Donald Trump's win resulted in a rough month for world markets as the following weeks after November 5 alone witnessed winners, such as Bitcoin and Tesla, and losers.
Some of those who find themselves at a disadvantage included European exporters and Mexico's peso. Meanwhile, Wall Street surged, with the dollar surging 2% over major currencies.
However, Reuters reported that December might also bring some challenges, as Trump's fiscal policies will disrupt the bond market, increase inflation, and complicate supply chains. Analysts caution that market optimism might be overlooking potential economic risks.
Currency markets suffered, with the euro falling 3% or more, the worst since 2022, following threats of US tariffs and economic woes in Europe. Mexico's peso and China's yuan fell against the dollar. On the other hand, Bitcoin soared 37%, nearly hitting the $100,000 mark, driven by speculation that Trump would soften the US stand on crypto-friendly regulations.
Some predict that this may be the turning point for Bitcoin to further mainstream into public consciousness, while others caution against speculative bubbles.
US Stocks After Trump's Win
According to Al Jazeera, US tech stocks surged, with the Nasdaq 100 reporting its best month since June. Tesla rose 33%, while Nvidia profited from a continuing interest in artificial intelligence.
But there are risks: Trump's tariff plans and fear of an AI investment bubble. The warning of a possible AI "bubble burst" from the European Central Bank puts the global tech markets in a fragile state and could send shockwaves to equity markets if valuations continue falling.
Banking and Bond Market Divergences
US banking stocks rallied 13% in November with hopes of deregulation while European banks fell 5% due to the economy. European banks must seek diversification into fee-generating activities such as asset management to offset market pressures. The US Treasury yields are increasing because of inflationary and higher deficit expectations from President Trump, while German yields have declined because of the economy and geopolitical tensions.
As December progresses, the world will face reality checks in its markets. It will be interesting to see how inflation, supply chain disruptions, and geopolitical risks test the optimism around the policies of Trump.
Join the Conversation