Trump’s second term as president of the United States has increased equities markets on wagers of beneficial tariffs, deregulation, and lower corporate taxes, raising shares of banks, small-cap companies with a local focus, and Trump Media.
After the billionaire supported Trump during his election campaign, he promised to appoint Tesla CEO Elon Musk to lead a government efficiency panel. This promise caused the electric carmaker’s stock to rise 12.5%.
While the small-cap Russell 2000 index surged almost 4.8 per cent to reach its best level in almost three years, Wall Street’s major indexes opened at all-time highs.
“Business animal spirits could be rekindled once again from Trump’s pro-business approach which could lead to a more robust capital expenditures and investment environment,” said Jeff Schulze, market strategist at ClearBridge Investments.
In volatile trading, Trump Media & Technology Group, in which Trump owns a controlling stake, increased by about 8%. The company’s most recent quarterly statistics, which revealed that the Truth Social parent company’s revenue was only $1 million, were disregarded by investors.
Since the shares’ all-time lows in late September, their value has more than tripled, and Trump’s investment has increased from $3.9 billion on Tuesday to as much as $5.3 billion.
Additionally, Trump’s Republican Party won the Senate and was gaining ground in the House of Representatives, which would facilitate the president’s ability to enact laws and appoint important officials.
According to Scott Chronert, US equities strategist at Citi, the markets “have priced in a pretty strong mandate for the Republicans and are biassing towards most of the Trump trades.”
“Policy details will be important for here as the market focus seems to be putting more emphasis on deregulation, tax cuts, and a more business-friendly backdrop.”
Expectations of increased domestic investment loosened restrictions, and more deals caused Wall Street lenders JPMorgan Chase, Bank of America, and Goldman Sachs to soar between 6 and 10 per cent.
“Trump’s win likely means some deregulation, including rolling back banking regulations, though Big Tech may remain a bipartisan antitrust focus,” strategists at BlackRock Investment Institute said in a note.
Despite Trump’s criticism of the US CHIPS and Science Act, which provides subsidies to boost domestic chip manufacture, semiconductor stocks moved higher, with the Philadelphia chip index jumping 1.8 per cent and AI hotshot Nvidia gaining 2.7 per cent.
Instead, Trump has suggested imposing duties on foreign chips, especially those made by Taiwan’s TSMC, whose stock fell 3% on the US stock exchange.
While US renewable energy companies like NextEra Energy and First Solar fell 6 per cent and 13 per cent, respectively, oil equities firmed 3.5 per cent.
Part of the energy policy plan that Trump’s campaign outlined was to dismantle the Biden administration’s attempts to combat climate change in order to maximise US fuel and electricity output.
Autos, crypto and China
Other electric carmakers’ stocks fell when Trump stated he would consider eliminating a $7,500 tax credit for EV purchases, but Tesla’s stock rose on Musk-Trump proximity.
Nikola fell roughly 1.4 per cent, while Rivian Automotive fell 8 per cent.
According to Garrett Nelson, a senior stock analyst at CFRA Research, “Since no one else is profiting from EVs except Tesla, the reduction or elimination of EV credits will increase Tesla’s competitive moat.”
US-listed China shares were under pressure due to worries about Sino-US tensions rising, and the iShares MSCI China ETF fell by over 2.4 per cent.
One of the main tenets of Trump’s policy is import charges, which are expected to have the largest worldwide impact. These include a 60 per cent tariff on imports from China and a 10 per cent universal duty on imports from all other nations.
Bitcoin hit a record high after Trump, who has positioned himself as pro-cryptocurrency, won the election. The cryptocurrency-related equities MARA Holdings, Coinbase, MicroStrategy, and Riot Platforms all had increases of 11 to 21 per cent.
The need for detention facilities may increase as a result of Trump’s promised crackdown on illegal immigration, which caused private jail providers Geo Group and CoreCivic to soar by almost 30% apiece.
Cleveland-Cliffs, Steel Dynamics, and Nucor, three US steel companies, saw increases of 13 to 19 per cent. Before the election, economists had warned that a Trump presidency might result in more protections for the American steel sector.
