The election of Donald Trump as President of the United States has triggered a notable upswing in financial markets. Wall Street began the day with record-breaking highs, buoyed by the incoming Republican administration's promises to slash corporate taxes, introduce favorable tariffs, and encourage deregulation. This has been particularly advantageous for sectors such as banking and small-cap firms. According to Reuters, the Russell 2000 index, which includes smaller companies, rose by 4.8%, hitting its highest point in nearly three years.
Among the biggest winners was Tesla, with its shares climbing 12.5% following Trump's announcement to appoint Elon Musk—Tesla's CEO and a significant ally during his campaign—as head of a governmental efficiency commission. This endorsement solidified Musk's position in the incoming administration and boosted Tesla's value compared to other electric vehicle manufacturers, who faced declines due to Trump's comments about potentially removing tax credits for electric vehicles.
Cryptocurrency Market Sees Unprecedented Growth
The cryptocurrency market also witnessed a dramatic surge. Bitcoin hit an all-time high of $75,000, marking a 9% increase, driven by Trump's pledge to transform the United States into a global cryptocurrency hub. Trump's shift from critic to advocate of the sector has sparked optimism within the industry, which anticipates greater regulatory acceptance under his leadership. Another popular cryptocurrency, Ether, also appreciated by 6%.
Global Economic Implications of Trump's Victory
Trump's victory has had worldwide repercussions. The dollar appreciated by 1.5% against other major currencies, while the 10-year Treasury bond yield rose to 4.46%, levels not seen since July. These developments reflect expectations that Trump's protectionist policies could drive inflation higher, constraining the Federal Reserve's ability to lower interest rates in the future.
In Europe, market reactions were mixed. According to El Mundo, Spain's Ibex 35 index dropped by 2%, impacted by the effect on renewable energy stocks, as Trump has suggested dismantling the previous administration's climate change policies. Simultaneously, sectors like defense and American banking saw their values increase, anticipating fewer regulatory constraints during the Trump era.
Overall, Trump's election victory appears to be shaping an economic environment that benefits industrial, energy, and cryptocurrency sectors, while those reliant on environmental policies may face substantial challenges in the coming years.