The currency market is divided, gold bulls are on the rise again, technology stocks are soaring, electric vehicles are cooling, and the space exploration craze is rising again... How will Trump's new policies disrupt the market?
Author: Zheng Yao
Source: JinShi Data
It has only been three days since Trump took office, but the impact of his policy agenda is already evident in the market.
Since Trump's inauguration on Monday, the S&P 500 index has cumulatively risen 1.5%, and the overnight session has even set a new all-time high. The Nasdaq Composite Index has risen nearly 2% this week.The volatility in certain areas of the market is more pronounced, including cryptocurrencies, the US dollar, gold, and technology stocks. The driving factors behind these fluctuations are the issuance of a series of executive orders by Trump and the setting of his agenda.
The following are the five major changes in the market since Trump took office:
1. Technology stocks soar, driven by a $500 billion AI infrastructure plan
Technology stocks have performed strongly this week, thanks to Trump's announcement of a $500 billion "Stargate" AI infrastructure plan.
Trump stood alongside AI and tech leaders, including OpenAI CEO Sam Altman and SoftBank Group founder Masayoshi Son, to announce this new plan. Oracle, SoftBank Group, OpenAI, and MGX will all participate in this project, with initial technology partners including NVIDIA, Microsoft, and ARM.
Trump said,this plan will build data centers across the United States and create more than 100,000 jobs for America.
"AI looks very hot. A lot of smart people are really focused on it. Our country will see unprecedented prosperity," Trump said,"This will be the golden age of America."
AI-related tech stocks soared this week, with Oracle up 14% and ARM up as much as 20%.
2. Space exploration stocks continue to rise
Since Trump's election victory in November last year, stocks related to space travel and exploration have continued to rise, and this trend has continued after he officially took office this week. Trump has long supported space exploration and established the Space Force during his first term.
Trump's enthusiasm for space, combined with his close relationship with SpaceX founder Elon Musk, has led investors to betthat space industry stocks will see a bull market. In his inaugural speech on Monday, Trump said, "We will pursue the destiny of entering the stars, sending American astronauts to Mars, and planting the American flag on Mars."
Since Trump took office, the stocks of Intuitive Machines, Redwire, and Rocket Labs USA have risen 21%, 47%, and 23% respectively.
3. Electric vehicle stocks are out of favor
Since Trump's inauguration, electric vehicle stocks have been shunned by investors, as there are signs thatTrump may terminate the incentive policies that promote the adoption of electric vehicles.
On the first day of his inauguration, Trump revoked 78 of President Biden's executive orders, including the requirement that 50% of the cars manufactured in the US by 2030 must be electric.
Trump also instructed his administration to consider eliminating "unfair subsidies" and "other government-imposed market distortions" that favor electric vehicles.
Small electric vehicle companies, such as Lucid and Rivian, have been the most significantly affected, with their stocks falling 13% and 11% respectively.
Even Tesla, led by Musk, who is closely associated with Trump, has not been spared, with its stock falling about 3% since Monday.
4. Bitcoin price hits a new high
Bitcoin is an asset that immediately benefited after Trump's election last year, and it has continued to rise since his inauguration. The price of Bitcoin hit a new high of nearly $110,000 shortly after Trump took office, but has since retreated.
This "Cryptocurrency President" introduced his own meme coin before taking office, fueling optimism about a more relaxed regulatory environment for the cryptocurrency industry. He also hinted at creating a Bitcoin national reserve, allowing the US government to purchase and hold Bitcoin as a strategic asset.
Although the President did not mention cryptocurrencies in his inaugural speech, the Securities and Exchange Commission announced this week the establishment of a working group dedicated to collaborating with the cryptocurrency industry to clarify the regulatory framework, further fueling expectations of a thriving cryptocurrency industry.
5. Currency market sees division
Since Trump took office, the currency market has shown mixed performance. The US dollar index, which measures the dollar against a basket of currencies, has declined slightly this week, but the dollar has risen against the Mexican peso and the Canadian dollar.
The weakness of the peso and the Canadian dollar against the US dollar is due to Trump's threat to impose a 25% tariff on these two countries on February 1st. Goldman Sachs economists said thatthis attitude is more hawkish than the market expected.
At the same time, Trump's widespread tariff threats made during the campaign appear to have been shelved, causing the US dollar to weaken against most other currencies, asthe market expects inflationary impacts to be reduced and the likelihood of interest rate cuts to increase. Supported by the weakening of the US dollar, spot gold has risen to its highest level since the US election.
Goldman Sachs said, "On the day of the President's inauguration, the policy rhetoric on tariffs was more moderate than expected. While we did not expect major policies to be implemented immediately after taking office, the hawkishness of President Trump is clearly lower than during the campaign."
