"Trump Trades" Are Going to Shape into "Trump Rally"
High spirits of clearly bullish excitement is afoot on Wall Street. U.S. stock futures, accompanied by Bitcoin, skyrocketed all night long to conquer historical peaks while Gold and Treasury bonds remained under selling pressure. This wave of an immediate market response came and quickly rose as soon as every national media outlet recognised Donald Trump as elected president after securing at least 279 electoral college votes, more than enough to come back, also beating his Democratic rival by nearly 5 million votes in the popular count. However, his political opponents just left their election headquarters and probably went home, without conceding defeat at that moment, many European and world leaders, as well as a NATO secretary general, were quick to congratulate the Republican leader on the victory, which actually included not only the presidential race but also the Senate majority. The investing community greeted the prospect of a Republican-controlled Congress to cut taxes and slash regulations for business.
Remember how relief on corporate taxes and deregulation measures formed a solid ground for a Trump rally in November 2016 when he just won his first term, so that the S&P 500 overcame a huge path from 2,100 to almost 3,400 in early 2020. A percentage increase in price surpassed 60% during this first Trump rally, with the further gains being postponed due to the corona crisis, but more bullish hopes being fulfilled during the reign of Trump's Democratic successors and after a two-year pause for correction. Inflation effect and money devaluation formed the major fuel for the ascending trend since 2023, but hopes for economic incentives provide a great chance for more healthy reasons for the second Trump rally, now based on higher growth projections.
The S&P 500 broad market barometer temporarily peaked at nearly 5,925 points, the Dow Jones Industrial Average stopped at 43,630 before the start of a regular session in New York. However, the next target area around 6,300-6,400 for the S&P 500, plus a very attractive psychological threshold of 50,000 for the Dow, may attract more stock purchases in various segments of the market. Renewable energy firms such as First Solar or NextEra may be sad exemptions. Both stocks already lost double-digits tonight as Trump repeatedly said about his intention to roll back on climate regulations passed under the sitting U.S. president Joe Biden. Chinese continental stock indexes and Hang Seng futures in Hong Kong slumped by 2.5% to 3.5% on fears of high trade tariffs, which could be promoted by Republicans, as it would be in line with Trump's policy during his first term. However, the presence of Elon Musk in Trump's current team could make the U.S. tariff policy may be less harsh this time, as Elon Musk is actually a person who cares much about his firm's sales in China.
In all other aspects, today's "Trump trades" may be extended and transformed into a midterm "Trump rally", especially as the Federal Reserve's dovish cycle with cutting interest rates will provide some fuel to add to the fire. The latter circumstance helped Wall Street lending banks like JPMorgan Chase, Bank of America and Wells Fargo to jump between 5% and 6%, while the market cap of the AI chip flagship NVIDIA exceeded $3.4 trillion to remove Apple from its leading position in the list of the most expensive companies in the world.
Besides, shares of Tesla shined after a more than 12% price gap well above $280 vs last day's close at $251.44, because the hyping EV maker's founder and top shareholder, Elon Musk, has openly and feverly supported and sponsored Donald Trump's electoral campaign. Shares of Trump Media and Technology Group opened a new session by surging 33% in the pre-market trading but later lost 2/3 of initial gains as commercial success of this rather political project is not so clear for investors.
BTCUSD briefly touched the area above $75,000 in early European hours and continued to consolidate gains surfing within a range between $72,500 and $74,800 later in the day. As we've written a couple of weeks before elections, Bitcoin may eventually develop its optimism up to $100,000 after reaching its nearest $80,000 target, upon breaking free beyond its previous technical borders. Bets on a much softer line on cryptocurrency regulation is moving BTCUSD ahead, taking into account Donald Trump's promise to go as far as consider using Bitcoin transactions to lighten the burden of U.S. debt in Dollars. However, investors also bought the Greenback, so that the U.S. Dollar Index added 1.5% to 2% after election results became clear.
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