The market answer to "Trump 2.0": Big winners "Tesla, financial industry, oil and gas industry," big losers "new energy, shipping industry, European automotive"

The dust has settled on the U.S. election, and the "Trump trade" has sparked a surge in the capital markets, with funds flowing into winners expected to benefit from Republican policies and selling off anticipated losers.

On Wednesday, the three major U.S. stock indices hit record highs, with the S&P 500 rising 2.5%, marking the largest post-election day increase in history, and the tech-heavy Nasdaq 100 index climbing about 2.7%.

The Dow Jones Industrial Average, closely tied to the economic cycle, rose 3.57%, achieving its largest increase in two years, as investors bet that Trump will favor economic growth and that Republican control of Congress will pave the way for tax cuts and deregulation; the Russell 2000 small-cap index surged about 5.8%, reflecting optimism about tax cuts and regulatory relief for small businesses.

Among individual stocks, Tesla is undoubtedly the biggest winner, with its share price soaring nearly 15% overnight to the highest level since July 2023, resulting in a $15 billion overnight increase in the personal wealth of Musk, a staunch supporter of Trump.

In the U.S. stock sectors, financial industries such as banking, private equity, mortgage lending, as well as oil and gas, cryptocurrencies, and prison-related stocks led the gains, while renewable energy sectors like photovoltaics, European automotive, shipping industries affected by tariffs, and real estate became the biggest losers.

Big Winners: Finance, Oil & Gas, and Cryptocurrency

Banking

Overnight, U.S. bank stocks surged, with the KBW Nasdaq Bank Index rising 10.7%, reaching its highest level since early 2022. Shares of JP Morgan, Goldman Sachs, and Morgan Stanley rose over 11%, while Bank of America and Citigroup increased by 8.4% and 8.5%, respectively.

Investors are betting that the Trump administration will maintain high interest rates for a longer period, and the soaring U.S. Treasury yields have also helped boost bank stocks, as higher yields mean higher net interest income for banks.

Additionally, investors expect the Trump administration to relax regulations on the financial industry, including further weakening the rules on the capital reserves banks must hold, and the Biden administration's restrictions on credit card late fees may also be abolished.

Private Equity and "Two Houses"

Private equity firms are also expected to benefit from the Trump administration's looser merger regulations, with shares of Apollo Global and KKR both rising over 10% overnight, and Blackstone increasing by nearly 5% The stock prices of the largest U.S. mortgage lenders, Fannie Mae and Freddie Mac, soared over 37% as investors bet that Trump might push for the complete privatization of these two institutions.

Oil and Gas

U.S. oil giant ExxonMobil rose about 2%, while Chevron increased by 2.8%; the largest natural gas producer in the U.S., EQT, rose by 7.8%, and LNG export terminal developer NextDecade surged over 15%.

During his campaign, Trump frequently courted oil companies, promising to repeal most of Biden's environmental and climate agenda.

Cryptocurrency and Prisons

Cryptocurrency-related assets surged on expectations that a Trump administration would support the industry, with Bitcoin rising nearly 8%, approaching its all-time high of $75,000, and shares of cryptocurrency exchange Coinbase Global increasing by 31%.

Private prison stocks soared to multi-year highs as the market bet that the government would outsource incarceration rates. Geo Group rose by 42%, and CoreCivic increased by 29% after reporting strong quarterly results on Wednesday.

Big Losers: New Energy, Shipping Industry, European Automakers, Real Estate

Renewable Energy

In contrast, new energy companies were hit hard due to concerns that Trump might repeal the tax cuts and subsidies of the Biden administration. The S&P Global Clean Energy Index, which tracks the world's largest clean energy companies, fell by about 6%.

European wind energy companies were hit the hardest, with Ørsted, the world's largest offshore wind farm developer from Denmark, dropping by 14.5%, and Danish turbine manufacturer Vestas falling by over 13%.

The Biden administration has promoted the deployment of offshore wind energy, setting a goal of reaching 30 GW of offshore wind deployment in the U.S. by 2030 and over 110 GW by 2050, but Trump promised to halt this project on the "first day" of the new administration.

Shares of photovoltaic companies also plummeted, with U.S. photovoltaic ETFs dropping over 10%.

Industries Affected by Tariffs

Trump threatened to impose high tariffs on imported goods, impacting the stock prices of retailers, automakers, and shipping companies.

Companies manufacturing goods outside the U.S. saw their stock prices decline due to tariff concerns, including Nike, Target, Best Buy, and home retailer Williams-Sonoma.

European automakers also fell, with Germany's BMW and Volkswagen dropping over 8% and 5%, respectively, while the Stoxx 600 automotive and parts index fell by 2%.

The world's largest shipping companies also faced pressure, with Denmark's AP Møller-Maersk dropping nearly 8% and Germany's Hapag-Lloyd falling nearly 9%. ABG Sundal Collier analyst Petter Haugen stated that global trade frictions would reduce shipping demand, leading to sell-offs Real Estate

On Wednesday, real estate was the worst-performing sector in the S&P 500, falling by 2.6%. Real estate developers are heavily reliant on debt financing, and as bond yields rise, borrowing costs will increase. Homebuilders are also among the worst-performing sectors, as investors expect higher mortgage rates to suppress demand.

Iron Mountain, which owns data storage facilities across the U.S., plummeted nearly 9% on Wednesday, while American Tower Corp and Crown Castle, which own and operate communication infrastructure, fell by over 7% and nearly 5%, respectively.

Additionally, physical storage companies, including Public Storage and Extra Space Storage, all dropped by over 4%. The commercial real estate investment trust Realty Income fell by about 3%