Today everyone is paying attention to the US election. Global assets had already started to reflect Trump's victory in the morning. When we reviewed the market at noon, we found that several Trump trading targets we were tracking had experienced very large fluctuations.
The focus of the U.S. stock market is DJT and Tesla. DJT rose as much as 60% before the market opened, directly recovering the extent of this wave of adjustments. Musk's Tesla also rose by 15%. This time, Musk all-in Trump really won the bet.
The fluctuations of other major asset classes are all related to Trump’s propositions. Let’s briefly sort out these propositions and changes in market expectations.
First of all, in terms of global assets, the US dollar index jumped, US bonds plummeted, and global currencies depreciated. The Mexican peso, which we are concerned about, depreciated the most. The market is reacting to Trump's subsequent trade policy expectations. Although there is a 60% tariff expectation on China, which is the largest amount, Trump is going to impose tariffs on all countries in the world, and the subsequent relations are expected to be strained.
Commodities also fluctuate in sync with the exchange rate. Changes in trade policies will lead to higher U.S. inflation expectations, which in turn will affect the Fed's subsequent interest rate cuts. Some overseas investment banks have predicted that the Fed may suspend its interest rate cuts in December, so metal prices also fluctuated greatly today.
The most important alternative asset is digital currency. Since Trump publicly supports digital currency, BTC surged today to hit a record high, which also led to a surge in other digital currency assets.
Another special asset is Rusal, which surged 13% in Hong Kong stocks today. After Trump takes office, the situation between Russia, Ukraine and the Middle East will most likely be suppressed. The war that has lasted for more than two years is expected to end soon. The changes in this area may be very big, and the market is gradually pricing in expectations.
The main reaction of Greater China Assets today is trade policy, which has a relatively greater impact on Hong Kong stocks, after all, foreign capital needs to respond to this. Although the A-share index fluctuates, it is generally acceptable. Hotline trading is rare earth agriculture and autonomous control, which were expected before. Even the Tesla sector rose sharply during the session, which is still a reflection of market sentiment.
Trump's election this time is a done deal, which is consistent with the expectations of most people. What is worth noting is that Congress has been taken over by the Republicans, and a US government with strong execution capabilities has been born. This will enable Trump's various propositions to be implemented efficiently, including ideas on fiscal and immigration policies.
For us, the biggest short-term impact is the trade tariff. The 60% tariff will definitely have a huge impact on US exports. Many sellers have already made calculations, and today's market decline is also a reflection of this. But this change is not all bad news. There are three positive angles that are worth careful consideration.
First, there are opportunities in the direction of domestic demand. I have talked a lot with you about this. If there is pressure on exports, domestic demand policies will inevitably support it. This is not only the press release of this week's meeting, but also the tone set by the economic meeting next month for next year. There will be many subsequent changes.
Second, due to the expectation of tax increases next year, the demand for restocking in the United States will increase rapidly in the short term, which should provide support for exports in the fourth quarter, and there should be no problem with the short-term economic climate.
Third, there may be a lot of opportunities for non-US exports. When Biden was in office, there were more conflicts of values. Business with many countries could not be negotiated. The word "no" was simply given. But after Trump came to power, the team was completely broken up. This is a good opportunity for us. Non-US exports may exceed many people's expectations in the future.
Trump's coming to power will have a short-term impact on the market and a medium-term disturbance to the Fed's rate cut process, but it is not necessarily a bad thing in the long run. I believe that the response measures have been prepared, and we will see how to deal with them in the future.
