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Shares of Trump Media, Tesla and domestic-focused small-cap companies surged on Wednesday as Donald Trump was elected US president for the second time, fueling expectations of higher domestic growth.
Capping a remarkable comeback after four years, Trump’s victory in the swing state of Wisconsin pushed him over the threshold required to win the White House.
Tesla jumped 15% as Tesla CEO Elon Musk has backed Trump throughout his electoral campaign. Trump has promised to make Musk head of a government efficiency commission.
Trump Media & Technology Group, in which the former president owns a majority stake, soared about 30%. From their all-time lows hit in late September, they have nearly tripled in value. His stake was last valued at about $5 billion.
Meanwhile, the S&P 500 and Dow futures hit an all-time high and futures tied to the small-cap Russell 2000 index surged 6.2% on bets that U.S.-focused companies would benefit from lower taxes and tariffs that favor domestic production.
“The market believes a Trump presidency will unleash animal spirits and give a boost to growth in the short-term through some relief on corporate taxes and deregulation,” said Frédérique Carrier, head of investment strategy for RBC Wealth Management in the British Isles and Asia.
Trump’s Republican Party also secured the Senate and was making gains in the House of Representatives, potentially making it easier for the president to legislate his proposals and push through key appointments.
“If you look at historical playbook, a Republican sweep has been strong backdrop for the S&P 500 whereas a Republican presidency with a split Congress has given a more muted return,” Carrier said.
Wall Street lenders JPMorgan Chase, Bank of America and Wells Fargo, typically sensitive to U.S. economic prospects, jumped between 7% and 9%.
Victory for Trump, who has positioned himself as pro-cryptocurrency, lifted bitcoin to a record high. Crypto-linked stocks Coinbase, MicroStrategy, Riot Platforms, MARA Holdings jumped between 10% and 13%.
Private prison operators Geo Group and CoreCivic jumped 27% and 23%, respectively, as Trump’s promised crack down on illegal immigration could boost demand for detention centers.
Elsewhere, European defense stocks jumped against the backdrop of Trump earlier this year threatening U.S. withdrawal from NATO while saying he would not defend allies that did not increase their defense budgets.
“A Trump presidency would add further impetus to accelerate European defence spending, as evidenced by his first term in 2017-21,” Berenberg analysts said.
AUTOS, ENERGY AND CHINA
While Tesla shares surged on Musk-Trump relations, other stocks of other electric automakers dipped as Trump has promised to consider ending a $7,500 tax credit for EV purchases.
“Tesla straddles the two perfectly, with Elon Musk’s position within Trump’s administration only serving to further enhance optimism for a company that benefits from being both a growth/tech stock and US-based manufacturer,” said Joshua Mahoney, market analyst at Scope Markets.
Rivian Automotive dropped 5% and Nikola slipped about 2%. Shares of U.S. automakers Ford and General Motors were up about 4% each.
Oil majors Chevron and Exxon Mobil firmed about 3% each, while U.S. renewable energy firms such as NextEra Energy and First Solar plunged 8% and 12%, respectively.
Trump’s presidential campaign has laid out an energy policy platform centered around maximizing U.S. fuel and power output, in part by dismantling the current administration’s centerpiece efforts to fight climate change.
Fears of escalation in Sino-U.S. tensions pressured U.S.-listed China shares with iShares MSCI China ETF dropping 2.4%.
Import duties, including a 10% universal tariff on imports from all foreign countries and a 60% tariff on imports from China, are a key plank of Trump’s policies and likely to have the biggest global impact.
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