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November trade driven by Trump election win

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Bitcoin, Tesla clear winners

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U.S., European bonds, bank stocks go in different

directions

By Naomi Rovnick, Dhara Ranasinghe and Nell Mackenzie

LONDON, Nov 29 (Reuters) - November was a month of clear

winners and losers from Donald Trump's Nov. 5 U.S. election

victory.

Trump trades, essentially punishing tariff-sensitive assets

from European exporters to Mexico's peso and driving investment

towards U.S. stocks and the dollar, proved successful. Wall

Street has rallied, the dollar gained 2% against rival

major currencies and bitcoin surged.

But December could be bumpy, with the Trump trade vulnerable

to a potential bond market backlash against fiscal largesse,

while tariffs might boost inflation and snarl up supply chains.

"Elevated (U.S.) equity valuations reflect complacency as

the more challenging environment we expect is not priced in,"

BCA Research said.

Here's a look at some assets in the spotlight.

1/ CURRENCY WOES

The euro has suffered its worst monthly drop since early

2022, losing just over 3% to around $1.05, on U.S.

tariff risks, political upheaval in Germany and France and a

sharp regional economic downturn.

Analysts expect more volatility in the $7.5 trillion-a-day

currency markets as debate rages about how low the euro can go

and whether Trump really will boost the U.S. economy while most

others suffer.

Mexico's peso dropped over 1% against the dollar in

November, sterling lost almost 2%. China's offshore

yuan was set for its biggest monthly drop since Aug 2023,

down almost 2%.

The key question in FX markets, Monex Europe senior market

analyst Nick Rees said, is: "does Trump's election victory

presage a fundamental structural shift in the global economy, or

are markets just engaged in a knee-jerk panic?"

2/ BITCOIN, BOOM OR BUST?

If there's one asset that smashed it out of the park in

November, it's bitcoin.

The crypto currency has surged 37%, briefly eying the

$100,000 milestone, on hopes of a more crypto-friendly

regulatory environment under Trump.

The last time bitcoin surged as much was February, when

money flooded into new bitcoin exchange-traded products.

So, what's next? For some in the industry, a rise to

$100,000 would mark the niche asset finally going mainstream.

"If bitcoin smashes through the $100,000 level... then even

more people could find crypto on their radar," said AJ Bell

investment analyst Dan Coatsworth.

Others reckon there is a risk of speculative excess, meaning

bitcoin's surge could just as easily be followed by a sharp fall

that catches some investors out.

3/ TECH UNDER TARIFFS

Wall Street's tech-heavy Nasdaq 100 has scored its

best monthly gain since June as Trump ally Elon Musk's Tesla

surged 33% and AI fervour boosted Nvidia ( NVDA ) even

as the chipmaker forecast slower sales growth.

Risks are growing for tech, as Trump's tariffs plans

threaten supply chains and an AI spending splurge by so-called

hyperscalers such as Microsoft ( MSFT ), Meta and

Amazon ( AMZN ) sparks investor anxiety.

"There's an intense arms race between the main hyperscalers,

which could be over-investment," said Mikhail Zherev, manager of

Amati Global Investors' innovation fund. "We have reduced our

exposure (to AI)."

The European Central Bank warned last week of "adverse

global spillovers" if an AI "bubble" bursts and the tech stocks

that dominate global equity markets slump.

4/ BANK RUN

Investors loved big U.S. banks but loathed European ones.

An index of U.S. banking stocks soared 13% in

November, the best month in a year, driven by deregulation hopes

under Trump.

But European bank shares have slumped 5% as a weakening

economy boosted rate-cut bets. Still, they have rallied

16% so far this year, benefiting from relatively higher lending

rates.

Europe's banks remain net sold by hedge funds "despite good

performance" said a JPMorgan prime brokerage note to clients

seen by Reuters on Wednesday.

The sector must respond and rev up fee making activities

from asset and wealth management as well as dealmaking and

investment banking, a Deutsche Bank report said.

5/ BOND BUDDIES NO MORE

November may well mark the month that major bond markets

(which usually move together) parted company.

Although U.S. 10-year Treasury yields end November little

changed on the month, the direction matters and that's pointed

higher.

U.S. borrowing costs have surged 60 basis points since

mid-September on strong data and expectations for higher

inflation and fiscal deficits under Trump's policies.

Capital Economics sees Treasury yields rising to 4.5% by

year-end, from around 4.24% now.

In contrast, Germany's 10-year yields are down over 20 bps

at around 2.15%, set for their biggest monthly fall

of 2024, on weakening economic activity, Trump tariff threats

and Russia-Ukraine escalation.

In Japan it's a different story again, with yields set for

the biggest monthly jump since May, partly as a

post Trump-win yen slide boosts speculation on a rate hike next

month.