Wall Street smashes records, dollar soars as Trump wins
The Republican candidate made a stunning political comeback as he defeated Vice President Kamala Harris to return to the White House, four years after losing it to Joe Biden.
Former US President and Republican presidential candidate, Donald Trump, speaks during an election night event at the West Palm Beach Convention Center in West Palm Beach, Florida, on 6 November 2024. Picture: Jim WATSON/AFP
LONDON, UNITED KINGDOM - Wall Street rallied into record territory, the dollar soared and bitcoin scaled a new peak Wednesday as the world gears up for another Donald Trump presidency.
The Republican candidate made a stunning political comeback as he defeated Vice President Kamala Harris to return to the White House, four years after losing it to Joe Biden.
The Dow soared three percent while the S&P 500 and Nasdaq Composite jumped around two percent.
"The rationale behind the US stock market rally is that Trump is seen as business-friendly and will be able to pass his tax cuts through easily without much resistance from the Democrats who have lost control of the Senate," said City Index and FOREX.com analyst Fawad Razaqzada.
Briefing.com analyst Patrick O'Hare said Trump's policies "which feature lower tax rates and deregulation among the cornerstones, are being heralded by the stock market as pro-growth policies that will be a boon for corporate profit growth".
Markets are also applauding the clarity of Tuesday's results, said Jason Schenker of Prestige Economics.
"A swift and decisive outcome reduces the risks of protracted uncertainty, political violence, recession risks, and even geopolitical spillover that could have accompanied presidential election outcome uncertainty," he said.
But in a sign that investors are also nervous about the impact of Trump's protectionist policies, European stock markets gave up strong earlier gains to slip into the red. Frankfurt fell 1.1 percent with shares in automakers - a possible target of Trump tariffs - slumping.
Asian stocks diverged, with Chinese stocks hit by expectations that Trump would impose tariffs on Chinese imports.
Market focus was also on plans to stimulate China's economy, the world's second biggest after the United States.
Trump tax cuts, while good for corporate profits, are seen as inflationary and therefore leading to fewer interest-rate cuts by the Federal Reserve in the coming months.
That boosted the dollar against main rivals, with the greenback up around two percent against the euro.
The Fed announces its latest rate decision on Thursday.
"With the Federal Reserve expected to announce a likely 25 basis-point cut tomorrow, we are already seeing expectations reined in for the December meeting given the perception that Trump's policies are inherently inflationary," forecast Joshua Mahony, analyst at traders Scope Markets.
US Treasury yields also won support Wednesday.
"Investors are bracing for tariffs and a clampdown on (US) immigration, policies considered to be inflationary which are likely to mean interest rates may be more elevated in the years to come," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
She added that "expectations are high that a Trump presidency will mean fewer regulations on big tech and big finance".
Shares in Tesla soared 13% after Trump praised the electric car maker's boss Elon Musk, a key campaign backer, as a "star" during his victory speech.
BITCOIN RECORD
Bitcoin sprung $6,000 higher to a record $75,371.67, topping its previous peak of nearly $74,000 in March.
Trump has pledged to make the United States the "bitcoin and cryptocurrency capital of the world" and to put tech billionaire Musk in charge of a wide-ranging audit of governmental waste.
Elsewhere, oil prices initially fell "amid expectations that under Trump more crude will flow from US wells", Streeter added. The main US contract WTI later erased its losses while international reference Brent was modestly lower.
"Another Trump presidency is likely to place emphasis on energy independence and his policies are likely to favour fossil fuels, promoting deregulation in the oil, gas, and coal industries," she said.
KEY FIGURES AROUND 1630 GMT
New York - Dow: UP 3.1%at 43,515.62 points
New York -S&P 500: UP 2.1% at 5,899.07
New York - Nasdaq Composite: UP 2.3% at 18,858.11
London - FTSE 100: DOWN less than 0.1% at 8,166.68 (close)
Paris - CAC 40: DOWN 0.5 percent at 7,369.61 (close)
Frankfurt - DAX: DOWN 1.1%at 19,039.31 (close)
Tokyo - Nikkei 225: UP 2.6% at 39,480.67 (close)
Hong Kong - Hang Seng Index: DOWN 2.2% at 20,538.38 (close)
Shanghai - Composite: DOWN 0.1% at 3,383.81 (close)
Euro/dollar: DOWN at $1.0730 from $1.0930 on Tuesday
Pound/dollar: DOWN at $1.2879 from $1.3035
Dollar/yen: UP at 154.44 yen from 151.60 yen
Euro/pound: DOWN at 83.30 from 83.82 pence
West Texas Intermediate: FLAT at $71.99 per barrel
Brent North Sea Crude: DOWN 0.3% at $75.33 per barrel