Why Tesla, crypto and prisons are Trump trade winners

Financial markets greeted Donald Trump’s victory in the US presidential election with a blistering rally.

That's despite considerable debate about how Trump’s plans for tariffs, lower taxes and mass migrant deportations might affect the world’s largest economy.

A week on, the surge finally appears to be settling. The three major stock indexes in the US are on track to end the day lower, after rising roughly 5% since 4 November, the day before the election.

Here are some of the companies that have come out ahead, as investors try to game out what the next four years might bring.

Tesla shares have surged more than 40% since 4 November.

The rally has pushed the market value of the firm back above $1tn for the first time since 2022 and boosted the wealth of boss Elon Musk, who owns a roughly 13% stake in the company, by more than $50bn.

It marks a bet by investors that a Trump White House might ease up on some of the investigations by safety regulators into features such as self-driving.

The ties between Trump and Musk could also help Tesla navigate shifts in relationship between the US and China, where the company has a significant presence.

Although Trump is generally expected to reduce government support for electric vehicles, such as tax credits, analysts say this could actually benefit Tesla, the market leader in the US, making it harder for rivals to catch up.

The price of the best-known cryptocurrency, Bitcoin, jumped more than 25% to new all-time records this week on the back of Trump's win, briefly storming past $89,000.

The gains are a sign that investors are anticipating big changes for the sector, which faced a crackdown under the Biden administration from regulators warning it was rife with hucksters and fraudsters.

Trump once also called crypto a scam, but he changed his tune on the campaign trail this year, promising to make the US the “crypto capital of the planet”.

He said he would create a strategic bitcoin stockpile and sack Securities and Exchange Commission chair Gary Gensler, who had sparked anger by taking legal action against firms under existing financial laws.

Crypto firms insist their sector should be subject to new, tailor-made rules. That likely depends on Congress, where they could also get a friendlier hearing this year.

Shares in some of America's biggest banks have seen double digit gains since the day before the election as investors bet financial firms will be among the most immediate beneficiaries of Trump's promises for lighter regulation.

Among other issues, he will now have a voice shaping pending rules that set how much cash banks must keep on hand as financial cushion.

Trump is also expected to part ways with Lina Khan, current head of the Federal Trade Commission, who is known for her anti-monopoly views and is blamed for casting a chill on deal-making, a key business for banks.

Shares in Capital One and Discover, which have a merger under review by regulators, have jumped roughly 20% since the result.

Shares in the leading publicly traded prison firms GEO Group and CoreCivic have jumped more than 70% since 4 November.

The gains point to the big opportunity investors see for private prison operators as Trump vows to round up and deport millions of migrants.

In 2021, President Joe Biden had ordered the Justice Department to stop doing business with private prison companies.

But Trump, who reversed a similar order during his first term, is expected to change that policy and drive new business, as he looks for help to carry out his immigration promises.

Trump's first actions as president have been focused on assembling the team in charge of immigration policy, a signal it is likely to be a priority.

The dollar index is hovering at its highest level since April, rising more than 2% in the last week.

It is good news for American tourists travelling abroad - but a more mixed signal about the economy.

That is in part because the strength of the dollar is closely tied to interest rates, which investors are now betting could stay higher than previously anticipated.

It partially reflects data from before the election suggesting the US economy is stronger than previously understood.

But investors also see a risk that lower taxes, less immigration and new trade barriers could keep pressure on inflation, making the US central bank more reluctant to cut interest rates.

Last week, the Federal Reserve offered little guidance about the months ahead, saying it was too early to tell what impact Trump's policies might have.