Trump's Win Sends #US Stocks Soaring, Dollar Surging - But World Markets Reel! #USElections #TradeWars #USD

Donald Trump's electoral triumph has propelled #US stocks to unprecedented heights and driven the dollar to a two-year peak. However, this development is far from positive for the rest of the world.

Equities outside the #US are plummeting, with an #MSCI indicator at its lowest point in three months. A benchmark of emerging-market currencies has shed over 1% following the #US election, nearly erasing this year's gains. European stocks and the euro have also faltered.

The stark contrast between #US and non-US assets has become more pronounced as Trump's cabinet begins to take shape, with loyalists prepared to implement his "America First" agenda named for key positions. This has confirmed investors' worst fears: that the push for higher tariffs, particularly on China #CHN, will gain momentum, alongside a host of potentially disruptive policies that could drive inflation higher and constrain central banks' actions.

Such concerns have prompted investors to allocate their funds to #US assets. Fund managers' exposure to American stocks has surged to the highest level since 2013, according to a Bank of America Corp. survey.

Conversely, emerging markets like China #CHN and Mexico #MEX, often viewed as the most vulnerable to Trump's trade policies, have suffered. Trump's more domestically-focused policies will favor #US companies, said the chief investment officer at Gama Asset Management SA. "We reduced risk ahead of the #US election, and it's now time to increase portfolio exposure but rotate into investments that will benefit from Trump's expected policy choices."

Wednesday is shaping up to be another bleak day, with an #MSCI benchmark for Asian stocks declining more than 1% and setting the stage for a weak session in Europe. Shares in South Korea were headed for a one-year low as foreign investors sell companies like Samsung Electronics Co. that are susceptible to trade protectionism.

A Bloomberg gauge of the dollar edged higher after reaching its highest level since November 2022 in the previous session. Investors are closely monitoring cabinet appointments for indications of whether Trump's campaign rhetoric will translate into policies. The president-elect had previously vowed to impose substantial new tariffs, considering a duty of 20% on all foreign goods and 60% or higher on those from China #CHN. This has revived fears of another trade war that could disrupt global supply chains and harm companies heavily reliant on #US sales. Trump's other proposals include mass deportation and tax cuts, which could lead to higher inflation and restrict the Federal Reserve's ability to cut rates.

As these prospects bolster the greenback and pressure emerging market currencies, some central banks, including Bank Indonesia and Banco Central do Brasil, have intervened in markets over the past week to support their currencies.

The People's Bank of China #PBOC set its reference rate for the yuan stronger than the market's estimate on Wednesday, indicating its discomfort with currency weakness amid the threat of higher #US tariffs. This is not to say there are no safe havens.

Money managers are increasing their investments in markets like India, which are perceived to be less affected by Trump's policies. Punitive tariffs on Chinese #CHN goods could also prompt a shift of investment away from the world's second-largest economy and toward Southeast Asia, according to Kasikorn Asset Management Co.

However, for now, #US assets appear to be the clear winner.

?"The '#US exceptionalism' theme seems to have considerable momentum left," said a senior strategist at Pepperstone Group Ltd. "I maintain full confidence in the bullish case for equities, particularly with the incoming Trump Administration likely to provide a further boost to economic growth and corporate earnings through a new round of tax cuts."

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