Roundup: Increased volatility in global stock markets amid U.S. presidential election

BEIJING, Nov. 8 (Xinhua) -- With Donald Trump's declaration of victory in the 2024 U.S. presidential election, expectations surrounding Trump's policy proposals became a key factor influencing global financial market activity.

Major global stock markets experienced significantly heightened volatility, with U.S. stock markets rising notably, European markets generally declining, and Asia-Pacific markets seeing more declines than gains.

On Wednesday, the three major indices of the New York Stock Exchange opened sharply higher, maintained strong performance throughout the session, and closed with significant gains, setting new record highs. The Dow Jones Industrial Average rose by 3.57 percent, the S&P 500 increased by 2.53 percent, and the Nasdaq Composite Index climbed by 2.95 percent.

Market expectations that Trump would relax financial regulations upon election drove a sharp rally in U.S. financial stocks. Shares of JPMorgan Chase and Wells Fargo surged by 11.54 percent and 13.11 percent, respectively. Additionally, Tesla's stock rose considerably, closing up by 14.75 percent as Tesla CEO Elon Musk is perceived as a staunch Trump supporter.

Trump has advocated for lowering corporate tax rates within the United States while adopting protectionist measures, including raising tariffs. The market expects these policies to benefit small and medium-sized U.S. businesses, leading the Russell 2000 index to soar by 5.84 percent on Wednesday.

The market widely anticipates that the next U.S. administration will strongly promote the oil and gas sector, boosting the energy stocks. However, expectations of policy adjustments regarding new energy development have created significant headwinds for companies in this field. Shares of hydrogen fuel cell company Plug Power plummeted by 21.83 percent on Wednesday.

Some analysts believe that the U.S. stock market's strong performance this year, coupled with the recent surge, may indicate an overreaction from investors to the election outcome. This could lead to significantly increased volatility in the U.S. stock market.

"He (Trump) is obviously a wild card relative to China and tech. That is one of the biggest factors playing into the rally of the market. And that could cause a dislocation in the market," Peter Tuchman, senior equity floor broker with TradeMas Inc., told Xinhua.

Edward Jones senior investment strategist Angelo Kourkafas said Wednesday's stock surge was not just a reaction to Trump's victory but also a relief that the election outcome was clear.

"A decisive win removes the overhang of an unclear or a contested outcome. And that by itself clears some of the uncertainty and is helping that strong reaction we are seeing in the markets," Kourkafas said.

However, the rally could lose some steam in the coming days as the excitement wears off, he cautioned.

"We tend historically to see markets overreact the day after the election, so it wouldn't be surprising if some of the initial optimism fades in the coming days," Kourkafas added.

Trump's victory led to sectoral divergence in European stocks. Due to policy expectations, defense and traditional energy stocks rose in Europe, while renewable energy and export-oriented companies came under pressure.

Trump has previously indicated if elected he would reduce U.S. military support for Europe and demand that NATO members increase their defense spending. This expectation boosted European defense stocks on Wednesday, with the European Aerospace and Defense Index surging by 2.1 percent to reach a record high.

Meanwhile, there is speculation that Trump might cancel offshore wind power and other new energy projects upon taking office, potentially affecting the sector across the United States and Europe. Consequently, shares of Orsted and Vestas both fell by around 12.8 percent.

Concerns over potential U.S. tariffs on imported cars under Trump's administration also weighed on German automakers, with shares of Mercedes-Benz Group and BMW each declining by about 6.5 percent.

Asia-Pacific stock markets saw mixed performance. Tokyo stocks surged Wednesday as the yen's depreciation boosted export-reliant Japanese shares.

Japan's benchmark Nikkei stock index, the 225-issue Nikkei Stock Average, climbed over 3 percent at one point before ending the day 2.61 percent higher than the day before, while the broader Tokyo Stock Price Index rose 1.94 percent.

Market watchers noted that some of Trump's policy ideas, including more tax cuts and higher tariffs on imports, are seen as inflationary, potentially strengthening the U.S. dollar against the yen, which is positive for bank stocks.

On Thursday, the 225-issue Nikkei Stock Average closed down 0.25 percent, while the Tokyo Stock Price Index rose one percent.

The South Korean composite index closed down 0.52 percent on Wednesday. Concerns over Trump's policies on renewable energy and climate change have impacted related companies. LG Energy Solution's stock fell by 7 percent, while solar cell manufacturer Hanwha Solutions dropped by 8.2 percent.

In addition, the U.S. election results have also significantly intensified market volatility in the international commodity, foreign exchange and bond markets.

On Wednesday, the yield on the U.S. 10-year Treasury bond sharply increased, the U.S. dollar index rose by over 1.6 percent, and the price of Bitcoin reached a historic high of approximately 75,000 dollars. Meanwhile, gold and copper prices dropped significantly, and oil prices also came under pressure, moving lower. ■