Global stocks rose on Wednesday morning after Donald Trump claimed victory in the 2024 US presidential election.
At the same time, the US dollar index hit its highest point since July, rallying against other global currencies, while the euro fell on expectations of increased tariffs on European goods.
“With the Republican party on the cusp of a clean sweep of Congress and the presidency, US markets are rallying. This is less an endorsement of every facet of the Republican manifesto, but because markets like visibility, and clear governmental control provides that”, says Michael Field, European market strategist at Morningstar.
“We are likely in for a busy, and eventful four years, with Trump knowing that he needs to hit the ground running and get policy changes done while Republicans control the two houses. The euro is down, and rightly so given the likelihood of at least some of these policies negatively affecting the region. Expect a brief pause after the results, before the real action begins. ”
Bitcoin Gains on Trump Trades
In his first speech, Donald Trump thanked supporters for electing him as the 47th president.
Cryptocurrencies, which are considered part of the so-called Trump trade, rallied as well. Bitcoin surpassed $75,000, topping its previous all-time peak reached in March. Donald Trump has voiced support for cryptocurrencies in the past.
Other popular picks within the Trump trade also outperformed: Trump Media & Technology Group DJT was the top gainer on the US premarket, while Tesla TSLA, headed by vocal Trump supporter and donor Elon Musk, rose 15%.
The 10-year Treasury yield surged to around 4.43% on speculation Trump’s proposed tax cuts and other spending plans would increase the fiscal deficit, while possible tariffs could reignite inflation.
Oliver Blackbourn, multi-asset portfolio manager at Janus Henderson, expects more stimulus for the US economy, but the scale will be dependent on whether the Republican party takes full control of Congress.
He also noted the broad-based rally in global stock markets.
“Perhaps the most surprising outcome so far is the strength of stock markets outside of the US. European and Japanese equities are performing well, and the downside in China is perhaps less than many had feared, despite the incoming President’s threats to global trade.”
European Stocks Mixed: Pharma Up, Auto Stocks and Wind Down
There were mixed reactions from European stocks on Wednesday, with the Morningstar Developed Markets Europe 100 Index up more than 1%.
Ozempic maker Novo Nordisk NOVO B, which has a large revenue exposure to the US market and reported positive earnings Wednesday morning, jumped. But wind turbine stocks like Denmark’s Vestas VWS and Orsted ORSTED fell amid fears over reduced investment in renewable energy and tariffs on European manufacturers.
European luxury car manufacturers also fell, with shares in BMW BMW and Porsche P911 falling on tariff fears.
Morningstar automotive analyst Rella Suskin says that the exposures of the European automakers to the US varies between around 10% and 30% in terms of vehicle sales, with Italy’s Stellantis and Germany’s Porsche the most vulnerable.
“With Porsche selling 27% of its vehicles in the US, we foresee it having the largest risk in a scenario of import tariffs against foreign manufacturers.”
But some firms are better prepared than others. With car production facilities in the US, this will limit the possible impact of import tariffs, she says.
“Key to BMW‘s strategy is a ’local for local’ production approach. Its sales in the US are almost exactly matched by its production footprint within the Americas.”
Thematic ETFs in Europe reflected the expected policy changes in the Trump administration: robotics, cloud computing, automation, cybersecurity and uranium mining exchanged-traded funds rallied, while Chinese tech and renewable energy funds fell.
In the UK, the FTSE 100, with its high proportion of dollar earners, gained nearly 2%, aided by pound weakness against the dollar. US-exposed stocks like Ashtead AHT, Rolls-Royce RR. and BAE Systems BA. were the biggest risers.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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