Hedge Funds Bet Billions Against US Stocks Amid Trump Uncertainty

Hedge funds have invested billions in short positions against the US stock market, predicting a potential market crash under President Donald Trump’s administration. A report from The Telegraph, citing data from Goldman Sachs, highlights a notable surge in short bets on US stocks, signaling growing concerns among traders about the market's future.

This shift comes in the wake of a significant sell-off in major tech stocks, sparked by fears of increased competition from the Chinese AI firm DeepSeek. The growing anxiety is further reflected in the rise of short positions, a clear signal that investors are becoming more cautious about the US stock market’s performance.

In January, the number of bets placed on US stocks falling was 10 times higher than those on stocks rising, a stark contrast to November, when hedge funds were heavily invested in US equities. Back then, many had placed their bets on the belief that Trump’s tax cuts and trade policies would spur economic growth.

After Trump's election victory, hedge funds rushed to invest in “Trump trades,” betting on a market rally. This wave of investment drove industry assets to unprecedented levels, surpassing $4.5 trillion (£3.6 trillion). However, the recent market volatility and growing pessimism reflect a changing sentiment, with hedge funds now preparing for potential downturns instead of betting on continued growth.

This drastic shift in investor sentiment highlights the growing uncertainty surrounding Trump’s economic policies and their long-term effects on the stock market, prompting many hedge funds to reconsider their previously optimistic outlooks. The market’s current instability, combined with external pressures like geopolitical tensions and technological competition, has left many hedge funds wary of what’s ahead.