Trump's victory ignites bullish expectations, with hundreds of billions of dollars flowing into the U.S. stock market on election day
On the day Donald Trump won the presidential election, U.S. stocks saw their largest capital inflow since June, reaching $20 billion. Small-cap stocks attracted their largest capital inflow since March, totaling $3.8 billion. Although Trump's tax cut proposal may boost corporate earnings, investors are concerned about the potential inflation and tariff policies it could trigger. U.S. equity funds increased by $32.8 billion in the week ending November 6, while European equity funds experienced capital outflows for the sixth consecutive week, amounting to $90 million
According to Bank of America strategists, on Wednesday, the day Trump announced a decisive victory in the presidential election, a massive inflow of $20 billion flowed into U.S. equity funds. Bank of America strategist Michael Hartnett cited EPFR Global in a report, stating that this was the largest single-day increase in five months. Small-cap stocks, which are considered to benefit from Trump's protectionist stance, attracted the largest inflow of funds since March, reaching $3.8 billion.
Following the announcement of the U.S. election results and the Federal Reserve's rate cut, the U.S. stock market rebounded to record highs this week. The S&P 500 index is expected to achieve its largest single-week gain in a year. While Trump's proposal to lower corporate tax rates is expected to boost corporate earnings, investors are also concerned that tariffs and immigration policies that the Trump administration may implement could reignite inflation. The yield on the 10-year U.S. Treasury initially surged after Trump's victory, although it has since retraced most of its gains.
Hartnett stated, "Inflation boom = sell bonds." He mentioned that Trump's "sweep" could bring about "big policies," including approximately $8 trillion in tax cuts, $3 trillion in tariff revenue, and $1 trillion in spending cuts. Republicans gained control of the Senate, while the House elections continued to swing in about 30 congressional races held on Thursday due to uncounted ballots.
According to the report, for the week ending November 6, U.S. equity funds saw a total increase of $32.8 billion. European equity funds faced outflows for the sixth consecutive week, amounting to $900 million. Concerns over potential tariff impacts have put pressure on European stock markets