"Political stock markets have short legs". But how long are the legs of political stock markets this time? Republican and former US President Donald Trump won the 2024 US presidential election against Democrat Kamala Harris and will move into the White House in January 2025. After an initial market reaction, there could be further different effects on various asset classes such as equities, commodities and crypto assets such as Bitcoin.
The most important facts in brief:
- Relief after US election about rapid government formation
- Increased volatility conceivable after US presidential election due to political uncertainty caused by Donald Trump
- Tax cuts and an increase in government spending could provide a boost - inflation concerns, on the other hand, are likely to dampen interest rate cut fantasies
- Introduction of possible punitive tariffs fuels fears of trade war with Europe and China
- Prospect of deregulation should allow entire sectors to breathe a sigh of relief
With Donald Trump, investors are hoping in particular for tax cuts and deregulation in various sectors. On the other hand, a protectionist approach also harbors risks. The risk of geopolitical instability should also not be underestimated.
Looking back: Donald Trump's first election victory in 2016 was considered a big surprise
Donald Trump won the White House for the first time back in 2016. Compared to the 2016 presidential election, the victory eight years ago came as a huge surprise, resulting in particularly pronounced volatility. In response to Trump's election victory in 2016, stock markets around the world initially reacted with great uncertainty until the news of tax cuts and thus the prospect of a flourishing US economy leaked out.
The second election victory in November 2024, however, was anything but surprising. A classic neck-and-neck race with Democrat Kamala Harris had been on the cards for months. First and foremost, investors were extremely relieved about the clarity of the future government formation immediately after the result was announced on November 5. A hung parliament would have meant further uncertainty and thus possibly additional market unrest.
Trump could "rule through": majority in the House of Representatives and Senate
In addition to a majority in the House of Representatives, Donald Trump can also count on a majority in the Senate at the start of his presidency. This means that the Republicans will control the presidency and Congress at least until the mid-term elections in two years' time.
Trump is therefore well placed to get legislation through parliament without major opposition from the Democrats.
Tariffs - Trump likely to focus on "America First" policy
Imports from Europe could be subject to tariffs of ten to 20 percent. Chinese goods could even face punitive tariffs of up to 60 percent. Trump wants to use the tariffs to protect domestic industry in particular from foreign competition and safeguard jobs in the USA. The budget deficit is also to be reduced through the introduction of tariffs. This is because the Republicans accuse both the eurozone and China of unfair trade practices, such as state subsidies.
The bottom line is that Trump wants to pursue an "America First" strategy that places a stronger focus on his own interests.
However, the planned tariffs could also have consequences. The price premium on imported goods could in turn lead to price increases for consumers, which could fuel inflation. It is quite possible that other countries will also introduce tariffs on US products in return, which would result in a trade war.
The German economy in particular, such as the automotive and mechanical engineering industries, which are considered to be particularly export-oriented, are likely to suffer.
At the same time, uncertainty about planned tariffs could delay investments and thus also slow down economic growth.
Deregulation
In addition to possible punitive tariffs, Trump is planning deregulation to boost economic growth, reduce costs, promote innovation and cut red tape at the same time.
By eliminating regulations, companies could be relieved, costs saved and profits increased.
The removal of certain regulations should also encourage innovation and make new start-ups more attractive.
Deregulation is seen as part of an overall business-friendly Trump policy, which is intended in particular to strengthen the competitiveness of the world's largest economy.
Equities: Deregulation as a possible influencing factor
Financial sector
Commercial banks and financial companies in particular could benefit from the planned deregulation. If there are fewer requirements or regulations for banks in mergers and acquisitions, for example, this could boost the sector and increase activity on the global financial markets.
In response to Donald Trump's victory, the shares of US investment bank Goldman Sachs, for example, soared.
Energy sector
As Trump wants to focus more on oil and gas production, fossil fuels and the companies associated with them could potentially benefit.
Conversely, companies in the renewable energy sector could suffer. The electromobility sector is also likely to lose momentum.
Remarkably, the shares of e-car manufacturer Tesla have increased in value by around 40 percent within eight trading days since Trump's election victory. Investors are betting that Tesla's CEO, Elon Musk, could possibly receive preferential treatment.
