Wall Street markets were quick to respond to Trump’s win. 📈 Overnight following Trump’s ascension to President-elect, the so-named ‘Trump trade’ saw Trump Media & Technology Group (DJT) initially ‘surge’ 25% (now fallen -2.8%), the Dow (^DJI) grew 3.2% (now up 4.95%), the Nasdaq Composite (^IXIC) lifted 2.7% (now up 4.57%), and S&P 500 (^GSPC) climbed 2.6% in ‘its best post-election Day in history’, according to Bloomberg (and is now up 3.75%). 

Tesla (TSLA) stock also soared around 29% following election results (now up 36.42%), climbing past a US$1 trillion market cap — the milestone they first passed in October 2021. This has been attributed by commentators to CEO Elon Musk’s very visible support of the Republican candidate, and potentially Trump’s plan for Musk to head up a proposed government efficiency commission.

The self-styled ‘crypto president’

Trump’s goal for the US is to be ‘the crypto capital of the planet’. 🌎 In his July address at the Bitcoin Conference, Trump shared his ambition to make America the ‘bitcoin superpower of the world’, promising to ‘appoint an SEC chair who will build the future, not block the future’. 

The Breakdown podcast host Nathaniel Whittemore — aka NLW — confirmed the crypto industry’s hopes, labelling last week ‘an extremely consequential week’. Speaking to Scott Melker, he said with Trump in-coming as US president, there’s a sense that cryptocurrencies have been ‘de-risked’.

Big crypto backing. 🤑 Despite Trump telling Fox Business in 2021 that crypto was a ‘disaster waiting to happen’, his stance has since changed. It appears, too, that Trump and the Republicans’ support of digital currencies created a significant point of difference between America’s two largest rival parties. 

‘Republicans will end Democrats’ unlawful and un-American crypto crackdown and oppose the creation of a central bank digital currency. We will defend the right to mine Bitcoin, and ensure every American has the right to self-custody of their Digital Assets, and transact free from government Surveillance and control.’ — The 2024 Republican Platform

TIME estimated that by October this year, the crypto industry and crypto investors had ‘poured US$119 million’ into US elections this year. Immediately following the Democrat’s loss, some crypto markets responded. Bitcoin (BTC-USD) reached a record high, ignited by a ‘crypto frenzy, climbing more than 94.18% this year, and now past US$87,000.

A regulator reshuffle? ⚖️ Outgoing chair of the US Senate Banking Committee, Democrat Senator Sherrod Brown, who had allegedly ‘stood in the way of legislation’, lost Ohio to blockchain businessman, Bernie Moreno. And Trump’s pledge to remove SEC chair Gary Gensler — one of many promises to crypto campaigners, including to ‘keep 100% of all the bitcoin the US government currently holds’ — resonated with pro-crypto industry commentators, the sentiment echoed by Coinbase’s Paul Grewal on X:

‘I hope @SECGov understands what has happened tonight. On many, many issues, the voters said loud and clear that they want change. Crypto is no exception. Stop suing crypto. Start talking to crypto. Initiate rulemaking now. There's no reason to wait.’ — Paul Grewal, chief legal officer of Coinbase (COIN) on X

Other digital currencies, such as Ether (ETH.CM) and Solana (SOL.CM), and crypto-adjacent stocks, including Coinbase (COIN) and MicroStrategy (MSTR), have also benefited from Trump’s decisive win.

Bitcoin ETFs have climbed 🧗‍♀️

In January, when the SEC paved the way for Bitcoin ETFs, approving 11 new exchange traded funds (ETFs), Hatch investors were among the first to diversify their investments with the new funds:

ARK 21Shares Bitcoin ETF (ARKB), Bitwise Bitcoin ETP Trust (BITB), BlackRock’s iShares Bitcoin Trust (IBIT), Fidelity Wise Origin Bitcoin Fund (FBTC), Franklin Bitcoin ETF (EZBC), Grayscale Bitcoin Trust (GBTC), Tidal Commodities Trust I-Hashdex Bitcoin Futures ETF (DEFI), Invesco Galaxy Bitcoin ETF (BTCO), Valkyrie Bitcoin Fund (BRRR), VanEck Bitcoin Trust (HODL), WisdomTree Bitcoin Fund (BTCW). 

One of the initially most popular funds, BlackRock’s iShares Bitcoin Trust (IBIT), benefited from last week’s post-election bitcoin rally, taking the fund’s net asset value above their iShares Gold Trust ETF (IAU), despite the latter trading since 2005.

What could be next for US inflation?

Experts have warned Trump policies may prove to be inflationary. 📈 During his campaign, Trump told Republican Convention delegates that ‘inflation will vanish completely’ under his presidency. This came after 16 nonpartisan Nobel Prize-winning economists warned of the opposite, stating that Trump's proposed fiscal agenda could ‘reignite’ inflation. 

The Peterson Institute for International Economics backed the claims. ☝️ They published their analysis of Trump’s three key policies: to deport ‘millions’ of immigrant workers, hike trade tariffs (10-20% worldwide, and up to 60% on Chinese goods), and plans to potentially erode the Fed’s independence (prompting Fed Chair Jerome Powell to ‘defend his job’). Their report found that his so-called ’Trumponomics’ could both increase consumer prices (with many American retailers importing from China), and may have the potential to hike inflation to between 6% to 9.3% — above its current 2.44%. 

While more conservative in their estimates, Moody’s Analytics had drawn a similar conclusion. They found that Trump’s proposed fiscal policies could potentially push up annual inflation to 3.6% next year, and could increase consumer prices by 1.1%. The Wall Street Journal’s The Journal podcast previously labelled Trump v Harris ‘the Inflation Election’, with chief economic correspondent Nick Timiraos adding that Trump’s ‘more aggressive tariffs could also risk kicking off a trade war’. 

How a strong USD impacts the global economy

ING analysed a Trump clean sweep win against potential foreign exchange, rates (bonds), credit and commodities. They previously suggested that his potential for ‘loose fiscal policy is likely to result in tighter monetary policy’, that is, higher inflation rates. 

ING’s predictions of a strong US dollar were realised. Overnight, as Trump’s win swept the US, the news sent ‘dollar and bond yields to multi-month highs’. If inflation rates do increase, however, it may prompt a reduction in the return on US share market bonds, where bond prices are inversely related to interest rates. 

ING and Goldman Sachs also released post-election analysis of what a Trump presidency means, including for: equity markets and FX rates, oil and gas markets, American consumers, US protectionism, and China.

In New Zealand

New Zealand doesn’t have a Free Trade Agreement with the US. 🇳🇿 In 2023, we sent around NZ$14.5 billion exports to America (12.7% of New Zealand’s total exports) that could be impacted if Trump’s proposed 10-20% trade tariffs come into effect. In 2023, Kiwi dairy and red meat US exports grew by 23% and 15% respectively. International Business Forum executive director Stephen Jacobi told Morning Report that if tariffs are imposed on our largest export beef, for example, in Aotearoa New Zealand ‘we could be looking at a very serious situation’.

For New Zealand’s 3.33 million KiwiSaver investors, as equity markets navigate Trump’s win, some may see their ‘balances fluctuate’ in the short term, said Kernel KiwiSaver founder Dean Anderson. But for now, we just watch and wait.

‍Read more: Is Trump good for the US economy?

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