The Stock Market Reaction to Donald Trump's Re-Election

Abstract

The 5th of November 2024, the United States elected Donald Trump as president. Trump made several statements throughout his campaign and these statements affected the financial markets. This thesis focuses on the stock market reaction to these statements. Trump is known from his previous presidency as someone who broke 53% of his promises and failed to deliver on the majority of his campaign pledges. Therefore, the thesis examines whether Trump’s election significantly influenced stock market return, which would indicate that investors believe in his promises. This was examined through a critical discourse analysis of selected speeches delivered during his campaign. Analyzing his communication was important because it was a part of how Trump convinced investors and people to trust in him. It was found that Trump communicated with the use of very emotional language. He used many strong adjectives, short sentences, and very apolitical language to connect better with his audience. Trump also went against hegemonic discourses such as the green agenda discourse. The statements selected for further market analysis included his support for conventional energy and his opposition to green energy. He also wanted to end the war in Ukraine and said that he could do so quickly. He wanted to implement tariffs on foreign countries such as China and better the conditions for American businesses. Based on the communicative analysis, the relevant markets were analyzed through an event study approach. It was found that the conventional energy market was significantly impacted with an increased return and the American and global green energy market were significantly impacted with negative returns. The S&P 500 increased which indicated that investors believed Trump could better conditions for American business. The Chinese market fell significantly showing that his threats of tariffs affected this market. While the Canadian market did not get significantly impacted and they were also not mentioned in his speeches. These findings suggest that the promises made during his speech mattered more than the actions he took during his first term. The Russian market did not change indicating that people did not believe he could end the war.