U.S. Markets Surge as Trump Declares Victory, Sparking “Trump Trade” Frenzy

Following Donald Trump’s declaration of victory in the U.S. presidential election, financial markets have responded with a surge, fueling what analysts are calling the “Trump Trade.” Investors are reorienting their portfolios toward sectors poised to benefit from anticipated Republican policies, while unloading stocks that may fare poorly under the same adm

On Wednesday, the three major U.S. indices reached unprecedented highs. The S&P 500 climbed by 2.5%, marking its largest post-election gain in history, while the Dow Jones Industrial Average rose 3.57%, its biggest increase in two years. The tech-heavy Nasdaq also gained 2.95%, with technology stocks broadly advancing. Notably, Tesla shares surged by nearly 15%, hitting their highest level since July 2023. Shares in Trump-linked entities such as Digital World Acquisition Corp., banking, and energy, experienced sharp rises. Meanwhile, renewable energy stocks, previously boosted by the prospect of Democratic policies, plummeted across the board.

Trump’s victory also set off a rally in the cryptocurrency market, with Bitcoin soaring to an all-time high of $76,400 at its peak before settling at $75,400, representing a 6% gain. Ethereum followed suit, rising 13.63% to $2,817. This cryptocurrency rally reflects investor optimism around deregulation and potential pro-business, pro-crypto policies.

The dollar index jumped over 1.6%, reaching its highest level in nearly four months as other major currencies struggled. The Japanese yen dropped over 1.9%, reaching a three-month low, while the offshore yuan fell to near 7.2 for the first time in over three months. The euro also declined by 1.8%, marking one of its worst single-day losses in over four years.

In the commodities markets, oil prices initially fell amid reports of record U.S. crude inventories and a stronger dollar, though the decline moderated to just over 0.4%. Spot gold faced downward pressure, posting its largest single-day drop in five months. Investors are weighing concerns that inflationary pressures may prompt the Federal Reserve to pause interest rate cuts, exacerbating gold’s losses. By market close, spot gold had dropped by over 3%, falling below $2,660, its lowest level in three weeks.

As the dust settles on the election, global markets are adapting to a potential “Trump 2.0” era, characterized by projections of robust economic growth and rising inflation. Investors are now closely watching the Federal Reserve’s upcoming monetary policy decision and Federal Reserve Chair Jerome Powell’s remarks for insights into how the central bank plans to navigate this changing landscape. The global market response underscores the stakes of the economic policy shift, with Wall Street betting heavily on the outcomes of Trump’s second term.