Donald Trump as next US President – What will be the effect on the Wealthy?
Donald Trump Regains the White House
Following on from his successful election as President, even though he is not to take office until January 2025, there has already been some major positive ripples in the money markets.
With Republicans in control of the executive and both the legislative branches of the government, they will be able to advance his ideas through each chamber and send those bills for him to sign into law.
Stocks, US$ investments and Crypto
Within the US, it is very apparent that there has been a positive effect. US shares hit record highs on Wall Street and the dollar posted its biggest gain in eight years as Donald Trump was re-elected to the White House in the historic win.
Bitcoin also hit an all-time high, following Trump's election promise to prioritise the volatile crypto currency. The price of bitcoin rose above $90,000 for the first time ever, immediately after Donald Trump's decisive victory in the US election and is still trading at $72,000 as of today.
Other cryptocurrencies, including dogecoin - which has been promoted by high-profile Trump supporter Elon Musk - are also making gains.
Trump has said one of his first actions as president would be to sack the current chair of the Securities and Exchange Commission (SEC), Gary Gensler.
Mr Gensler, who was appointed by Joe Biden in 2021, has led the SEC's crackdown on the crypto industry.
“If the Trump administration does deregulate crypto, it’s hard to see how it is not bullish for the sector,” Matt Simpson, market analyst at StoneX Financial told the BBC, adding that such a move could lead bitcoin prices to jump to as high as $100,000.
But “it is still vulnerable to nasty selloffs along the way – which can be less kind to smaller pockets,” he added.
Trump's broader agenda, which includes cutting taxes and reducing regulations on businesses, has also driven a surge in other investments since he won the election.
Investors were, however, betting that Trump's plan to cut taxes and raise tariffs will push up inflation and reduce the pace of interest rate cuts.
Higher rates for longer mean investors will get better returns on savings and investments they hold in dollars.
The immediate effect on Global markets was evident directly following his election:
The major US stock indexes soared, with banks performing particularly well
The dollar was up by about 1.65% against a host of different currencies, including the pound, euro and the Japanese yen
The pound sank 1.16% against the US dollar to its lowest level since August
The FTSE 100 index, comprising the largest companies listed in the UK, rose in early trading before closing marginally down
The euro dived 1.89% against the US dollar to its lowest level since June as the German Dax and the French CAC 40 and stock indexes closed down 1.14% and 0.51% respectively
In Japan, the benchmark Nikkei 225 stock index ended the session up by 2.6%
In mainland China, the Shanghai Composite Index ended 0.1% lower, while Hong Kong's Hang Seng was down by around 2.23%
In essence, within the US the rich get richer
Trump's election bid sparks a stock market rally and enriches the wealthiest.
Crypto markets ride Trump's wave, with Bitcoin and Ether seeing significant gains.
Wall Street and billionaires thrive as Trump’s influence reshapes economic tides
Tax cuts will benefit larger US companies by up to 4%
The next question is how Trump’s presidential victory affect the wealthy outside of the US and how his administration’s foreign policy of increased trade tariffs and his potential position towards ending Ukraine’s war with Russia and the escalation of war in the Middle East, will affect global markets. Whilst there seems to be a lot of bullish confidence in the US, there is a lot of uncertainty how his election and his control of both the Senate and Congress will affect the rest of the globe.
Economists and investors are expecting a series of seismic and wide-ranging impacts from Donald Trump’s second presidential term. A range of financial markets have already seen significant volatility this week, from currencies to commodities to corporate share prices.
Changes in the political environment often have domino effect repercussions on global markets and the US being one of the largest, will have more ramifications around the world. There are obviously quick wins available in Crypto, US investments and stocks and shares, but as we always advise at Syracuse Advisers, we remind clients of staying with longer term disciplined and diversified strategies and sticking to your financial goals.
Hi election has already bolstered the wealthy in the US, but will the Trump presidential administration 2.0 be better for the rest of the globe? There is a lot of uncertainty until the dust settles, but there is potentially a lot of positivity from many wealthy countries.