Investors drove stocks, the dollar and yields on U.S. Treasury bonds higher in response to a decisive victory by President-elect Donald J. Trump.
U.S. stock futures, which had risen steadily overnight, surged as the outcome of the vote became clear, putting an end to weeks of uncertainty. Futures in the S&P 500 rose more than 2 percent and futures in the Russell 2000, an index of small U.S. companies, jumped 6 percent. U.S. bank stocks also rose.
Yields on U.S. government bonds climbed as traders prepared for the possibility of higher deficits and economic stimulus under a Trump administration.
Bitcoin surged to record highs, as Mr. Trump has promised to end the Biden administration’s regulatory push and establish the United States as the “crypto capital of the planet.”
The U.S. dollar rose against the Japanese yen as well as the euro, the Mexican peso and the Chinese yuan — the currencies of major trading partners expected to be heavily affected by Mr. Trump’s proposal to substantially raise tariffs. The euro recorded its steepest daily fall against the dollar in more than eight years.
In October, investors started driving up yields on U.S. Treasury bonds and pushing the dollar higher against global currencies as they started to see a better chance of a Republican victory.
This was caused in part by the expectation that Mr. Trump’s proposed policies on taxes, trade and immigration might bolster economic growth even as they would increase government spending. Together, analysts believe, they would drive interest rates higher over time.
In anticipation of a second Trump term, the yield on the 10-year U.S. Treasury bond rose nearly 0.2 percentage points — a big move in that market — to more than 4.4 percent on Wednesday morning. Shorter-dated bond yields rose by less, as the Federal Reserve was expected to continue to cut interest rates in the coming months, including at its meeting that concludes on Thursday.
An index measuring the value of the dollar against several other major currencies rose 1.9 percent. Among the most closely watched currencies, the Mexican peso fell 2.4 percent, the Japanese yen weakened 1.8 percent and the euro lost 2.2 percent, its worst day since mid-2016.
Global Investors React
Investment advisers in Asia and Europe described a lengthy day and night spent fielding calls from clients as the election results rolled in, discussing the potential implications of Mr. Trump’s victory.
“We are all waiting to see if his second term will be the same or different,” said Joy Yang, the head of Asian economic and strategy research at the hedge fund Point72. “The broad market consensus — there is very little understanding of what his plans are this time.”
Stock markets in Europe rose sharply in early trading on Wednesday but pared those gains in the afternoon with the Pan-European Stoxx 600 index gaining about 1 percent.
Yields on European government bonds fluctuated. Investors’ initial bets that central banks would cut rates more to bolster the region’s economies, especially those of export-oriented nations such as Germany, gave way to the prospects of higher inflation from the weak currency. “The market has clearly yet to settle on a consensus narrative,” analysts at Rabobank said.
But there were some early losers in European markets as shares in automakers, like BMW and Volvo, and renewable energy companies, including the Danish wind company Orsted, dropped on expectations of higher tariffs and less aggressive climate goals.
German business leaders warned that a second Trump presidency would further challenge Germany’s stagnating economy. The United States is the largest buyer of German products, especially pharmaceuticals, machinery and cars.
“The clear result of the U.S. elections is a wake-up call for Germany and Europe,” said Siegfried Russwurm, president of the Federation of German Industries.
Across Asia, stock markets extended gains from Tuesday. In Japan, the benchmark Nikkei 225 rose 2.6 percent. Stocks in mainland China fell slightly, and Hang Seng Index in Hong Kong tumbled 2.2 percent.
Bruce Pang, chief economist for the greater China area at JLL, a real estate and investment management firm, said the Hong Kong stocks were down because the companies listed there were more exposed to a weaker Chinese currency.
Mr. Trump’s more protectionist policies might also mean that Chinese policymakers will focus more on driving domestic demand in the economy instead of expecting exports to stimulate growth.
“There will be tensions geopolitically, but it’s still more predictable,” Mr. Pang said of a Trump victory. “There is some history there.”
The ‘Trump’ Trades
In the volatile cryptocurrency markets, Bitcoin rose 6 percent in the last 24 hours to more than $74,000, eclipsing a record high set in March. Mr. Trump had been promoting himself as a crypto supporter on the campaign trail.
This year, uncertainty over the election’s outcome or a contested result has driven money into gold, which is considered a safe-haven investment during turbulent times. But with Mr. Trump’s victory, gold prices, which have been near a record high, fell slightly.
The stock of Tesla, the electric vehicle company run by Elon Musk, who has emerged as one of Mr. Trump’s most prominent backers, rose about 13 percent in premarket trading. Mr. Trump could ease regulatory scrutiny of Tesla. He has promised to install Mr. Musk as head of a “government efficiency” panel.
Shares in the private prison companies Geo Group and CoreCivic rose about 20 percent in premarket trading.
But no stock is more directly linked to Mr. Trump’s political fate than Trump Media & Technology Group, the parent company of Truth Social. Mr. Trump is the social network’s most important user and its largest shareholder. The company’s shares have traded largely as a proxy for Mr. Trump’s political fortunes.
Trump Media’s stock price swung wildly in early morning trading, on heavy volume, rising more than 30 percent.
In China, an aviation software and equipment company, Wisesoft, whose Chinese name sounds like “Trump wins big” in Mandarin and has become a Trump meme stock in recent weeks, rose 10 percent on Wednesday. Its stock price has more than doubled in the last month.
The post Stocks and the Dollar Jump After Trump Clinches Election Win appeared first on New York Times.
