US shares and Bitcoin hit record high on Trump win

U.S. markets surged to record highs on Wall Street, and the dollar saw its biggest gain in eight years following Donald Trump's re-election to the presidency. Bitcoin also reached an all-time high, benefiting from Trump's campaign pledge to make the U.S. the "bitcoin and cryptocurrency capital of the world."

However, investors are concerned that Trump's tax cuts and tariff increases could drive inflation and slow down interest rate cuts. Higher interest rates would mean better returns on savings and dollar-denominated investments.

In the wake of the election results, markets and currencies worldwide experienced significant shifts:

• The dollar rose by approximately 1.75% against various currencies, including the pound, euro, and yen.
• Major U.S. stock indexes surged, with banks performing particularly well.
• The pound fell 1.41% against the dollar, reaching its lowest point since August.
• The FTSE 100, comprising the UK’s largest companies, saw a slight increase of 0.1%.
• The euro dropped by 2.24% against the dollar, hitting its lowest level since June.
• In Japan, the Nikkei 225 index gained 2.6%, while Australia's ASX 200 rose 0.8%.
• The Shanghai Composite Index in mainland China closed down 0.1%, and Hong Kong's Hang Seng dropped by around 2.23%.

Why is Bitcoin rising?

Bitcoin’s value surged by $6,000 to a record high of $75,371.69. Trump's stance on cryptocurrencies, in contrast to the Biden administration’s crackdown, has boosted the market. During his campaign, Trump suggested he might remove Gary Gensler, the SEC chair overseeing crypto regulation, and appointed Elon Musk to lead an audit of government waste. Musk, a long-time supporter of cryptocurrencies, has been influential in Bitcoin’s popularity. Tesla, which invested $1.5 billion in Bitcoin in 2021, saw its shares increase by over 14% at the opening on Wednesday.

Global market response

Experts warned that financial markets could face volatility due to global uncertainty and Trump's economic plans. U.S. bond yields rose sharply on Wednesday, signaling that investors expect an increase in borrowing under the new administration and are seeking higher returns on their investments.

Impact of tariffs

Trump’s trade policies, particularly plans to increase tariffs, are causing concerns globally. Economists warn that these policies could disrupt economies, especially in the Eurozone and the UK. Ahmet Kaya, principal economist at the National Institute of Economic and Social Research, noted that the UK might be significantly impacted, with economic growth forecasts for 2025 reduced to 0.4%, down from 1.2%. Katrina Ell of Moody’s Analytics added that Asia is particularly anxious about Trump’s protectionist stance, which could lead to more aggressive tariffs.

Trump's isolationist foreign policy has also raised concerns about his approach to defending Taiwan, a crucial global chip producer, against potential Chinese aggression.

Investors will also be focused on the U.S. Federal Reserve’s interest rate decision on Thursday, with comments from Chairman Jerome Powell likely to have significant global implications.