A Look at the Day Ahead in U.S. and Global Markets

By Dhara Ranasinghe

Almost a week after the U.S. election, investors are already betting on the potential winners and losers of a new Donald Trump administration.

The cryptocurrency bitcoin, referred to by some as "digital gold," has surged over 25% since Trump's victory, nearing $90,000 on Tuesday. Its year-to-date gain exceeds 100%. The latest surge is driven by expectations that a Trump administration will create a more crypto-friendly environment, as he intends to replace SEC Chair Gary Gensler, known for his scrutiny of digital assets.

During his campaign, Trump advocated for making the U.S. the "crypto capital of the planet" and proposed accumulating a national stockpile of bitcoin.

Bitcoin miner Riot Platforms saw a nearly 17% jump on Wall Street and continued to rise in after-hours trading. Other miners, MARA Holdings and CleanSpark, surged nearly 30% as well.

Moreover, Tesla's stocks also gained nearly 40% over the past week, highlighting significant winners from Trump's election.

While markets evaluate what to expect from a Trump administration, economic data may take a backseat for now. However, the Federal Reserve's Senior Loan Officer Opinion Survey on Bank Lending Practices may capture some attention. The prior survey reported steady demand for commercial and industrial loans for the first time in two years.

Any indication of strong credit conditions could suggest that U.S. interest rates might not need to decline as rapidly as previously thought, especially if potential tax cuts and tariff hikes under Trump fuel inflation. Currently, markets are anticipating around 80 basis points of U.S. rate cuts by the end of 2025, a decrease from over 100 basis points a week ago.

Consequently, the dollar is rising to four-month highs against major currencies, whereas the euro is experiencing seven-month lows around $1.0617. The euro has fallen by nearly 3% in the past week, placing it in the losers' column post-election.

Capital Economics predicts the euro will reach parity against the dollar by the end of 2025, suggesting tariffs may be imposed next year and the ECB is likely to ease more than investors expect.

Key Developments to Watch for U.S. Markets Later on Tuesday:

• German ZEW index
• Federal Reserve's Senior Loan Officer Opinion Survey on Bank Lending Practices
• Speeches from Fed officials: Christopher Waller, Thomas Barkin, Neel Kashkari, and Patrick Harker.