“Trump Trade” Heats Up: Bitcoin and Gold

Surge as China Stimulus Wait Continues

On Monday, October 21, Asian stocks fluctuated amid weakness in Hong Kong’s stock market, while Bitcoin climbed to a three-month high, fueled by the intensifying “Trump trade.” Ongoing Middle East conflicts and the looming U.S. presidential election drove gold to a new all-time high, further boosting its appeal.

China cut its benchmark lending rate on Monday, a move widely expected by the market. Despite Beijing’s announcement of a series of stimulus measures in late September, initial optimism has waned in recent days, with investors waiting for more detailed fiscal support.

China's blue-chip CSI 300 index turned positive in the afternoon after morning fluctuations, supported by gains in tech stocks. The benchmark index rose 0.4%, while the Shanghai Composite gained 0.31%. Meanwhile, the Beijing Stock Exchange 50 Index soared by 14%, reaching a record high after the exchange announced plans to help small- and medium-sized tech companies with training and financing for listing.

However, this failed to lift Hong Kong’s market, which fell over 1%, dragging down the MSCI Asia-Pacific Index (excluding Japan) by 0.26%. This pullback followed six consecutive weeks of gains in U.S. stocks. Japan's Nikkei edged up by 0.12%.

Additional details of China’s stimulus measures may take some time to be unveiled. Chaoping Zhu, a global market strategist at JPMorgan Asset Management in Shanghai, noted, “We may not see specific plans until late October or early November, likely during the NPC Standing Committee meeting.”

European stock markets mostly opened lower, with the Euro Stoxx 50 down 0.30%, Germany’s DAX off by 0.29%, while the UK’s FTSE 100 rose by 0.03%, and France’s CAC 40 fell by 0.45%.

Nasdaq futures slipped by 0.08%, while S&P 500 futures were flat.

U.S. Election

With less than two weeks remaining until the November 5 U.S. presidential election, market bets on Donald Trump’s victory are increasing.

The Republican candidate’s policies on tariffs, taxes, and immigration are seen as inflationary, negatively impacting bonds while supporting the dollar. Trump is also perceived as more crypto-friendly.

“Trump appears to be leading in key battleground states, suggesting a strong chance of reclaiming the White House. Markets seemed to have started pricing this in last week, resulting in stronger equities, rising yields, and a robust dollar. Meanwhile, Bitcoin rose by 10% last week,” said Tony Sycamore, a market analyst at IG.

Bitcoin recently rose 0.5% to $69,080.72, after hitting a July high of $69,487 earlier. The cryptocurrency gained 9.6% last week and has increased by over 8% so far this month.

“Bitcoin’s current performance looks promising, and I think it still has more room to run,” Sycamore added.