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SummaryCompaniesDollar has lost value broadlyStocks at record highs, AI boom roarsGold, bitcoin profit as investors seek non-dollar assetsBond yields rise on worries over government finances Nov 3 (Reuters) - In the year since Donald Trump's election as U.S. president, global financial markets have had to navigate policy shocks and unprecedented uncertainty and high volatility, with stocks, gold and crypto hitting record highs. After Trump defeated Democratic rival Kamala Harris on November 5, 2024, the dollar roared higher, along with stocks and bitcoin, while Treasury yields rose, as investors priced in the likelihood of greater strain on U.S. finances. Advertisement · Scroll to continueReport Ad Since then, the U.S. administration has struck deals on trade, while upending global supply chains and decades of post-war international diplomacy. Investors are learning to ride out the unpredictability, including clear ways to trade Trump's tendency to amp up threats only to later back down. The so-called TACO trade - "Trump always chickens out" - has become a feature. Here is a snapshot of where major markets are now, compared to when Trump was elected. UP THE BIT, DOWN THE GREEN The dollar has offered the clearest reflection of how the rest of the world has reacted to Trump's erratic approach. It surged after the election, as investors bought into the idea that a Trump-fuelled spending splurge would fuel the economy, but it has lost a net 4% in value since then. Advertisement · Scroll to continue Trump's tariffs on trade partners and uncertainty over their impact have driven investors to find alternatives. His crypto-friendly policies, which have drawn scrutiny over unprecedented conflict of interest, have sent bitcoin to a record high of $125,835.92 in October. Geopolitical tensions and tariffs have also driven gold, a classic safe-haven, to a record $4,381 an ounce in October. Demand for dollars is unlikely to wane any time soon as when financial market turbulence or geopolitics heats up, it is often investors' first choice, or "the cleanest dirty shirt", as Piotr Matys, senior FX analyst at In Touch Capital Markets, says. CHECKING IN ON STOCKS Stock markets everywhere have hit record highs this year, powered in large part by enthusiasm over artificial intelligence and the prospect of lower global interest rates. Ad Break Coming Up NEXT StayNext OffEnglish 180p288p360p480p540p576p720pHD1080pHDAuto (180p) About ConnatixV2136483083 About ConnatixV2136483083 Continue watchingafter the adVisit Advertiser websiteGO TO PAGE Trump's April 2 "Liberation Day" tariff announcement was a first major test and it hit markets hard. The MSCI World Index (.MIWD00000PUS), opens new tab tumbled 10%, but has since rebounded to record highs, gaining over 20% since Election Day. The S&P 500 (.SPX), opens new tab is up 17% since last November, thanks to AI fever, while in Europe, defense stocks have been at the heart of the rally, as Trump forced regional governments to spend more on their own security, while war rages in Ukraine. Tech-fueled rallies and a softer dollar have boosted equities in Japan, South Korea, and China too. TESLA – AN ELECTRIC YO-YO Trump's relationship with Elon Musk, the world's richest man, was a key driver of Tesla stock in the weeks after the election. Musk had spent over $250 million backing Trump's reelection bid last year and even joined his campaign trail. Musk's fortune swelled, as shares in his EV maker almost doubled in less than two months to hit a record high of $488.5. But the honeymoon did not last. After Musk launched Trump's budget-slashing Department of Government Efficiency (DOGE) in January, Tesla's brand loyalty rate dropped dramatically as the CEO's flirtation with politics spooked buyers, contributing to a drop in deliveries for two consecutive quarters. Tesla shares hit a low in April before rebounding as tensions between Musk and Trump spilled into the open, culminating in a split by late May. Despite the turbulence, the world's most valuable carmaker has outperformed struggling legacy rivals, including Detroit's GM (GM.N), opens new tab, Ford (F.N), opens new tab and Stellantis (STLAM.MI), opens new tab. BOND YIELDS RISE Since Trump's election, bond yields have surged across major economies, reflecting investor concerns over rising government borrowing and the sustainability of public finances. One of the concerns among investors in U.S. Treasuries was the likely cost of funding Trump's planned tax cuts. His "One Big Beautiful Bill", which passed in July, is expected to increase the federal deficit by around $3.8 trillion in the coming 10 years. However, with the Federal Reserve cutting rates and inflation seemingly contained, 30-year Treasury yields are up just 14 basis points at 4.66% since last November. The rise in Japanese government bonds (JGB) has been more aggressive, with 30-year yields up nearly 85 basis points to record highs while French and German 30-year yields are up 62 and 59 bps, respectively, since November 5, 2024. BALANCING TRADE One of Trump's key areas of focus is the U.S. trade balance, something he says is proof America is being "ripped off" by partner countries and that tariffs, aside from being "the most beautiful word in the dictionary" are the only way to correct it. Trump's tariffs have driven up the cost of doing business and made planning more complicated. But they are eroding the trade deficit. The most recent data shows it hit a two-year low of $60.2 billion in June, and the deficit with China shrank by 70% over five months to its lowest level in over 21 years. Similarly, the U.S.-EU trade balance spiked ahead of the tariff announcement before declining. This suggests that "the trade war may be hurting the EU more than it does China," which has a stronger back-up plan than the Europeans, said Ipek Ozkardeskaya, a senior analyst with Swissquote. Reporting by Canan Sevgili, Paolo Laudani, Vera Dvorakova, and Alessandro Parodi, Additional reporting by Arda Dipova; Editing by Amanda Cooper and Conor Humphries Purchase Licensing Rights Get the key points from this story with Reuters AI Paolo LaudaniThomson ReutersSicily-born and raised Paolo is currently based in Gdansk, from where he covers the twists and turns of German, Swiss and Austrian companies. A curious reporter with a passion for markets and finance, he covers topics spanning from European defence companies to Swiss chocolate maker Barry Callebaut's latest strategic updates. A firm believer in visual learning, he will always try to show you why a story is interesting with a compelling chart.EmailXVera DvorakovaThomson ReutersVera is a news reporter in Gdansk where she covers equities and companies in the Nordics with a keen interest in pharmaceutical and gaming companies. Previously, she freelanced for the European Parliament and completed the Erasmus Mundus Master's in Journalism, Media, and Globalization at Aarhus University and Amsterdam University.EmailLinkedinAlessandro ParodiThomson ReutersAlessandro is an Italian journalist based in Gdansk reporting on European markets, with focus on Italian companies. Previously, he worked as a multimedia freelancer in South Africa covering general news and cultures.EmailXInstagramLinkedin
