Wall Street-China Market Gap Hits Nearly 10 Points Since Trump’s Victory

January 20 Marks a Historic Day as Donald Trump is Sworn in as the 47th President of the United States

US-China Phase One Trade Deal Review Postponed: China to Buy More US Crude?

This date is expected to be pivotal for the future of the U.S. economy and financial markets, with ripple effects on major global economic powers. In fact, these effects are already being felt.

SPX

Since November 5, when the Republican businessman was declared the winner of the presidential election, the gap between the U.S. and Chinese stock markets has widened significantly. The S&P 500 now holds a lead of up to 10 points over Shanghai’s benchmark index, the Shanghai Shenzhen CSI 300. China is likely to be the country most affected by Trump’s aggressive economic policies.

Despite concerns, China closed 2024 on a positive note, surpassing market expectations and suggesting that its economy could maintain solid momentum in 2025. The better-than-expected results were driven not only by strong quarter-on-quarter growth in Q4 (1.6%) but also by retrospective data revisions—adjusting figures from Q4 2003 downward while raising growth estimates for Q2 and Q3 of 2004.

China Outlook and Optimism

This optimistic outlook is one of the reasons why market analysts still see potential for the Chinese stock market to regain lost ground following the U.S. election and return to trading in line with the S&P 500, as seen over the past 12 months.

Let’s not forget China’s ace up its sleeve: the exchange rate. Experts predict that it will likely weaken to offset some of the impact of tariffs. This possibility becomes even more plausible when considering the lessons from the first trade war, which suggest that the Chinese currency, the renminbi, could depreciate to as much as 9 yuan per dollar.

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ABOUT THE AUTHOR See More
Ignacio Teson
Ignacio Teson
Economist and Financial Analyst
Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.
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