This is how currencies, cryptocurrencies and world markets reacted to Trump’s victory

Coinciding with the election of the Republican candidate Donald Trump to the presidency of the United States, the markets are registering important reactions, highlighting the immediate beneficiaries of this victory. As Gabriel Debach, analyst at eToro, an investment platform, explains, Among the sectors that will benefit from the magnate’s return to the White House are the world of cryptocurrencies, the dollar and, potentially, the bond market. Specifically, the reaction of global markets is the result of the expectation of a business-oriented policy and deregulation.

Crypto

The cryptocurrency sector, as confirmed in a note by Ferdinando Ametrano, CEO of Checksig, a cryptocurrency management company, will be one of the biggest beneficiaries of Trump’s victory. For example, bitcoin reached new all-time highs, exceeding 75 thousand dollars and marking a capitalization of more than 1,473 billion dollars. Although the growth of the cryptocurrency is the jewel in the crown, a significant increase is also announced in other currencies, including Ripple (+5%) and Dogecoin (+20%). The latter received support from Elon Musk for the Trump campaign.

During his election campaign, the Republican candidate promised to transform the United States into the “cryptocurrency capital of the world,” with a plan that includes the creation of a strategic reserve of bitcoins and the appointment of regulators favorable to the industry. These proposals have attracted support from prominent figures in the world of digital currencies, including Tyler and Cameron Winklevoss, Jesse Powell and David Bailey, who actively contributed to their campaign. Trump also expressed his intention to fire the current chairman of the Securities and Exchange Commission (SEC), Gary Gensler, to facilitate more open and welcoming regulation towards the sector.

The markets

The US stock market also responded positively to the Republican victory. Trump Media & Technology Group Corp (DJT) reported an increase of more than 10% in after-sales operations, after initial strong fluctuations that caused the suspension of operations. DJT’s market capitalization of around $6.79 billion still lags far behind that of giants like Apple and Nvidia, but trading volume indicates considerable speculative interest around the company. Small-cap stocks represented by the Russell 2000 Index are growing strongly, driven by the prospect of perfectionist policies and stimulus for American industry and the search for easy profits. Trump’s victory also benefited Tesla shares.

Likewise, the future of the main indices, such as the S&P 500 (+1.9%) and the Russell 2000 (4.5%), point to possible internal economic growth; increased merger and acquisition activity and an extension of personal tax cuts. These factors are also reflected in the rise in 10-year Treasury yields, with a 13 basis point rise suggesting expectations of higher fiscal deficits and nominal GDP growth.

The dollar and growth sectors

Trump’s victory also boosted the dollar, with the DXY index rising 1.6%. The US currency appreciated against the euro (-1.7%), and the Japanese yen (-1.5%) and the Mexican peso (-2.6%), reflecting a climate of confidence in stronger nominal growth and the possibility of protectionist policies . The Mexican peso traded at its worst level since August 2022 on fears of an increase in trade tariffs that could result from Trump’s protectionist stance.

“For the dollar, a stable framework offers support in the coming months, as interest rates in the US are expected to remain high. In the long term we expect investors to focus more on fiscal risks and the impact of the tariffs. This scenario would favor safe haven currencies, such as the Swiss franc and the Japanese yen, against cyclical values ​​such as the euro and the pound,” say Samy Chaar and Luca Bindelli, chief economist and head of investment strategy at the Swiss bank. Lombard Odier, respectively. They added that The outlook for gold remains positive, although high US rates and a slightly strong dollar could initially limit gains.

“We maintain our 12-month price target of $2,900 per ounce. An increase in US oil production could put pressure on supply and we provide risks that crude oil prices fall below $70 a barrel within a period of time. year,” Chaar and Bindelli suggest. For its part, The sectors that could benefit most from the Republican administration are: technology, public services and the financial sector. The expectation of a policy of deregulation and tax reduction, together with the influence of AI in a growth context, makes these areas particularly attractive. Analysts predict that the S&P 500 will reach 6,600 points by the end of 2025, returning almost 15% from current levels.

In this sense, investors seem inclined to take advantage of high bond yields to secure profits, in view of possible inflation. However, the situation remains complex and subject to possible difficulties in implementing the promises made during the electoral campaign. According to Paul Donovan, head of brokerage Global Wealth Management (GWM), the markets’ affirmative reaction could be corrected, especially if the Federal Reserve were to adopt a more conservative approach to monetary policy. The possibility of an austerity policy could curb growth expectations for large technology companies that had bet on the victory of the Democratic candidate, Kamala Harris.

Article originally published in WIRED Italy. Adapted by Alondra Flores.