Tesla rose 13 per cent.
US stock futures were about 1.5 per cent higher, while yields on US sovereign debt rose, indicating an expectation of economic growth but also an increase of national debt, which would likely lead the government to issue more bonds to fund the deficit.
Observers had said they had feared possible uncertainty regarding the election results could upset markets but Trump’s decisive victory has quelled those fears.
The dollar appeared to be on track for its biggest one-day gain versus other major currencies since March 2020.
The dollar index, which measures it against six other major currencies including the euro and yen, was up 1.25 per cent in the morning of November 6, having previously reached a four-month high.
Compared to the Mexican peso, the dollar climbed 3.36 per cent while the euro fell 1.92 per cent.
Iran’s currency, the rial, fell to an all-time low early on November 6 at 703,000 rials per US dollar.
That seemed to reflect trust in Trump’s fiscal ability, especially given he was on track of also having a majority in the House of Representatives and the Senate, to pursue its own economic policies, friendly to entrepreneurs and businesses, with room for tax cuts and deregulations.
In an analysis by Deutsche Bank, it was predicted that a unified government under Trump would “have the greatest degree of freedom for fiscal policy and would likely be the most dollar bullish outcome”.
Cryptocurrency Bitcoin rose to an all-time high, up 7 per cent, to around $75,060, or €69,740.
During the presidential campaign, Trump appealed to investors in such currencies and promised to launch a strategic national crypto stockpile.
He also promised to remove Gary Gensler, the Securities and Exchange Commission chairman appointed by now-ex-president Joe Biden, who had taken what was seen as a hostile approach to cryptocurrency regulation.
Trump also said he would create a “bitcoin and crypto presidential advisory council”.
The Republican Party’s draft platform, passed prior to the election, expressly stated its goal to cease what it described as an “unlawful and un-American crypto-currency crackdown”.
In after-hours trading (US time) on November 5, crypto-linked firms such as Coinbase and MicroStrategy rose sharply.
Dogecoin, promoted by Musk, was up 18 per cent.
The rise in Bitcoin’s price seemed to reflect wider economic concerns among voters. The US federal deficit rose by 8 per cent in the fiscal year 2024, reaching $1.8 trillion (€1.6 trillion).
Bitcoin could serve as a hedge against probable inflation and dollar depreciation.
In Europe, the reaction appeared mixed but was positive overall. Early on November 6, futures were pointing towards a higher opening in major European indices and the UK’s FTSE 100 jumped by about 1.5 per cent when markets restarted.
Japan’s stock market also went up, while the Shanghai Stock Exchange and Hong Kong’s Hang Seng Index were down slightly, suggesting caution in China, a geopolitical adversary of the US, but also reflecting a weaker Chinese economy.
Bruce Pang, chief economist for the greater China area at JLL, a real estate and investment management firm, told the New York Times on November 6 he expected more predictability under a second Trump presidency.
Trump’s news was not good news for everyone on Wall Street.
Big losers of the results in the US appeared to be in the renewable energy sector. After having received lavish support and subsidies from the left-wing government, such shares dipped sharply.
MarketWatch reported that SunRun, First Solar and Enphase Energy were each down anywhere between 9 per cent to 13 per cent.
Wind energy firms, such as the Danish Ørsted dropped 14 per cent and turbine maker Vestas Wind Systems tumbled 13 per cent. The German RWE and Nordex were also in the red.
Citigroup analyst Jenny Ping said in a note: “We expect to see some differentiation between renewable technologies, with those exposed to offshore wind potentially more at risk.”
Another loser appeared to be the German car manufacturing sector. BWM, Porsche, Mercedes, and Volkswagen all saw their stock shares drop in value.
