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Key US indexes hit new records following Donald Trump’s victory in the presidential election.
Trump’s campaign, which focused on reviving traditional industries and reinforcing tariffs, suggests a shift in economic priorities that investors in the US and elsewhere are now trying to assess.
Immediate reactions were seen across various asset classes on Wednesday (November 6), including American indexes and equities, the US dollar, cryptocurrencies and commodities.
Key US indexes reach new all-time highs
The S&P 500 (INDEXSP:.INX), Dow Jones Industrial Average (INDEXDJX:.DJI) and Nasdaq Composite (INDEXNASDAQ:.IXIC) all reached new record levels as Trump’s victory hit markets. The S&P traded as high as 5,922.53 on Wednesday, while the Dow rose to 43,707.92. For its part, the Nasdaq reached 18,962.46.
‘The market is definitely moving in line with the Trump playbook; stocks and small caps, in particular, are higher on the idea that Trump will be good for U.S. companies,’ Seema Shah, chief global strategist for Principal Asset Management, explained to Reuters. She added that markets outside the US are reacting as well.
‘Across emerging markets, you can see China and Europe are struggling with the idea that they could face higher tariffs, and U.S. bond yields higher with expectations for a higher fiscal deficit and inflation.’
US dollar rallies, Bitcoin hits new all-time high
On the US dollar front, Trump’s win put the greenback on track for its strongest daily gain in four years.
Investors anticipate that a renewed focus on tariffs could increase inflation, potentially prompting the US Federal Reserve to cut interest rates by less than previously expected. The Fed’s next meeting is currently in progress, with many market watchers anticipating a 25 basis point reduction after September’s 50 basis point drop.
Bitcoin, which some see as a hedge against traditional financial instability, hit a new all-time high, reaching US$75,397 shortly after Trump’s victory. The cryptocurrency’s surge reflects investor sentiment that a Trump administration will be more favorable to digital assets than a Kamala Harris-led country might have been.
The boost continues the trend of cryptocurrencies being perceived as alternative assets in times of uncertainty.
Gold, also typically seen as a safe-haven asset, experienced a decline. The yellow metal sank as low as US$2,660.84 per ounce on Wednesday after spending the better part of the last three weeks above US$2,700.
Experts see the yellow metal facing opposing pressures: inflation risks from tariffs could increase demand for safe-haven assets like gold, while the strong dollar and stabilized economic growth might dampen that demand.
Silver also fell on Wednesday, dropping to US$30.99 per ounce at its lowest point.
Oil, copper and agricultural commodities react
Other commodities saw contrasting responses to Trump’s victory at the polls.
Both Brent and West Texas Intermediate crude futures saw small declines on Wednesday. Looking longer term, some analysts believe a Trump presidency could be positive for oil — if he renews sanctions on countries like Iran and Venezuela, these nations’ oil exports could be reduced, creating a tighter supply situation.
Copper saw a more significant decline, with Reuters reporting that it is set to record its biggest intraday loss in five months. Market participants appear to be pricing in the possibility of reduced US support for electrification projects, which could lower demand for copper, along with other industrial metals.
“We are seeing industrial metals taking the biggest hit, led by copper and iron ore, while grains trade lower, led by soybeans on fears that China’s countermeasures may hurt US exports of soybeans and corn,’ Ole S. Hansen, head of commodity strategy at Saxo, said in an emailed note.
China is a leading importer of soybeans from the US, making the market heavily dependent on the Asian nation.
Trump’s election has raised concerns that new tariffs could disrupt the US-China agricultural trade relationship, potentially prompting China to impose retaliatory tariffs on American crops.
Wheat and corn, while less reliant on Chinese markets, also trended downward before recovering.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.