Commodity prices worldwide falling due to Trump's victory
Photo: Trump's victory led to a decline in commodity prices (Getty Images)
The prices of raw materials, from oil to metals and grain, have decreased amid the strengthening of the dollar. Investors are expecting Donald Trump's return to the White House and the continuation of his policies, Reuters reports.
Oil prices have fallen by about 1.5%, and copper has dropped by more than 2% under pressure from the rising US dollar. Precious metals, including gold, remained stable.
"This is the initial response in commodities markets to US vote counting and early results favoring Trump's victory," said Ole Hansen, head of the commodity strategy at Saxo Bank.
According to him, "the main focus is that if we will see a Trump 2.0 scenario, we are likely to see tariffs on Chinese goods, which is negative for metals with China being the big consumer of copper, iron ore and steel."
Oil is falling due to concerns over economic growth, as tariffs do not support overall global demand, he said.
Trump's economic policy
China's metallurgy and steel industries could face difficulties if Trump returns to power. Trump has promised to impose comprehensive 60% tariffs on Chinese goods to boost manufacturing in the US.
"China's steel prices will undertake more downward pressure if Trump wins the election, and domestic steelmakers may face even more severe losses. This is because Trump will be more aggressive in terms of measures against China," said Ge Xin, Deputy Director of Lange Steel Research Centre.
Global oil supplies could experience disruptions if the Trump administration tightens sanctions on oil exports from Iran, which exports around 1.3 million barrels per day.
"And Trump may support Israel adopting a tougher military posture against Iran which portends higher near-term risk of a military escalation that might impact supply in the region," said Saul Kavonic, Senior Energy Analyst at MST Marquee.
Regarding agriculture, Beijing may have to impose tariffs in response to the US soybean tariffs if Trump wins and introduces new tariffs on Chinese goods. Although Beijing has reduced its dependence on soybean imports from the US, this oilseed remains the largest agricultural export from the US to China.
Spot gold held its ground after reaching a record high of $2790 last Thursday. Gold is considered a hedge against geopolitical and economic uncertainty and typically thrives in environments with low interest rates.
The Federal Reserve is beginning a two-day meeting on monetary policy, and it is expected to decide to cut interest rates by another 25 basis points. However, Trump's victory could complicate the outlook for US interest rates.
According to Fox News, Trump has secured 270 electoral votes, the necessary number to defeat opponent Kamala Harris. Other news organizations have yet to declare him the winner, although he continues to lead.
Trump has already declared victory. He has been congratulated by many world leaders, including Ukrainian President Volodymyr Zelenskyy.
