The U.S. election is heating up, and the market is pricing in a Trump victory. What changes can we expect in global asset trends?
The US dollar may strengthen, and the cyclical and technology sectors are likely to become the main lines of the US stock market.Since October, Trump has risen in the polls, and global market sentiment has rapidly changed, with trading focus gradually shifting to betting on the election results. As the U.S. election enters its final showdown phase, the market seems to have sensed increasingly clear signals, with "smart money" significantly pricing in a tilt towards Trump.
The Market is Betting Real Money on Trump's Victory
On Tuesday local time, the well-known "Trump concept stock," Trump Media Group, saw its stock price rise by 8.76% after a significant increase of 21.59% on Monday, bringing its cumulative increase since October to 220.54%. Additionally, the KBW Regional Banking Index has risen 10% over the past month, far exceeding the broader market, indicating significant confidence in Trump-related assets.
The U.S. dollar and Treasury yields also show signs of a "Trump trade." Currently, the dollar index has surged to 104-105, marking its fourth consecutive week of gains, putting pressure on non-U.S. currencies; the 10-year Treasury yield has rebounded from previous lows to 4.28%, an increase of 48 basis points since the end of September.
Meanwhile, Bitcoin has become one of the core assets of the "Trump trade" due to Trump's support for cryptocurrencies. On October 30, Bitcoin broke through $73,000 again after seven months, just 0.2% away from its all-time high. Data shows that since October, U.S. Bitcoin spot ETFs have attracted over $3 billion in net inflows, with strong institutional buying.
Total net inflow of Bitcoin spot ETFs
In recent weeks, the strengthening dollar, rising Treasury yields, and strong performance in banking and cryptocurrency sectors have led to robust performance in the most direct "Trump concept stocks," as the market bets real money on Trump's victory.
Price Impact on Major Assets After Trump's Election
As the U.S. election heats up, expectations for Trump's victory are growing, and the market is beginning to bet on the potential impact of his policies on different asset classes. The economic impact of Trump's policies may create a stark differentiation among major assets, and the global economic landscape will shift accordingly.
- The Dollar May Strengthen
Trump's policy proposals include raising tariffs and cutting taxes, which are expected to push up inflation expectations. The Federal Reserve will likely become more cautious about interest rate cuts, supporting a strong dollar. Currently, the U.S. economic fundamentals are robust, particularly with high employment rates and moderate inflation, providing strong support for the dollar, which is expected to continue strengthening in the global forex market.
- Cyclical and Tech Sectors May Become the Main Focus of U.S. Stocks
The market generally views Trump's potential election as a boost for U.S. stocks. The U.S. economy is relatively strong, and Trump's advocacy for tax cuts and deregulation is conducive to promoting corporate profits and consumer spending, particularly in cyclical and tech sectors, which will become key areas of focus for investors. Supported by macro factors such as fiscal expansion, strong demand in the AI industry, and global capital reallocation, the medium- to long-term outlook for U.S. stocks will be more attractive.
Historically, U.S. stocks have mostly recorded gains in election years. For instance, in the 2016 election, the expansionary policies following Trump's victory drove a rapid rebound in the S&P index, providing a historical reference for this year's U.S. stock performance.
- Commodity Demand May Face Adjustments
Compared to the Democratic Party, the Republican Party's energy policies tend to support traditional energy industries. Trump's election may relax restrictions on fossil fuels, promoting the expansion of the oil and gas industry, which could suppress oil prices in the medium to long term. The current likelihood of escalating tensions in the Middle East has diminished, coupled with expectations of declining oil demand due to a slowing global economy, leading to potential short-term weakness in oil prices.
Meanwhile, the gold market continues to strengthen at high levels, having factored in significant safe-haven and anti-inflation demand under Trump's policy framework, somewhat deviating from the fundamental support levels based on the dollar and real interest rates. If uncertainty decreases after the election, gold prices may face downward pressure.
- Bitcoin is Set for a New Surge
This year's U.S. election cycle aligns closely with Bitcoin's cycle. Trump's friendly policies towards the crypto market and his deep involvement in various crypto activities and related products, along with the declaration to "make Bitcoin a strategic reserve for the U.S.," have stirred excitement in the crypto market. Trump's victory would be a significant boon for the crypto community, leading to a new surge in Bitcoin prices, and the influence of crypto assets in the global market will reach new heights.
Conclusion
The current "Trump trade" is profoundly impacting global asset pricing. Regardless of the final outcome of the election, the global market will face an unprecedented opportunity for asset revaluation.
eeee.com, as the official partner of the Argentina national team, provides trading services covering over 600 assets, including cryptocurrencies, commodities, stocks, and indices, while also supporting wealth management products with annualized returns of up to 5.5%. Users can invest with just one click as long as they hold USDT. Additionally, the 4E platform has set up a $100 million risk protection fund, adding another layer of security for users' funds. With 4E, investors can closely follow the dynamics of the U.S. election market, flexibly adjust their strategies, and seize every potential opportunity.