Musk becomes co-head of the newly created "Department of Government Efficiency" in the US government. In addition to reducing bureaucracy, Musk is tasked with increasing efficiency.
Source: TradingView
Media company
The media company Trump Media & Technology Group has already benefited from increased public awareness and support.
The group includes the "Truth Social" project, a social network that acts as an answer to X (formerly Twitter) or Facebook.
Trump Media & Technology Group Chart
Source: TradingView
Commodities: introduction of planned punitive tariffs and possible trade war could reshuffle the cards
The announcement of blanket tariffs of 10% on imports and 60% on Chinese goods could have an impact on various commodity prices. Domestic commodity production is also likely to be boosted in this context.
Due to fears of an impending trade war with the eurozone and the People's Republic of China, for example, the uncertainty could also lead to increased volatility.
Gold and silver
In view of a neck-and-neck race in the US election campaign, investors feared a political deadlock for months. The resulting uncertainty about the future US government drove investors increasingly into the precious metal. After a quick election result, however, this uncertainty was quickly dispelled. Immediately after the election, concerns about the planned new borrowing are likely to have fueled inflation fears and thus dampened interest rate cut fantasies. The actual shape of the new Trump administration remains open, so it is important to be prepared for imponderables and therefore surprises.
In 2025, the new US government, above all Donald Trump, could shake up the markets. Investors should also keep an eye on geopolitical developments. In addition to the existing conflict in the Middle East, the Ukraine-Russia conflict is also likely to come back into focus, which could also tend to benefit gold and silver. The shape of future US monetary policy is also likely to play a decisive role.
Gold Chart
Source: TradingView
Silver Chart
Source: TradingView
Crude oil, copper, steel and aluminum
The Republicans could initiate a turnaround in environmental and climate policy. According to media reports, this could include more than just withdrawing from the Paris Climate Agreement. There are also plans to move the Environmental Protection Agency (EPA) out of the capital, Washington, and to reduce the number of nature reserves in order to clear the way for oil drilling.
If Trump initiates infrastructure projects, for example, this could increase demand for industrial metals such as steel, copper and aluminum.
Crude Oil (WTI) Chart
Source: TradingView
Crypto assets: Bitcoin as a profiteer in the hope of a crypto-friendly Washington
With Donald Trump as head of state, investors are hoping for a crypto-friendly Washington in the future and thus for further price rises. Trump's move to ensnare the industry in order to win additional voter favor and gain political capital has clearly worked. Bitcoin is therefore one of the winners of the US presidential election.
For the crypto sector in the world's largest economy, a new era is likely to begin in January at the latest. The fact that Bitcoin and co. have found a place in the US election campaign for the first time once again underlines the priority of the asset class and shows that it is here to stay.
Donald Trump must now be judged on which promises he will actually put into practice. Should Trump, as announced, dismiss SEC Chairman Gary Gensler, who has a restrictive attitude towards Bitcoin and the like, and replace him with a crypto-friendly person, investors may well welcome this. The introduction of a strategic Bitcoin reserve could also be grist to investors' mill. According to speculation, the USA could accumulate a total of one million Bitcoin units over several years. Robert F. Kennedy Jr. initiated the topic.
Question marks must always be attached to all plans. The bar is already extremely high and the potential for disappointment in this context is pronounced. In 2016, Trump still railed against Bitcoin and co.
Bitcoin Chart
Source: TradingView
Summary: Breathe a sigh of relief after quick election result - uncertainties due to Trump policy remain
Relief at a clear election result in the 2024 US presidential election prevailed in the first instance, initially sparing investors around the globe a great deal of uncertainty. US President-elect Donald Trump is likely to reshuffle the cards in a wide range of sectors, particularly with his planned deregulation of various industries and the possible introduction of punitive tariffs. While the US banking sector in particular welcomes a loosening of the regulatory belt, the issue of tariffs is likely to have an impact on a wide range of commodities, for example.
However, the "America First" strategy also has its downsides, which investors should not ignore. The combination of tax cuts and an increase in government debt could rekindle inflation and thus put the brakes on interest rate cut fantasies.
Geopolitical uncertainties must also continue to be taken into account.
