 "Ahead of Trump 2.O the financial world in the US id flying high. AP")
Donald Trump hasn’t even taken office, yet his presidency is already setting the financial world ablaze. His promises of tax cuts, deregulation and a pro-business agenda have sparked unprecedented optimism among investors, fuelling a surge in US stock markets and cryptocurrencies. While Wall Street celebrates, the global financial arena is grappling with the ripple effects of his bold moves. From record-breaking investments in US equity funds to Bitcoin reaching a historic $100,000, Trump’s policies are reshaping expectations for 2025 and beyond.
But this rapid momentum raises questions: Is this growth sustainable, or could it lead to instability in the global economy?
Historic inflows into US equity funds
Since Trump’s election victory on November 5, US equity funds have seen inflows of nearly $140 billion, as reported by The Financial Times. According to data from EPFR, this rush of investments made November the busiest month for inflows since records began in 2000.
The optimism stems from Trump’s proposed economic policies, which many investors believe will boost corporate profits. The S&P 500, a key indicator of US market performance, has risen by 5.3 per cent since Election Day, while smaller companies tracked by the Russell 2000 index have reached record highs. These gains reflect a renewed faith in the US economy, with investors betting on Trump’s ability to deliver on his promises of growth.
Kevin Gordon, senior investment strategist at Charles Schwab, told The Financial Times that the current rally’s breadth provides a healthier dynamic compared to previous market surges. He highlighted that unlike in 2021, when the market reached all-time highs despite weakening breadth, the present rally appears to have a more stable foundation.
Impact Shorts
More ShortsRipple effect on global markets
While US markets are booming, other regions are feeling the heat. Since Trump’s win, emerging markets have lost $8 billion, including $4 billion from China-focused funds. Western European funds have seen $14 billion pulled out and Japanese funds have faced $6 billion in withdrawals.
Analysts at Bank of America call this the “American exceptionalism” trade, where the US attracts investments even though it’s causing global risks like trade wars and higher tariffs. Trump’s policies are boosting US markets but creating uncertainty worldwide.
Dec Mullarkey of SLC Management told The Financial Times that investors are “fully embracing” Trump’s growth-focussed plans. But this optimism comes at a cost—the growing gap between US markets and the rest of the world.
Bitcoin’s meteoric rise under Trump’s influence
The cryptocurrency market has also joined in on the Trump-era optimism. Bitcoin hit an all-time high of $100,000 shortly after Trump picked Paul Atkins, a crypto-friendly figure, as SEC chair.
Trump’s stance on cryptocurrency has shifted dramatically. Once a critic, he now sees Bitcoin as vital to America’s financial future. In July, he proposed a “national Bitcoin stockpile,” started accepting crypto donations for his campaign, and even launched his own crypto company, World Liberty Financial.
This shift has boosted Bitcoin by over 130% this year, far outpacing traditional markets like the S&P 500. According to CNN, Trump’s pro-crypto stance and industry backing have driven this surge.
Opportunities and risks
Trump’s economic plans have excited investors, with promises of tax cuts and deregulation. Firms like BlackRock predict strong market growth in 2025, while Deutsche Bank’s Parag Thatte believes strong fundamentals could sustain the momentum, say The Financial Tinmes.
However, risks remain. Trump’s proposed tariffs could raise costs for businesses and consumers, potentially driving inflation. This may challenge the Federal Reserve’s ability to manage interest rates.
Cryptocurrency also brings uncertainties. While Bitcoin’s rise has been celebrated, Federal Reserve Chair Jerome Powell warns it’s more like a speculative asset than a reliable currency, raising concerns about its long-term stability.
A divided financial world
Trump’s policies are widening the gap between US markets and the rest of the world. US funds have attracted $350 billion this year, as reported by The Financial Times, but this growth comes at the expense of emerging markets like China, Europe and Japan.
As Trump prepares for office, the stakes are high. His pro-business policies and crypto enthusiasm have reshaped markets, but questions remain about their sustainability.
Trump’s economic vision has energised US markets but carries risks that could ripple globally. As the world watches, the hope is for prosperity, though the potential for disruption looms large. Trump’s impact is already unmistakable, setting the tone for a presidency that could redefine global finance.