Health stocks, too, benefited from the perception that the new administration and Congress will do little to make life harder for Big Pharma. Shares in Novo Nordisk, the maker of weight loss drugs Wegovy and Ozempic, rose around 6 percent; while Roche, Novartis and GSK all saw increases of more than 1 percent.
By contrast, the car sector — an obvious target for import tariffs under the new administration — suffered: Shares in Porsche, Ferrari and BMW all fell around 7 percent, while Mercedes-Benz and Volkswagen were down around 5 percent each. For its part, Stellantis gained 1.4 percent on expectations that its Chrysler and Jeep businesses will profit from the imposition of tariffs on competitors.
It’s not easy being green (or Mexican)
Another sector hit hard was renewable energy, amid speculation that Trump will curtail the lavish subsidies extended by the Biden administration. Danish wind farm developer Ørsted contracted by more than 10 percent; while two of Europe’s largest wind turbine makers, Vestas Wind Systems and German-based Nordex, dropped around 9 percent and 6 percent, respectively.
Trump’s first trade war in 2018 immediately led to a broad economic slowdown, and fears of a rerun were evident in the reaction of the bond market. Yields on two-year benchmark eurozone sovereign bonds all fell by over 0.10 of a percentage point as markets bet on the European Central Bank having to cut interest rates to compensate for the bleaker outlook for exporters. Longer-term yields fell less, reflecting fears that slower growth won’t necessarily mean lower inflation over the next few years.
The geographical focus of Trump’s tariff plans was also evident in bank stocks. Spanish bank BBVA, which owns the biggest bank in Mexico and makes more than half of its profit there, decreased nearly 7 percent; while Santander, which generates around 15 percent of its profits in Mexico, fell 3.5 percent. Trump has threatened to include Mexico in his tariff plans despite its privileges under the North American Free Trade Agreement. The Mexican peso declined more than 3 percent against the dollar on Wednesday morning in anticipation of trouble ahead for its economy.
Away from mainstream financial markets, the price of Bitcoin also leaped to a new record high, above $75,000, reflecting Trump’s enthusiastic embrace of cryptocurrency during the campaign. Trump has promised to support Bitcoin mining in the U.S. and create a strategic Bitcoin reserve, although he hasn’t spelled out what that will mean in concrete terms.