Before we dive in, let’s get one thing clear—this isn’t a political post! As a Brit, I didn’t have a vote in the U.S. elections. My goal here is to focus on the financial market movements since President Donald Trump’s re-election, looking purely at the numbers. No political spin, just a look at what’s happening and what it could mean for global markets and investors.
So, what’s the story?
What does this mean for global economies? One key takeaway is the growing interest in alternative investments. The U.S. market’s gains—combined with the performance of assets like Bitcoin—suggest that investors are increasingly open to moving beyond traditional stocks. This shift could mean more volatility as markets become a mix of traditional stocks and digital assets.
For index fund investors, particularly those following global indices that are heavily influenced by the U.S. market, these moves highlight some risks and opportunities. An index fund tracking the S&P 500, for instance, would have done extremely well during Trump’s years, but such a strong performance can also raise questions about whether this pace is sustainable in the long term.
The Bitcoin Rush
While we can’t ignore the boost the S&P 500 and Bitcoin experienced, the question remains whether the market can continue to hold at these high levels. A period of growth is often followed by a period of adjustment. For long-term investors, the recent U.S. market changes are a reminder of the importance of diversification—not only within the U.S. but globally, too. As Trump’s years showed us, markets can soar unexpectedly, and keeping a balanced approach might be the best way to weather whatever comes next.
Since Donald Trump’s recent re-election in November 2024, both traditional markets and cryptocurrency have seen interesting trends. The S&P 500 has shown a favorable initial response, achieving record highs across multiple indices as investors anticipate potential economic reforms under Trump’s administration. The Dow, Nasdaq, and S&P 500 have each hit new highs, spurred by expectations of business-friendly policies that could boost market confidence. This optimism has also led the VIX, or "fear index," to drop significantly, which indicates a general reduction in market anxiety.
Bitcoin, meanwhile, has surged dramatically, reaching a new all-time high of around $93,000, spurred by Trump’s crypto-friendly rhetoric. His potential removal of SEC Chair Gary Gensler and proposed pro-crypto policies, including possible Bitcoin mining subsidies, have fueled excitement in the digital asset space. This positive outlook led to a short squeeze that liquidated significant short positions, boosting Bitcoin and other cryptocurrencies. Although some pullbacks are likely as the market adjusts, many analysts remain bullish on crypto’s future under Trump’s proposed regulatory shifts.
From a broader perspective, this market enthusiasm suggests potential global economic impacts, especially if Trump's policies favor stronger ties with crypto markets and lower corporate taxes. Index funds tracking the S&P 500 and other major U.S. indices could see sustained growth, assuming continued investor confidence in pro-business policies. However, heightened volatility is likely in both stocks and digital assets as the administration's policies begin to unfold and the Fed’s rate policies remain a factor.
In short, while both the S&P 500 and Bitcoin have seen early positive impacts from Trump’s re-election, investors should remain cautious. The initial market reaction is promising, but longer-term impacts on global economies and tracking indices will hinge on how these policies play out in practice.
What will I do?
I still don't have the stomach to be investing heavily into Bitcoin. I decided to put £100 into a Crypto account at the start of the year and it sits now at around £180. Once it hits £200 I will take my original stake out and probably top up my Emergency Fund or simply put it into my Index funds I hold with Vanguard. With the S&P 500 climbing though this will help my Global Funds as well, but obviously the jump won't be as big as the purely US focused index.