In response to former President Donald Trump's return to the White House, U.S. stocks, bond yields, and bitcoin soared on Wednesday, signaling investor confidence in the potential for growth-oriented policies under the Trump administration.
The Republican Party's control of the Senate further bolstered market optimism, with traders banking on a Trump presidency that could lead to lower taxes and reduced regulation.
Ahead of Wall Street's opening, U.S. stock futures pointed to strong gains. S & P 500 futures rose 1.23 percent, the Dow Jones Industrial Average gained 1.02 percent, and the Nasdaq composite futures saw a 1.43 percent increase. Meanwhile, bitcoin hit a record high of $75,345.00 before easing slightly, reflecting strong enthusiasm in the cryptocurrency market.
Bond Yields Surge with Inflation Expectations
U.S. bond yields also surged as the yield on the 10-year Treasury jumped to 4.4 percent from Tuesday's 4.28 percent.
This movement indicates investors are anticipating higher inflation and growth under Trump's policies. Esho Capital's Peter Esho noted that the market is pricing in expectations for "higher growth and higher inflation," adding that traders are attempting to gauge the future affect of Trump's economic agenda.
The Trump administration is likely to bring substantial shifts in monetary policy, with potential consequences for trade and inflation. In European markets, Germany's DAX rose 1.3 percent, France's CAC 40 advanced 1.9 percent, and the FTSE 100 in Britain climbed 1.4 percent.
Dollar Strengthens Against Major Currencies
The dollar surged against multiple currencies, including the Mexican peso and the Chinese yuan, reflecting renewed tensions with China, a country Trump has frequently targeted with tariffs.
Robert Halver of Germany's Baader Bank remarked that "since Donald Trump stands for the economy, it can be assumed that stock markets around the world will go up, with one exception: China," predicting the Trump administration will continue its trade pressure on Beijing.
Markets globally are watching Trump's trade policies closely, as the reimplementation of tariffs could have broad ramifications, particularly for Chinese exporters. The renewed strength of the dollar also saw gains against the yen and euro, adding momentum to the greenback's rally.
China Responds as Markets React
Asian markets saw mixed responses to Trump's win. Japan's Nikkei 225 climbed 2.6 percent, while South Korea's Kospi dipped 0.9 percent. Australia's S & P/ASX 200 rose by 0.8 percent, but in Hong Kong, the Hang Seng Index fell 2.2 percent, as investors sought safe havens amid election uncertainties. The Shanghai Composite inched 0.1 percent lower.
In China, economic challenges persist as the government convenes the National People's Congress to address local debt and support fiscal policy. Recent positive comments from Premier Li Qiang about China's growth targets have boosted market sentiment domestically, but the Trump victory may complicate this optimism, especially with his proposed tariffs on Chinese imports.
In energy markets, U.S. benchmark crude dropped to $71.09 per barrel, and Brent crude declined to $74.53, reflecting volatile trading in reaction to the election results. The outlook for oil may continue to face pressures as global markets react to the geopolitical shifts anticipated under Trump's renewed leadership.
This article includes reporting from The Associated Press
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