The Impact of Trump's 2024 Election Victory Across All Asset Classes

Donald Trump’s win in the 2024 U.S. Presidential election has caused a surge in several asset classes, as investors try to predict the impact of his policies on global markets. From equities to commodities and cryptocurrencies, markets have fluctuated due to policy shifts, geopolitical tensions, and inflationary expectations. Below is an extended analysis across a wide array of assets and sectors to give a clearer picture of the market’s reaction post-Trump victory.

Trump’s win sent equity markets into a frenzy, particularly benefiting pro-growth sectors such as healthcare, finance, and energy. The S&P 500 gained roughly 1.5%, with the energy sector leading the charge due to his promises of reducing regulations on fossil fuels. The healthcare sector also gained, largely from the anticipation that Trump’s policies would favor privatized healthcare options. However, concerns about tax hikes for the wealthiest citizens tempered the rally somewhat.

Tech stocks, especially large-cap companies like Apple, Amazon, and Alphabet, remained volatile. While many analysts initially expected a Trump administration to loosen regulations on big tech, fears of potential antitrust action have made investors cautious. Small-cap stocks, which are often seen as more responsive to domestic economic policies, outperformed with the Russell 2000 Index rising 4%, benefitting from tax cuts and deregulation.

Bond markets have reacted with a sharp rise in yields, as investors anticipate Trump’s pro-growth fiscal policies to lead to higher inflation. The 10-year Treasury yield surged to 4.47%, up 20 basis points from pre-election levels. With the likelihood of a higher deficit and more government spending, bond prices have dropped while yields have increased. Investors have also started preparing for potential interest rate hikes by the Federal Reserve.

​Commodities experienced mixed reactions post-election. While oil prices faced headwinds, largely due to fears of economic slowdown from trade policy shifts, gold prices also tumbled by 3% as the dollar strengthened. The U.S. dollar surged by 1.6%, making dollar-denominated assets like oil more expensive for international buyers. Despite fears of inflation, gold saw a major pullback, falling to a three-week low.

The real estate sector remains uncertain, as rising interest rates due to inflation concerns could affect both residential and commercial real estate prices. Developers may face higher borrowing costs, impacting housing affordability. While tax cuts and deregulation may benefit commercial real estate, higher bond yields could cool off the housing market in the long term, especially for middle-income households.

The U.S. dollar surged post-election, jumping against major currencies like the euro, British pound, and Japanese yen. The euro fell by 2%, reflecting investors' flight to the U.S. as a haven for growth amid concerns over Trump’s trade policies. The Mexican peso lost 2.3% on trade-related concerns, while emerging market currencies in Latin America and Asia also weakened due to fears of further tariffs and economic isolationism. Bitcoin, however, saw a 6.8% surge, as digital assets gained popularity as an inflation hedge.

Bitcoin hit an all-time high of $73,848, and Ethereum followed suit, climbing 8.2%. Crypto assets are increasingly viewed as a store of value amid rising inflation expectations and heightened concerns over traditional fiat currencies. The volatile nature of cryptocurrencies still presents a risk, but many traders see them as a hedge against central bank policies and inflationary pressures.

Emerging market assets have taken a hit, particularly as Trump’s win suggests a continuation of trade policies that may hurt global supply chains. Countries heavily reliant on exports to the U.S., like China, South Korea, and Brazil, face uncertain prospects, especially with potential tariffs on Chinese goods and Trump’s stance on global trade deals. The MSCI Emerging Markets Index dropped by 1.7%, reflecting concerns over Trump's protectionist policies.

Agricultural commodities have remained volatile post-election, as Trump's trade war rhetoric and tariffs on China may slow agricultural exports. However, the agricultural sector is also being influenced by weather conditions and crop yields. Corn and wheat prices have been volatile, largely due to unpredictable weather patterns exacerbating supply concerns.

The corporate debt market has experienced a mixed reaction to Trump’s win. On the one hand, lower taxes and deregulation policies could benefit high-yield and junk bonds, as companies stand to benefit from lower borrowing costs and fewer regulatory burdens. However, there are concerns about inflation leading to higher borrowing costs in the long run, which could hurt weaker companies with high levels of debt.

Venture capital markets saw an uptick in risk appetite post-election, especially in sectors that could benefit from Trump’s policies, such as fintech, energy, and healthcare. However, there is a heightened risk of regulatory crackdowns on monopolistic behavior, particularly in tech-related startups, which may increase volatility in the startup ecosystem.

Private equity markets are expected to benefit from a more business-friendly environment under Trump’s administration, with an increased focus on deregulation. However, the higher cost of capital due to rising interest rates could limit the amount of available liquidity for new deals. For private equity investors, the timing of exits may become more difficult as bond yields climb.

Investment-grade bonds have largely remained stable but face risks as the Trump administration’s fiscal policies could add to the country’s deficit. High-yield (junk) bonds, on the other hand, have seen a rise, as the risk-on sentiment driven by Trump's pro-business stance boosts corporate profits and investor confidence in high-risk assets.

Hedge funds, especially those with strategies targeting global macroeconomic trends, have adjusted their positions in response to the uncertainty surrounding Trump’s win. Many funds are betting on higher inflation and rising interest rates by increasing their exposure to commodities, including oil and gold, while shorting sectors like technology that might face stricter regulations. Meanwhile, funds focusing on arbitrage and macroeconomic plays are recalibrating their strategies based on potential trade wars and geopolitical risks.

The financial markets are experiencing significant shifts following Donald Trump’s 2024 election victory. While U.S. equities have surged, benefiting from tax cuts, deregulation, and a pro-business agenda, other asset classes like commodities, bonds, and emerging market currencies have encountered volatility. The strength of the U.S. dollar, in particular, has weighed heavily on global trade, while inflationary pressures continue to be a concern for fixed-income investors.