Markets Update November 2024 - After the US election: the Trump trade moves the markets

There seems to be no end to the wave of euphoria on the global stock markets. Donald Trump's clear election victory has boosted investor confidence and further supported the positive market trend on the US stock exchanges. Small caps and the financial and technology sectors are benefiting particularly strongly from Trump's plans. Cryptocurrencies have gained even more. Trump is considered to be extremely “crypto-friendly”: he not only wants to promote the domestic cryptomining industry, but is even in favor of a strategic US bitcoin reserve. The recent rise in long-term interest rates on US government bonds is remarkable, for a simple reason. This is because US deficits are likely to be higher under Trump. In addition, the expected aggressive stimulus in the late phase of the US economic cycle could trigger a new wave of inflation.

Trump: the dark side

The financial markets are currently focusing mainly on the positive aspects of the Trump agenda, such as tax cuts and deregulation. However, Trump also stands for tough protectionism and an erratic foreign policy that could increase geopolitical risks. Furthermore, his efforts to curtail the Fed's independence could cause additional uncertainty on the financial markets. Trump is starting his term in office with a lot of support, including within the Republican Party. After all, he was able to secure a clear victory despite the favorable economic data - solid economic growth, low unemployment, falling inflation rates and booming stock markets - which actually spoke for Harris. The Republican Party also secured a majority in both chambers of Congress in his slipstream. Trump could therefore govern without any major obstacles, although this entails considerable risks and uncertainties going forward.

The current high on the markets is likely to continue and possibly transition seamlessly into the typical seasonal year-end rally. However, the negative aspects of the Trump presidency could become increasingly apparent over the course of 2025, which would put a damper on the stock market euphoria.