European markets fall after Trump win and focus on Fed

This article was originally published in English

Major European stock indices closed lower after Donald Trump’s victory in the US presidential election, distancing itself from Wall Street records rise. Pan-European index Stokes 600 fell by 0.54%, DAX fell by 1.13%, and CAC 40 fell by 0.51%. Investors were weighing the possible impact of a Trump presidency on the European economy, especially given the possibility of a “red wave” with Republicans retaining control of both the House of Representatives and the Senate.

European stock markets may also have reacted to domestic factors as German Chancellor Olaf Scholz sacked Finance Minister Christian Lindner, ending the coalition government and raising concerns about possible early elections in Germany ahead of schedule in March.

With a focus on the Fed and its interest rate decisions

Market attention is expected to focus on solving Federal Reserve on Interest Rateswhich is a critical factor in shaping the long-term trajectory of markets amid ongoing economic pressures. Although political events tend add volatilityunderlying economic fundamentals continue to drive sustainable trends. As Oanda market analyst Josh Gilbert stressed in a note to clients, “it’s important to remember that despite this, markets act primarily on fundamentals rather than politics.”

DAX falls led by automakers

The DAX recorded its biggest one-day fall since August, especially under pressure from German automakers. Trump’s tariff position has raised concerns about a trade war between the United States and the European Union. Shares of major German auto companies recorded a noticeable decline: Porsche fell by 5%, Mercedes-Benz lost 6.4%, Volkswagen fell by 4.3% and BMW fell by 6.5%. The Stoxx Europe 600 Automobiles & Parts index also fell 2.3%, weighing on the broader market.

However, aerospace and defense stocks benefited from Trump’s election, with the Stoxx Europe Aerospace & Defense Index up 2.1%, Airbus up 0.37% and Rheinmetall up 3.2%. Trump’s announced withdrawal of funding from Ukraine could further stimulate defense spending.

Ibex loses 2.9%, more than other European stock markets after Trump win

Major European stock markets closed lower, especially Ibex, which lost 2.9%. Ibex drop stands out. The 2.9% drop was driven by banks. Shares of BBVA and Banco Sabadell closed down 6.62% and 6.48%, respectively. Banco Santander, down 4.78%, Unicaja (-4.43%), Bankinter (-3.84%) and CaixaBank (-3.70%) also had a tough day.

The possibility that The European Central Bank is forced to cut interest rates faster than expected to protect European economic growth from US protectionist policies is influencing negative views of the financial sector.

Vice President of the ECB, Luis de Guindoswarned of the “huge impact” Trump’s protectionism would have on global trade and the economy. “If you impose 60 percent tariffs on China, the direct and indirect consequences will be enormous.”

Wall Street hits new highs

US stock markets hit records on Election Day, with the Dow Jones up 3.6%, the S&P 500 up 2.53% and the Nasdaq up 2.95%. The Russell 2000 index of small companies rose 5.9%, hitting an all-time high. Wall Street’s “risk-on” sentiment was evident, with the CBOE Volatility Index (VIX) falling 20%, reflecting a reduction in hedging against election-related risks.

Investors responded positively to tax cuts, deregulation and the program.”America first” suggested by Trump. However, some analysts warn that such a policy could cause inflation to rise and prompt the Fed to consider raising interest rates, which would pose risks to stock fundamentals. Michael McCarthy, market strategist and chief trading officer at Moomoo, commented: “Fiscal stimulus could disrupt the Fed’s rate-cutting program and bring it to a complete halt. The coming days and weeks pose a significant risk.”

The euro is stabilizing and the dollar is falling

The euro recovered slightly against the US dollar, trading at 1.0738 at 5:11 am CET after strong selling the previous day. The US Dollar Index (DXY) fell 0.1% to just below 104, possibly reflecting profit-taking in currency markets as yields stabilize. American national debt.

Meanwhile, commodity currencies such as the Australian, New Zealand and Canadian dollars strengthened in Thursday’s Asian session, helped by positive Chinese trade data. This trend may provide some support for the euro in opening of European marketsalthough it is still unlikely that the general downward trend in the euro will change.

Gold and silver are falling, Bitcoin is slowing its growth

precious metalsthey fell given the strengthening of the dollar and reduced demand for safe-haven assets after the elections. Gold futures fell 2.7% and silver futures fell 4.4% on Wednesday, and both extended their declines in early trading on Thursday, down around 0.5% as of 5:30 CET. Dilyn Wu, research strategist at Pepperstone, noted that gold could continue its long-term bullish trend as Trump’s policies are expected to increase US debt levels, which could prompt the Fed keep interest rates low stimulate economic growth that will support gold prices.

Bitcoinfor our part, stopped his brilliant career after topping US$75,700 (€70,431) before falling slightly to trade just below US$75,000 (€69,780) in early Asian trading.