Asian and European markets surged Thursday as investors weighed Donald Trump's White House return.
The Republican secured the presidency this week with 50.9 percent of the popular vote and counting.
Driven by expectations of renewed trade, corporate tax cuts, and deregulation, many markets are preparing for both growth potential and economic disruption.
Trump has suggested imposing a 60 percent tariff on all Chinese goods entering the United States, with the possibility of further increases if China takes aggressive actions toward Taiwan. He says the policy is set up to decrease the U.S. economy's reliance on international imports.
"I think everybody's going to be worried about Trump's tariffs because that's one of the things in his playbook," Neil Newman, head of strategy at Astris Advisory Japan, said.
"We'll have to see how things develop in the early stages of his presidency this time."
China's Export Growth Hits Two-Year High
In China, however, shares climbed sharply, boosted by new data showing a robust 13 percent increase in October exports compared to the previous year. Hong Kong's Hang Seng Index surged two percent to 20,953.34, while the Shanghai Composite gained 2.6 percent to 3,470.66.
China has said it would want "win-win" cooperation with the next administration.
Zichun Huang, an economist at Capital Economics, expressed cautious optimism, saying in a report that shipments from China are expected to "stay strong in the coming months." He said that any negative affect from tariffs "may not materialize until the second half next year."
Some analysts expect Beijing to bolster domestic stimulus to counterbalance potential trade conflicts, while China's legislature meets to discuss economic measures in the wake of this global shift.
"People want the government to spend some money to boost the economy, instead of looking outward," said Francis Lun, CEO of Geo Securities.
Wall Street Calm in the Face of Volatility
Elsewhere, Japan's Nikkei 225 fell slightly by 0.3 percent to 39,381.41.
South Korea's Kospi finished nearly flat, at 2,564.63—both indicate a more cautious approach until Trump's abrupt and often volatile intentions come to light.
Domestically, multiple markets have responded with less apprehension.
They seem firm in the belief that the next four years of economy policy will serve to protect American industries and jobs, in Trump's own words.
Wall Street's gains on Wednesday illustrated a robust enthusiasm toward the Republican billionaire's second term, with the S & P 500 gaining 2.5 percent to 5,929.04—its best day in nearly two years. The Dow Jones surged 3.6 percent to 43,729.93, and the Nasdaq climbed 3 percent to 18,983.47, each reaching record highs.
What is Donald Trump's Economic Plan?
Trump's economic plan hinges on the proposed mass deportation of illegal immigrants and cutting inflation.
Market observers predict aggressive tax cuts and uncosted plans could increase the U.S. government deficit, which may drive Treasury yields higher. The 10-year Treasury yield rose sharply to 4.43 percent from 4.29 percent Tuesday, illustrating the expectations of rising borrowing needs.
The Federal Reserve's rate decision, expected later Thursday, may result in a cut, though forecasts for additional cuts in 2024 have been moderated in light of possible inflationary effects of Trump's policy agenda.
In currency trading, the U.S. dollar slipped to 154.05 yen from 154.62 yen, while the euro climbed to $1.0757 from $1.0730. Bitcoin, which reached an all-time high above $76,480 on Wednesday, eased to $74,789.38 according to CoinDesk. Trump has declared his aim to make the U.S. "the crypto capital of the planet" and to establish a "strategic reserve" of Bitcoin.
This article includes reporting from The Associated Press
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