【One Day After the Midterm Elections】Why did stocks, BTC, and gold rise simultaneously after Trump's defeat? A part-time trader contemplates the "three reasons" and future outlook
Almost a day has passed since the midterm election results were tallied.
What did you make of yesterday’s market moves?
What I noticed was,U.S. stocks (US500), Bitcoin, and even gold all rose together.
Stocks and Bitcoin are called "risk assets," while gold is considered a "safe asset," and they often move in opposite directions. Why were they all bought at the same time? Now that things have calmed down a bit, I’d like to sort this out.
For busy readers, here’s a quick summary
- Stocks and Bitcoin: The results became clear and anxiety faded. Rates are also likely to fall
- Gold: Dollar weakness and declining interest rates attracted buy orders, "just in case"
- All three rose forseparate reasons, so they may not move together in the future
- Key going forward: The direction of interest rates and moves around war and crude oil
First, a recap of the election results
The Democrats won majorities in both the Senate and the House. Since the President remains Trump, who is of the Republican Party, the situation is a “divided government.”“Gridlock” is in effect.
What’s interesting is that, during the tally, the market actually moved downat first. US500 also fell when vote counting began in the early hours of the 4th Japanese time. From around 1 p.m., it sharply reversed.
▼ Chart ① US500 (S&P 500) 1-hour
After a drop during counting, it rebounded sharply
The rising trend in stocks and Bitcoin
In short,the anxiety disappearedandthe expectation that interest rates would falldrove the move. If we follow the sequence, it looked like this.
As a result,Dow up 3.03%, S&P 500 up 1.58%and rallied significantly.
However, is this a cause for wholehearted celebration…
- Even though the index rose,semiconductor stocks fell
- Bitcoin briefly dipped below $76,000before bouncing back. Some view that new buyers are still scarce
▼ Chart ② BTCUSD (Bitcoin)
Dropped below $76,000 once, then retraced to around $80,000
Calling this the arrival of a strong uptrend now might be premature. For now, I’ll proceed cautiously and follow the charts.
Why did gold get bought too?
Gold rose by +3.3% from the previous dayand rebounded strongly.
▼ Chart ③ XAUUSD (Gold)
Jumped on the election results
Although it is a safe asset, it rose along with stocks. There are roughly three main reasons for this.
① Dollar weakness
The dollar hit a one-month low. Since gold is priced in dollars, a weaker dollar makes gold appear cheaper and more attractive to buy.
② Decline in interest rates
Gold does not generate interest. When rates fall, that drawback becomes less about.
③ Uncertainty about the future
With gridlock, budgets and policies may struggle to advance. Gold is bought as a form of insurance in such times.
Putting the three side by side
| Asset | Main reasons for buying |
|---|---|
| Stocks (US500) | Relief from anxiety, expectation of lower rates |
| Bitcoin | Lower rates, expectation of more money circulating in the market |
| Gold | Dollar weakness, lower rates, bought as insurance |
When lined up like this, what all three have in common is only “lower interest rates”, you know.
In other words, if the direction of interest rates changes, the current situation where they all rise together may also change.
What to watch next
1. Crude oil
Will it keep falling?
2. U.S. Treasury yields (interest rates)
Will rate declines continue?
3. Dollar index (measure of the dollar’s strength)
Will the dollar stay weak?
4. War and geopolitical developments (the most important)
Will moves toward ceasefire emerge, or will the situation drag on?
Of particular note isPresident Trump’s stance toward war and its connection to crude oil prices.
How he moves toward ceasefire and diplomacy will greatly influence the directions of crude oil, the dollar, and interest rates with his words and actions.
If there are any other movements that catch my eye, I’ll整理 them here. I hope this is at least somewhat helpful.
※The market prices and figures mentioned in this article are based on market data as of November 4–5.