As Donald Trump solidifies his victory in the U.S. presidential election, financial markets have responded with optimism. U.S. stock futures hit record highs, the dollar surged, and Treasury yields rose, reflecting investor confidence in Trump’s economic policies. Many investors are positioning themselves for a potential Trump victory, anticipating a continuation of pro-business policies, tax cuts, and deregulation.
Fox News announced Donald Trump as the winner of the U.S. presidential election, though no other networks had made the call at the time. Despite this, Trump delivered an exuberant speech, vowing to fight for the American people and pledging to "not rest until delivering a strong, safe, and prosperous America."
Trump will become only the second president to return to the White House for a second non-consecutive term, after Grover Cleveland. After losing to Joe Biden, he would also become the first American president to be charged with a crime including alleged involvement in the Capitol riots in 2021. Additionally, Trump will become the first American president to be twice appointed before being re-elected for a second term.
U.S. Market Reaction
U.S. futures soared as markets reflected hopes for a Republican-controlled Congress and potential tax cuts. The dollar strengthened, and Treasury yields rose as the market priced in expectations of higher borrowing costs. Bitcoin also surged, surpassing $75,000 for the first time, amid hopes that Trump’s administration would adopt a more favourable stance on cryptocurrency regulation.
According to Reuters, Matthew Ryan, head of market strategy at Ebury, noted that investors have faith in Trump's proposals, especially those pertaining to tax cuts and deregulation, which might further strengthen the economy and the stock market.
Global Market Impact
As Donald Trump's possibilities of winning the election rise, there are discernible shifts in the financial markets. Assets whose prices could be bolstered by Trump’s pledges to raise tariffs, cut taxes, and slash regulations have gained attention.
According to Reuters, global markets have reacted with mixed results. In Asia, bank stocks benefitted from expectations of higher yields and growth, with Tokyo’s bank stocks rising by 4.4 per cent. However, exporters' stock prices fell due to worries about trade tensions, particularly in Hong Kong, where the Hang Seng Index fell 2.7 per cent. For companies that rely significantly on trade between the United States and China, these worries are a result of the possibility that tariffs will remain in place during the Trump administration.
A 3 per cent loss in the value of the Mexican peso and a dramatic drop in the euro both reflected concerns about economic slowdowns linked to possible disruptions in international trade.
Cryptocurrency Surge
It is also noteworthy that Bitcoin has risen to a record high since investors think that a Trump victory will improve the environment for digital assets. The surge in cryptocurrency prices is ascribed to the perception that Trump's approach to regulating digital currencies will be less stringent than that of his opponent, Kamala Harris.
